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Oil sands improve showing Study shows direct greenhouse gas emissions from production, transport and refining are comparable to U.S. heavy crudes Gary Park For Petroleum News
Alberta is cleaning up its act to the point where direct emissions from the extraction, shipping and refining of oil sands output is roughly parallel to that of other crudes refined in the United States, says a report by the government-created Alberta Energy Research Institute.
And Premier Ed Stelmach wasted no time proclaiming those findings as evidence of the “incredible progress” made by Alberta-based companies in reducing and recycling water used in energy production, land reclamation and management of waste byproducts from oil sands operations.
He said Alberta is also on the way to developing “game-changing technology” that will have worldwide application in lowering greenhouse gas emissions.
Even now, while that technology is being researched and developed, Stelmach said Alberta is only a “tiny” contributor to carbon dioxide emissions, accounting for only one-tenth of one percent of the world’s output.
He noted that the government is currently working on letters of intent from proponents of three commercial-scale carbon capture and storage projects that have been selected to qualify for C$2 billion in provincial aid.
“Alberta’s commitment to fight climate change is measured in action, not words,” he declared.
Comparable to heavy crudes The AERI report found that CO2 emissions from oil sands operations are an average of about 10 percent higher than crude imports to the United States and about the same as those from heavy oil produced in California.
Those estimates are at direct odds with earlier studies that have estimated GHGs from the oil sands were as much as 40 percent greater than those from other sources.
AERI executive director Eddy Isaacs said emissions from imported and domestic U.S. heavy crudes are comparable to the oil sands.
Where the oil sands are higher, those emissions “can be reduced technologically and we are all working on that.”
However, Isaacs acknowledged there is still much work to do to improve the oil sands’ environmental image.
The AERI findings should not absolve the industry in Alberta from doing its utmost to pull emissions down as low as possible, he said.
He said CO2 emissions from conventional oil activities are rising as pools become harder to exploit, whereas oil sands emissions are declining on a per-barrel basis as the industry becomes more efficient.
The study, funded by the Alberta government through AERI, combined findings from independent studies by U.S. based consultants — Jacobs Consultancy and TIAXX LLC — both of which confined their work to direct emissions only, including those released during production. Indirect emissions include land use, exploration and waste streams.
A spokesman for the Alberta-based Pembina Institute said Alberta should be concentrating more on how the oil sands compare with advanced biofuels and electric vehicles, rather than drawing comparisons with pollution-intensive sources of oil.
As North America moves towards using cleaner fuels and develops new technologies to tackle climate change, the oil sands will find it increasingly tougher to compete, and, unless there are drastic changes, the oil sands won’t be able to compete, he said.
Economist: Oil headed up Separately, Jeff Rubin, the former chief economist for CIBC World Markets, told a Calgary conference that Alberta is heading for another wave of oil sands development based on his prediction that oil will regain US$100 per barrel next summer, assuming a rebound in the world economy.
He said the Canadian dollar will soon be trading on a par with or above the U.S. dollar, opening the door to a flood of oil sands investment.
If triple-digit oil prices return, Alberta will have the incentive to raise oil sands production to 4 million barrels per day from the current 1.1 million bpd, but that same future will result in a doubling of gasoline prices, with widespread economic implications.
Rubin said petroleum demand — contrary to what is happening in North America, Europe and Japan — is skyrocketing in Venezuela, Saudi Arabia and Iran, depleting the world’s oil reservoirs by 4 million bpd.
“We need 20 million bpd of new production by 2014 so we can consume as much as we do today and it is going to take us years to bring back the supply that has been curtailed,” he said.
Because of production declines in Mexico, the United States will be forced to turn increasingly to Canada in the next four or five years, by which time Canada will meet 30-33 percent of U.S. needs, up from the current 22 percent.
Rubin also believes North American natural gas prices will rise from US$3.50 per thousand cubic feet to at least US$5 as the recession fades, accelerated by exports of LNG from Canada and the U.S. to Asia and Europe, where it will fetch higher prices.
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