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(Mushroom?) cloud over oil sands Private company’s plan for Alberta nuclear plant faces long road; industry watches from sidelines, despite need for alternative power Gary Park For Petroleum News
As the Alberta oil sands swing from mining to in-situ operations — only three of the next 14 projects will rely on mining to extract raw bitumen — so does the hunger for natural gas to generate the steam which drives in-situ technology.
And finding enough gas to drive oil sands operations, while catering to a rising domestic and North American demand, is out of the question.
There is hope that, in fact, natural gas requirements will decrease on a per-barrel basis, especially, according to Ziff Energy Group, if there are technological breakthroughs in a number of new methods being researched and tested.
The steam-assisted gravity drainage projects that will eventually account for the largest share of oil sands production are estimated to consume 850 cubic feet of natural gas per barrel of output where they are linked to upgraders.
Mining operations use about 630 cubic feet per barrel when tied to upgraders and 300 cubic feet when they aren’t, according to GLJ Energy.
FirstEnergy Capital rates SAGD consumption at 830 cubic feet per barrel.
Ziff, in a 2006 study, predicted gas demand will quadruple between now and 2015, while oil sands output will triple, reflecting the shift to SAGD.
It said oil sands’ demand for gas was running at 600 million cubic feet per day in 2005 and headed for 1.8 billion cubic feet per day in 2012 and 2.4 bcf per day in 2015.
If the 2015 figure is accurate that is likely to be double the startup volumes if the Mackenzie Gas Project comes on stream about that time.
Given that natural gas is one of the cleanest fuel sources and the oil sands are rated as the dirtiest, the oil sands’ critics can add that to their ammunition pile.
So, what’s the answer?
Enter nuclear power.
Decisive debate likely For the past four years, that mushroom cloud has been building over northern Alberta and is now headed for a decisive debate in the province.
Privately owned Energy Alberta — an upstart of Wayne Henuset, a one-time car-dealer and wine merchant and now an energy entrepreneur — is daring to test the nuclear option by filing an application for an atomic plant capable of generating 2,200 megawatts by 2017.
That is the equivalent of 18 percent of Alberta’s current generating capacity and more than half of the additional 4,000 megawatts the province is expected to need over the next decade to ensure Alberta remains the driving force of Canada’s economy over that period.
The site chosen by Energy Alberta is Cardinal Lake, 20 miles west of the Town of Peace River, largely because of a stable population and a desire to cash in on progress, which includes development of the region’s own oil sands deposits, which rank third to the Athabasca and Cold Lake areas of northeastern Alberta.
The town and two surrounding municipal districts have been unreserved in their support for a nuclear plant.
Peace River Mayor Lorne Mann asked: “Where better for the peaceful use of nuclear energy than Peace River?”
For now, the biggest mystery surrounds the identity of a company — widely thought to be a “large” oil sands player — Henuset said is ready to take 70 percent of the power generated by a plant conservatively estimated to cost C$6.2 billion.
Not surprisingly, there is a confidentiality pact to keep that client’s name and its business private.
Henuset said “they don’t want us to” disclose their identity.
But there was no shortage of oil sands players who put distance between themselves and the tentative project.
Ever since the nuclear option became part of the risk-benefit equation — with Alberta struggling to find ways to replace its coal-fired power plants, reduce greenhouse gas emissions and keep pace with a staggering growth in power demand — the petroleum industry has tiptoed through the political minefield.
Delivery of power an issue France’s Total and Husky Energy are the only two oil sands players who indicated support for evaluating the use of nuclear power, but Total now says it is not actively considering nuclear and Husky says its interest has been “overstated.”
Otherwise the major oil sands companies have shown no interest in rushing to embrace the alternative.
They have consistently pointed out that because oil sands facilities are spread over such a large area, delivery of power from a single nuclear plant would be inefficient and uneconomic.
In addition, the current planning cycle for projects is much further advanced than the 10-year timeline for the Energy Alberta proposal.
Greg Stringham, a vice president with the Canadian Association of Petroleum Producers, said existing operations already have cogeneration plants on site producing steam and electricity, as well as sending power into the Alberta grid. He said the technology being used now in the oil sands does not require outside power sources.
Royal Dutch Shell, which plans a 100,000-150,000 barrel-per-day operation in the Peace River, and Penn West Energy Trust, which hopes to exploit an in-place resource of 6.8 billion barrels, have been quick to separate themselves from Energy Alberta saying there has been no contact.
Energy Alberta has conceded the tough uphill battle it faces by setting a 10-year timetable for public debate and regulatory hearings.
The opponents are already girding for a fight.
Citizens for the Use of Sustainable Energy, formed last year to tackle Energy Alberta, says the small company is doing a poor job of answering questions; the Sierra Club of Canada describes nuclear power as an “unnecessary risk”; and the Pembina Institute has urged the Alberta government to give priority to other options.
The government itself is taking a measured approach, suggesting this is the time for a wide-ranging debate in the province before a policy is established.
If that debate takes place is could easily overtake all of the other negative issues that are associated with the oil sands.
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