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Curbing oil sands’ gas appetite
Alberta Energy Minister Greg Melchin does not buy arguments that precious natural gas resources — especially gas from the Northwest Territories — will be wasted to foster development of his province’s oil sands.
He said the combination of market forces and high commodity prices is forcing oil sands producers to look for less costly alternatives to gas.
Environmentalists have voiced concerns that all of the proposed Mackenzie Gas Project volumes of up to 1.9 billion cubic feet per day will end up in the oil sands region of northern Alberta.
Analyst and investment banker Matthew Simmons told an Ottawa meeting Oct. 18 it would be a “tragedy” to use all of the Mackenzie gas “for converting tar sands into low-quality oil. Natural gas is just too valuable.”
He contended that the oil sands process consumes far more energy than it ends up producing.
Simmons took issue with those who say North America can replace Saudi Arabia’s reserves with output from the oil sands.
To those critics, Melchin told a Ziff Group North American gas conference in Calgary Oct. 24 that there is no truth in claims that the Arctic gas will all be used in the oil sands.
“With today’s technology, the oil sands would require one-half to one-quarter or even less of the gas from the Mackenzie pipeline and would not require any Alaska gas,” he said. Melchin: pilots to eliminate use of gas Melchin noted that commercial pilot projects are working on methods to eliminate the use of gas entirely.
“Their quantity usage and efficiency is improving every year and likely, given the price of gas, will help spur further developments,” he said.
Melchin said some of the alternatives to gas include the possible gasification of coke, a byproduct of oil sands mining, and the use of asphaltene in the upgrading process by the Nexen-OPTI Canada Long Lake project to produce synthetic gas.
Suncor Energy has also been exploring the use of coal and coke gasification and others are developing the means to burn bitumen in the ground.
Melchin said the Alberta government will “use all means possible” to achieve value-added results in both gas and oil sands production to ensure that the province is not seen as a mere resource extractor in the next 30 to 50 years.
A government task force is currently being assembled to tackle the broad issue, following up the work of another task force that has spent the past two years studying the upgrading of bitumen into feedstock for the petrochemical industry.
—Gary Park
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