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Alberta Oil Sands Overview
 

Alberta Oil Sands Overview

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Overview of the production of oil from the Alberta oil sands.

Overview of the production of oil from the Alberta oil sands.

This slideshow gives pertinent information in understanding the energy relationship between the United States and Canada.

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  • Alberta accounts for 60% of Canadian energy exports, with New Brunswick, Saskatchewan, BC and Newfoundland following at 7-9% each.90% of Canadian energy exports go to the U.S.
  • 9 out of Alberta’s top 10 and 21 out of Alberta’s top 25 export destinations are US States.Excluding oil and gas, Texas is Alberta’s top export destination in the US.
  • Alberta has proven oil reserves of 171 billion barrels, of which crude bitumen reserves accounted for 169 billion barrels and conventional crude oil reserves for 1.5 billion barrels.This is enough oil to meet Canada’s current oil demand for almost 400 years.The oil sands are the third-largest proven crude oil reserve in the world, after Saudi Arabia and Venezuela.
  • There are two types of oil sands extraction methods: surface mining and in situ recovery.Surface mining requires an open-pit mine operation, similar to many coal, iron ore, copper and diamond mine operations. Oil sands are dug up and moved by trucks to a cleaning facility where the material is mixed with hot water to separate the bitumen oil from the sand.For deeper oil sands reservoirs an in situ recovery method is used to produce bitumen through wells similar to that of conventional oil production.80% of recoverable bitumen can only be produced using in situ methods.In situ operations result in much less land disturbance and are able to reclaim areas much sooner than surface mines. In situ projects also eliminate the need for tailings ponds.The majority of in situ operations use steam-assisted gravity drainage (SAGD). This involves pumping steam underground through a horizontal well to liquefy the bitumen, which is then pumped to the surface through a second well.
  • There are two types of oil sands extraction methods: surface mining and in situ recovery.Surface mining requires an open-pit mine operation, similar to many coal, iron ore, copper and diamond mine operations. Oil sands are dug up and moved by trucks to a cleaning facility where the material is mixed with hot water to separate the bitumen oil from the sand.For deeper oil sands reservoirs an in situ recovery method is used to produce bitumen through wells similar to that of conventional oil production.80% of recoverable bitumen can only be produced using in situ methods.In situ operations result in much less land disturbance and are able to reclaim areas much sooner than surface mines. In situ projects also eliminate the need for tailings ponds.The majority of in situ operations use steam-assisted gravity drainage (SAGD). This involves pumping steam underground through a horizontal well to liquefy the bitumen, which is then pumped to the surface through a second well.
  • Total production will grow from 2 million barrels per day in 2010 to 3.7 million barrels per day in 2020 Non-oil sands production will decline from 587 thousand barrels per day in 2010 to 491 thousand barrels per day in 2020 Oil Sands production will grow from 1.5 million barrels per day in 2010 to 3.2 million barrels per day in 2020
  • Total production will grow from 2 million barrels per day in 2010 to 3.7 million barrels per day in 2020 Non-oil sands production will decline from 587 thousand barrels per day in 2010 to 491 thousand barrels per day in 2020 Oil Sands production will grow from 1.5 million barrels per day in 2010 to 3.2 million barrels per day in 2020
  • Canada supplies the U.S. with 22 per cent of its oil imports, the bulk of which comes from Alberta (2010).Taken alone, Alberta supplies 17 per cent of U.S. oil imports – equal to Saudi Arabia and Iraq combined.Alberta’s oil comes from a politically stable and democratic neighbour and is sent to the U.S. via pipeline, a safe and secure method of transportation.It is forecast that by 2019 Alberta will be producing 3.3 million barrels of oil per day, compared to about 2 million barrels today. This increased supply can further reduce U.S. dependence on foreign-sourced oil.
  • The oil sands are being developed because of the demand and choices you and I make as consumers. We’ll be the first to admit that the world must transition to cleaner forms of energy in the future. The reality is this transition is going to take time.This chart demonstrates the U.S. EIA’s projections for liquid fuel consumption to 2035. Alberta’s oil sands will continue to play a major role in meeting energy demand.
  • US liquid fuels demand rises from 20 million barrels per day in 2008 to 22 million barrels per day in 2035Other OECD liquid fuels demand declines from 28 million barrels per day in 2008 to 26 million barrels per day in 2035Total OECD liquid fuels demand remains steady at 48 million barrels per day from 2008 to 2035Chinese liquid fuels demand rises from 8 million barrels per day in 2008 to 19 million barrels per day in 2035Other Non-OECD countries’ demand rises from 30 million barrels per day in 2008 to 43 million barrels per day in 2035Total Non-OECD liquid fuels demand rises from 38 million barrels per day in 2008 to 62 million barrels per day in 2035Total global liquid fuels demand rises from 85 million barrels per day in 2008 to 111 million barrels per day in 2035
  • The lack of current capacity to move production outside of the U.S. Midwest and resulting discounting has created a strong economic incentive for producers to be able to move production to other markets.As one of the largest refining centres in the world, access to the U.S. gulf coast is a preferred option for Alberta as it is consistent with our commitment to be a stable, growing and environmentally responsible supplier of crude oil to the U.S.The same market forces that are driving pipeline expansion beyond the Midwest in the U.S. markets have resulted in renewed proposals to ship oil sands production to the west coast.The proposed Keystone XL pipeline has become something of a bellwether in Canada as it has in the U.S., should the presidential permit ultimately not be issued, the market will be provided with further incentive to seek a west coast outlet. Much like the regulatory approval process in the United States for the Keystone XL pipeline, new or expanded west coast pipeline options will be subject to a thorough approval process that takes into account economic, technical and financial feasibility, and the environmental and socio-economic impact of the project. This includes environmental protection and public safety, and will provide an opportunity for affected parties to voice concerns.
  • Crude oil movements from the U.S. Midwest to the U.S. Gulf Coast on the rise As the price differential grows, so does the economic incentive to find a way to move the crude. US EIA estimated large volumes of crude are being transferred from the Midwest (PADD II) to the Gulf Coast (PADD III) via some very indirect routes. EIA estimates: 166,000 bbl/d moving through pipelines 28,000 bbl/d moving on tanker and barges. EIA unable to track truck and rail shipments, but note that “some third-party sources estimate may be as large as, or even larger than pipeline shipments”. “EIA's figures are likely to underestimate total crude shipments from PADD 2 to PADD 3”Emphasize: there are likely hundreds of thousands of barrels a day moving from the Midwest to the Gulf Coast moving by older, indirect pipelines; tankers; barges; truck and rail. From a carbon efficiency, other environmental and human health/safety perspective – a new state-of-the-art direct pipeline would seem preferable.EIA Notes: Crude oil movements from the Midwest (Petroleum Administrative Defense District, or PADD 2) to the U.S. Gulf Coast (PADD 3) are up due partly to increasing crude oil supplies from Canada and growing oil production in the Bakken formation. On average, 184,000 barrels per day of crude oil moved from PADD 2 to PADD 3 during the first five months of 2011, about 2.5 times greater than average volumes over the period from 2006 to 2010. Growing land-locked crude oil supplies in Cushing, Oklahoma (part of the Midwest), and limited refinery access to those supplies, are keeping crude prices in the region lower relative to other domestic and global locations. The price difference between Louisiana Light Sweet crude oil and West Texas Intermediate crude oil has persistently exceeded $15 per barrel for much of 2011. At these price levels shipping economics provide a strong incentive for increasing petroleum movements out of the Midwest, even using high-cost modes of transportation such as rail and trucks. EIA's Petroleum Supply Monthly data for May 2011, the most recent data available, show pipeline shipments of crude oil from the Midwest to the Gulf Coast of 166,000 barrels per day (bbl/d) and those by tanker and barge at 28,000 bbl/d; these are 43,000 and 19,000 bbl/d increases, respectively, from January 2010. EIA's surveys exclude truck and rail shipments, which some third-party sources estimate may be as large as, or even larger than pipeline shipments. Therefore, EIA's figures are likely to underestimate total crude shipments from PADD 2 to PADD 3. The Gulf Coast remains a net exporter of crude oil to the Midwest, despite the recent increases in crude shipments from the Midwest to the Gulf Coast. In May, the Gulf Coast shipped about one million bbl/d of crude oil to the Midwest.
  • This slide shows that for every dollar the Canada spends on imported goods, 90 cents is returned to the U.S. through exports.This demonstrates the strength of our trade relationship and the importance of the return on the American economy.
  • A recent study by the Canadian Energy Research Institute (CERI) outlined that oil sands development will contribute between $8.4 billion and $15.9 billion per year to the U.S. economy.This range is due to the relationship between growing production and pipeline access to markets, such as the Keystone XL project.* On this and following slides, the actual U. S. benefit depends on the extent to which growing production has pipeline access to markets.
  • The same CERI study estimates that on average, oil sands development will support an average of 93,000 to 175,000 U.S. jobs.The average earnings of these workers will be $4 billion to $7.5 billion per year.
  • Base Assumptions:Large-scale reductions will be realized through step-change technologiesMarket is best positioned to find sustainable, clean energy solutionsStrategic, focused investment is needed to support development and deployment of transformative technologiesThe Fund keeps compliance money where it is needed – in sectors and facilities that face the challenge to reduce emissionsLeverage additional $$ from industry and othersPromotes industry partnerships and economic growthAdvances technology – demonstration to commercializationEnhances competitiveness and generates new jobs

Alberta Oil Sands Overview Alberta Oil Sands Overview Presentation Transcript

  • Alberta & Oil Sands OverviewNational Conference of State Legislatures November 7, 2011
  • Alberta in the World
  • Alberta’sLocation Anchorage 1415 miles Alberta Vancouver 507 miles Ottawa 1,769 miles Alberta covers New York City 255,285 miles2, 2,032 miles an area slightly less than Texas Houston 1,875 miles Mexico City 2,469 miles
  • GeographyPopulation (2010): 3.7 millionGreater Edmonton 1 millionCalgary 1 millionRed Deer 90,000Lethbridge 85,000Medicine Hat 61,000Fort McMurray 89,000* 58% Land base is Forested 40% Land Base Prairie
  • The Canadian Federation Provincial Federal Government GovernmentNatural Resources Defence(including oil/gas/minerals) Foreign AffairsHealth Border ControlEducation Navigation/Ports/ShippingSocial Services Employment InsuranceMunicipal Institutions BankingGaming and Liquor Treaty IndiansEnvironment Environment
  • International Presence
  • Growth Growth In Selected Indicators: 1999 - 2009 Per Cent Change 24.9 Population 11.0 Alberta Canada 28.7 Employment 16.9 29.1 GDP 23.1 102.1 Exports* 0.9 109.8 Investment 67.7 *Goods Exports Source: Statistics Canada and Alberta Finance and Enterprise
  • Financial Position Provincial Net Financial Assets/Debt As per percent of GDP (2010-2011)Source: Conference Board of Canada
  • Net Interprovincial Migration 1981-2010 Total (Thousands)400 Since300 1981, 361,000 people have200 moved to Alberta from other parts of Canada100 0 BC AB SK MN ON QB NB NS PEI NL-100-200-300
  • Net International Migration to Alberta (Thousands)4540 International migration35 reached 40,000 in 2008, including30 temporary foreign workers2520151050 1993 2010 1981 1986 1991 1992 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
  • Canadian Top Export Sectors 2006-2010 Average (US$ Billions)$100$90$80$70$60$50$40$30$20$10 $0
  • Canada’s Exports 2006-2010 Average: Energy vs Total ($US Billions)$100$90$80$70$60$50$40$30$20$10 $- Energy EU 27 China Japan Mexico South Norway India Brazil Exports Korea
  • If Alberta were a US State-Export Comparison Total International Goods Exports by State 2005-2010 Average (USD, Billions) 2005-2010 Population Exports per Rank State Average (Millions) Person 1 Texas $176.20 25.1 $7,007 2 California $134.00 37.3 $3,597 ALBERTA $77.70 3.7 $21,000 3 New York $67.60 19.4 $3,488 4 Washington $50.80 6.7 $7,554 5 Florida $48.00 18.8 $2,553 6 Illinois $47.20 12.8 $3,679 7 Ohio $40.40 11.5 $3,502 8 Louisiana $33.90 4.5 $7,478 9 Pennsylvania $30.70 12.7 $2,417 10 New Jersey $30.60 8.8 $3,480
  • If Alberta Were A Country - US Trade 2006-2010 Average Two-Way Trade ($US, Billions) Canada 494 China 387 Mexico 327 Japan 185 Germany 130 Alberta 79 South Korea 78United Kingdom 65 France 64 Taiwan 57 Netherlands 50 0 100 200 300 400 500 600
  • Key Exports Albertas Global Exports in 2010 (US$ Billions) Other Energy, $2.6 Natural Gas and Gas Forestry, $2.2 Liquids, $13.6 Manufacturing, $4.1 Other, $21.6 Agriculture, $6.5 Metals and Metal Crude Manufacturing, $1.8 Oil, $37.7 Petrochemicals, $6 Other, $1.6 Total: US$75.6 Billion
  • Key Export Markets Distribution of Albertas Export Destination by Region in 2010 European Latin America Union 11% 14% Mexico 7% Other 7% United States 87% Other Asia 20% Other incl. Other Other US$10. Europe, Middle 13% East, Africa 3 15% Japan 14% China 27% Asia Pacific 61%
  • Alberta-US Trade Albertas Top 25 Export Markets in 2010 (Millions of US$) 1 Illinois (US) $ 18,654 14 California (US) $ 1,083 2 Washington State (US) $ 7,745 15 Tennessee (US) $ 925 3 Ohio (US) $ 4,897 16 Iowa (US) $ 922 4 Minnesota (US) $ 4,422 17 Pennsylvania (US) $ 829 5 Michigan (US) $ 4,157 18 Indiana (US) $ 802 6 New York (US) $ 3,689 19 Wisconsin (US) $ 739 7 China $ 2,706 20 North Dakota (US) $ 734 8 Colorado (US) $ 2,681 21 Mexico $ 723 9 Texas (US) $ 2,588 22 Oklahoma (US) $ 641 10 Montana (US) $ 1,712 23 Korea, South $ 523 11 Japan $ 1,461 24 New Jersey (US) $ 517 12 Kansas (US) $ 1,418 25 Arkansas (US) $ 500 13 Wyoming (US) $ 1,280
  • Oil SandsOverview
  • World oil reserves (billions of barrels - established) Saudi Arabia 260 Venezuela 211 Alberta/Canada •Alberta (171) 175 Iran 137 Iraq 115 Kuwait 101.5 Abu Dhabi 92 Russia 60 • Only 21% of the world’s Libya 46 proven oil reserves are Nigeria 37 accessible to private sector Kazakhstan 30 investment (not state Qatar 25 20 controlled). China USA 19 • 53% of the world’s open and Brazil 13 accessible reserve are in Mexico 10 Canada’s oil sands.•SOURCE: Oil & Gas Journal, January 2011
  • What are the oil sands?• Naturally occurring mixture of sand, clay, water and bitumen – a very heavy oil• Bitumen is separated from the sand and upgraded to refinery-ready crude oil
  • Ownership and Regulation• Project approvals by Alberta and federal government regulators• Comprehensive regulatory regime for project development and operations• Regulatory frameworks and monitoring being reviewed and updated• Resource owned by Albertans and developed by private sector
  • Oil Sands and Pipelines• Alberta independent regulator has 40+ years experience regulating pipelines that move oil sands production.• Pipeline performance data: • no evidence transporting oil sands crude poses a greater risk to pipeline safety than other crudes • no indication that oil sands production increases internal corrosion compared to other crude oils• In Alberta, as is the case in the U.S., any product entering pipeline must meet same regulatory standards (sulfur content, dissolved solids, etc,)
  • Where are the oil sands? • Located in northern Alberta
  • Where are the oil sands? • Located in northern Alberta • Oil sands deposits underlie 54,903 square miles
  • Where are the oil sands? • Located in northern Alberta • Oil sands deposits underlie 54,903 square miles • Surface mineable deposit 1,853 square miles
  • Where are the oil sands? • Located in northern Alberta • Oil sands deposits underlie 54,903 square miles • Surface mineable deposit 1,853 square miles • Land disturbed to date for mining is about 232 square miles • Less than 30% of mineable area has been approved for mining • Total minable area is about 0.15% of Canada‘s Boreal forest
  • Oil sands: In situ and Mining•In situ •Steam Assisted •Cyclic Steam Gravity Drainage Process • 80% of resource • 45% of production•Mining • 20% of resource • 55% of production
  • Economics of Production
  • Alberta Crude Production Alberta Supply of Crude Oil and Equivalent 4 3.5 Million Barrels Per Day 3 2.5 Oil Sands 2 (Bitumen) 1.5 Oil Sands 1 (SCO) 0.5 Non-Oil Sands 0 2003 2013 1998 1999 2000 2001 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2014 2015 2016 2017 2018 2019 2020Source: ERCB ST98
  • Million Barrels Per Day 0.5 1.5 3.5 2.5 0 1 2 3 1998 1999 2000Source: ERCB ST98 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Other Markets Alberta Demand Alberta Oil Sands Production Destination 2018 2019 2020
  • United StatesEnergy Security
  • Sources of U.S. oil imports (2010)Total U.S. Demand: 19.15 million bbl/dTotal Imports: 9.16 million bbl/d ALBERTASOURCES: US Energy Information Administration NOTE: Total does not add up to 100%National Energy Board (Canada) due to rounding
  • U.S. Liquid Fuels ConsumptionU.S. Energy Information Administration: U.S. Liquid Fuel Consumption 1970-2035 (millions of barrels) Oil is forecast to be an important part of the U.S. energy mix for years to come Alberta’s oil sands are a vital part of the forecast s for oil supply and imports SOURCE: U.S. Energy Information Administration, Annual Energy Outlook, April 2011
  • US EIA Global Liquid Fuels Consumption Forecast (Reference Case) 120 100 Millions of Barrels per Day 80 Other Non- 60 OECD China 40 Other OECD 20 United States 0 2011 2008 2030 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2031 2032 2033 2034 2035Source: US Energy Information Administration Annual Energy Outlook 2011
  • Energy Security• Oil sands often positioned as a separate topic, little reference to broader questions of crude oil consumption, security and supply
  • World Oil Production (Millions of Barrels per Day) Saudia Arabia 10.52 Russia 10.13 U.S.A. 9.69 China 4.27 Iran 4.25 Canada 3.48 Mexico 2.98United Arab Emirates 2.81 Brazil 2.75 Nigeria 2.46 Kuwait 2.45 Iraq 2.41 Venezuela 2.37 Norway 2.13 Algeria 2.08 Angola 1.99 Libya 1.79 Kazakhstan 1.61 Qatar 1.44 United Kingdom 1.39 0.00 2.00 4.00 6.00 8.00 10.00 12.00 SOURCES: Production U.S. Energy Information Administration , 2010 Democracy Economist Intelligence Unit Democracy Index (Full Democracies)
  • Major Oil Movement and Chokepoints A 30 day closure of the Straight of Hormuz would cost the U.S. $75 billion in GDP CNA Military Advisory Board October 2011 Straight of Hormuz Bosporous •17 m bbl/d (40% •2.9 m bbl/d world total) •½ mile wide •4 miles wide shipping •Difficult navigation lane •Iran has threatened to close in the past Suez Canal •2 m bbl/d •2.3 m bbl/d Sumed Pipeline through Egypt also vulnerable Bab el-Mandeb Strait of Malacca •4 m bbl/d •14 m bbl/d •2 mile wide channel •Mideast oil to Asia •Terrorist attack on •1.7 miles wide at tanker Limburg in narrowest point 2002 •Piracy problemSOURCE: BP Statistical Review 2011
  • Crude oil pipeline delivery system
  • Intra-US Oil Sands Crude Movement • 2011 volume roughly 2.5 times greater than previous 5-year period • Large volumes of oil sands derived crudes are moving from Midwest to Gulf Coast through indirect/inefficient routes Motivated by price differential • Recent US EIA estimates:  Indirect/Older Pipeline  166k bbl/d  Tanker/Barge  28,000 bbl/d  Truck/Rail  Unknown, but may exceed pipeline shipments
  • Gulf Coast Access and Midwest Consumers 3 2.5 2 1.5 1 0.5 0 Midwest (PADD 2) Total Gasoline Wholesale/Retail Price by Refiners (Dollars per Gallon) Gulf Coast (PADD 3) Total Gasoline Wholesale/Retail Price by Refiners (Dollars per Gallon)• Impact on Midwest consumers often cited as argument against expanded Gulf Coast access for Canadian crude• Historical data that precedes significant oil sands exports shows little correlation SOURCE: Source: U.S. Energy Information Administration Refiner Gasoline Prices by Grade and Sales Type http://www.eia.gov/dnav/pet/pet_pri_refmg_dcu_R30_a.htm
  • United StatesEconomic Benefits
  • Economic impact in the U.S. For every dollar spent on imported goods in 2010, this is how much returned to the US through exports $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 Canada $0.90 Mexico $0.71 Saudi Arabia $0.37 • The value of Alberta crude oil exports to the U.S. in 2010 was almost Venezuela $0.33 $38 billion. OPEC $0.37 • 90% of $38 billion = $34 billion in return U.S. exports to Canada. European Union $0.75 Japan $0.50 China $0.25Source: US Census Bureau and Statistics Canada
  • Sourcing Oil sands development makes use of goods, services, labour and expertise from around the world U.S. based companies and suppliers extensively involved Recent survey of oil sands operators found 1,400 individual US companies supplying products 44
  • Economic impact in the U.S. • Oil sands development will, on average, contribute between $8.4 billion and $15.9 billion per year to the U.S. economy between 2010 and 2035.*SOURCE: Economic Impacts of Staged development of Oil Sands Projects in Alberta (2010-2035), CanadianEnergy Research Institute (CERI), June 2011
  • Oil sands and U.S. jobs • Oil sands development will support an average 93,000 to 175,000 U.S. jobs per year between 2010 and 2035 • The total earnings of these workers will average from $4 billion to $7.5 billion per yearSOURCE: Economic Impacts of Staged development of Oil Sands Projects in Alberta (2010-2035), CanadianEnergy Research Institute (CERI), June 2011
  • Oil SandsEnvironmental Regulation
  • Carbon Capture andStorage (CCS)
  • Carbon Capture and Storage (CCS)• Key element of Alberta‘s Climate Change Strategy• $2 billion for large-scale CCS projects—among the largest single capitalized funding investments by any jurisdiction in the world• Public funding will accelerate the development of projects and encourage investment from industry to make large-scale CCS projects viable• Alberta‘s geology ideal for CCS
  • CCS Projects CO2 Storage Potential
  • CCS ProjectsSwan Hills Synfuels • Converts coal into synthetic gas underground and then into low-emissions electricity with captured CO2 used in enhanced oil recovery • Alberta government committed $285 million • 1.3 million tonnes of CO2 captured and stored each year
  • CCS ProjectsProject Pioneer • TransAlta, Capital Power, Enbridge • Fully integrated project at TransAlta‘s 450 MW Keephills 3 coal fired power plant • $436 m (Alberta) + $343 m (Canada) + $5 m (Australia) = $784 million committed • 1 million tonnes of CO2 captured and stored each year
  • CCS ProjectsQuest Project • Shell Canada, Chevron Canada, Marathon Oil Sands • Fully integrated CCS project at the Scotford oil sands upgrader • $745 m (Alberta) + $120 m (Canada) = $865 million committed • 1.2 million tonnes of CO2 captured and stored each year
  • CCS ProjectsEnhance - Alberta Carbon Trunk Line • 240 km [149 mile] pipeline transporting CO2 from the Agrium fertilizer complex and North West oil sands upgrader for use in enhanced oil recovery • $495 m (Alberta) + $63 m (Canada) = $558 million committed • 1.6 million tonnes of CO2 captured and stored each year (initially)
  • Oil Sands,Climate Change &Emissions Management
  • Oil Sands and GHGs GloballyThe oil sands in a carbonconstrained world…CANADA = 2% of globalGHG emissionsOil sands = 0.15% of globalemissionsOil sands carbon intensity is Alberta‘s oil sands account fordecreasing, while the carbon 0.15% of global GHG emissionsintensity of ‗conventional‘ sourcesis going up The challenge: as production increases, so do total emissions
  • Alberta’s GHG Emissions in Context
  • Climate Change: Life-cycle GHG Emissions 120 Range of Common 100 U.S. Imported Crude Oils 98 102 102 102 106 102 104 114 107 80 On a life-cycle basis, oil sands g CO2e/MJ gasoline have similar GHG 60 emissions to other sources of oil 40 20 GHG Emissions from Production and Refining GHG Emissions from Gasoline 0 Consumption Saudi Mexico Iraq Venezuela Nigeria Imported US Gulf California Oil Sands Wtd. Avg. Coast Heavy Avg Source: Jacobs Consultancy and Lifecycle Associates, Life Cycle Assessment Comparison for North America and Imported Crudes, July 2009
  • Provincial Emissions Profile Chemicals Power Plants 7% Heavy Oil 47% 7% Gas Plants 8% Other 13% Oil Sands 18% Total Province – 2008 Large Facilities – 2008 •Industry > 70% •Account for >50% of Provincial
  • Regulatory Context – Alberta Approach• Manage the Risk  We need to start now, with focus on practical, stretch but achievable objectives  Adjust policies as needed and as we further understand the reduction opportunities• Reductions at source requires some policy certainty for industry  New technology a big part of the long-term solution  Large investments being made now – expensive to retrofit; investment is often for 40 years+  Market instruments needed to bridge the gap between current emissions and long-term solutions  Its all about carbon pricing• Consumers must be part of the solution
  • Confronting Global Issues:Alberta’s Climate Change Plan Send Price Signal / Broad Deployment Technology Fund of Low Carbon Investment Technologies growing demand Rising Price / Commercialization of Low Carbon Technologies
  • Renewable Energy and Bioenergy Primary goal: Reduce greenhouse gas emissions by 37Mt (2050)Bioenergy:• $239 million allocated to bioenergy programsRenewable Electricity:• 2028 MW (an increase of +70% since 1998)• 15.7% of installed capacity• Wind = 805 MW (forecast 4,000 MW by 2017)• Hydro = 900 MW• Biomass = 323 MWRenewable Fuels Standard:• 2% biodiesel blend with diesel• 5% ethanol blend with gasoline• 25% less GHG emissions thanequivalent fossil fuel
  • Strategy - Complementary Measures • Consumers - $2 billion GreenTrip – commitment to public transit projects - Incentives for energy efficiency - Building Codes - Energy Efficiency Act
  • Climate Change Law• In 2007, Alberta became the first jurisdiction in North America RESULTS (through to regulate large industrial GHG 2010): emissions.• 12% GHG intensity requirement – 23.8 million tonnes of emissions avoided• Three compliance options: 1. Physically reduce emissions – $257 million into the 2. Purchase accredited Alberta offset Climate Change and 3. $15 dollar/tonne towards Emissions Management technology fund that supports Fund development and application of transformative technologies. – $133 million invested in clean energy projects
  • Offsets Submitted 2007-2010 4500 4000 Biofuel Biofuel Nitric Acid Abatment Nitric Acid Abatment 3500 Wastewater Management Wastewater ManagementCredits (K tonnes) Hydro Hydro Acid Gas Injection Acid Gas Injection 3000 Hydro EOR Compost EOR Compost Energy Efficiency Acid Gas Injection Energy Efficiency 2500 EOR Biomass Energy Biomass Energy Compost Landfill Gas 2000 Biomass Energy Wind Landfill Gas Wind Landfill Gas 1500 Wind Biomass Energy 1000 Landfill Gas Tillage Tillage 500 Wind Tillage Tillage 0 2007 2008 2009 2010 Compliance Year
  • Alberta’s Climate Change Fund• As of March 31st 2011, $257 million contributed to the fund• Announced nearly $133 million in funding for clean technology initiatives in last 16 months. • 3 RFPs approved • Fourth RFP – Cleaner Energy and Carbon Capture (closed in July) • Fifth RFP – Small Medium Enterprise (announced in July)• Support innovations that can be applied worldwide with the potential of game-changing outcomes – but must have Alberta application• Leverage 4:1 – more than $ 465M total project investment• Expect >$1B worth of projects by end of next year• Funds are renewed annually – approx. $60-80M
  • Oil SandsWater, Air and Land
  • Oil Sands Environmental Management Air Quality Greenhouse Assurance Gas Targets Limits on Water Withdrawals No Discharge Policy Mandatory Reclamation Water Quality MonitoringSuncor. Photo by: David Dodge, The Pembina Institute
  • Responsible Water Use • Strict limits on water use • Total water use by mining operations was ~1% of average river flow in 2010; • oil sands projects recycle 80-95% of water used • Comparing 2010 and 2008, mining operations used ~20% less water from the river but produced ~18% more bitumen • Zero-discharge policy for process-affected waters
  • 324Water use for transportation fuels(net gallons of water to produce one gallon of fuel) 50 45 40 35 30 25 20 15 1.9 - 9.8 10 2.6 - 6.2 3.4 - 6.8 10 2.5 - 5.8 5 0 Gasoline (Canadian Gasoline (Saudi Gasoline (US Switchgrass ethanol Corn ethanol oil sands) conventional crude) conventional crude)SOURCE: US-DOE, Argonne National Laboratory, January 2009
  • Water monitoring ongoing for…more than 40 years in Athabasca regionDr. Preston McEachern, Alberta Environment
  • Bitumenseepsnaturallyinto theAthabascaRiver
  • Tailings Ponds• Ponds are used to manage tailings while solid wastes settle and to store water for recycle.• > 85% of a companys water needs for extraction may come from recycle pond water, significantly reducing the amount of fresh water used.• They are not without challenges  clays that contribute to fluid fine tailings (MFT)  residual bitumen and solvents  Amount of time required to settle and allow the water to be recovered
  • Management of Tailings Ponds
  • Footprint of Tailings PondsIn 2010, the footprint of tailings was~ 170 km2 (23% of total activefootprint) .~ 15% of the footprint has beenreclaimed~ 38% of the footprint has processwater at the surfaceThe first tailings pond in the oilsands region was reclaimed inSeptember 2010
  • Management of Tailings PondsManaging Today• Directive – faster reclamation; less fluid tailings• Ongoing reclamation at several tailings pondsVision for the Future• Zero growth in tailings• Development and adaptation of new technologies• Demonstration of both remediation and Suncor Pond 1 (Reclaimed 2010) reclamation success
  • Air Quality Health Index• Joint federal-provincial system providing hourly information about air quality in more than 20 communities across the province• Designed by health and environmental experts• Measures and reports on common air pollutants that could impact human health• Uses a scale from 1 to 10 to assess whether there is a health risk posed by air www.environment.alberta.ca/apps/aqhi/aqhi.aspx Sixteen real-time stations operate 24 hours a day, 365 days a year in oil sands area
  • Land Reclamation Alberta was the first province in Canada to legislate land reclamation• Reclamation to equivalent pre-development in 1963. state requirement of project approvals• Funds based on estimated cost of reclamation must be provided to province from developer  $946 million held in 2010• ~ 716 km2 (275 square miles) of land have been disturbed by oil sands mining activity, ~ 72 km2 reclaimed• Only 1 km2 is certified ??  Final stage in extensive provincial process ensuring restoration meets provincial standards  Includes years of monitoring• Moving to progressive reclamation standards
  • Wetland Reclamation Potential2000 2006 Photos: Suncor ReclamationResearch demonstrates the reclamation potential of wetlands.
  • Draft Lower Athabasca Regional Plan• Cornerstone of cumulative effects management approach for majority of the oil sands region• Proposed new conservation areas add to existing parks and protected areas  Total of 20,000 km2 (7700 square miles) of land would be legislatively protected from new industrial development  Would result in the largest swath of protected boreal forest in North America• Similar limits would be established for water, air and regional biodiversity.• Currently undergoing consultation, including:  First Nations, General Public, Environmental Groups & Industry Proposed LARP Conservation Areas
  • Thank You!
  • Oil Sands andFirst Nations
  • Aboriginal involvement• Approximately 250,000 Albertans of Aboriginal origin — 8% of the province‘s population• Eighteen First Nations reserves, with a population of about 16,000, located in the three oil sands regions• Six Métis Settlements, with a total population of about 7000, are located in areas where oil sands are found
  • Aboriginal involvement • About 10 per cent of the oil sands workforce is Aboriginal. • 1,600 Aboriginals directly employed by oil sands operations*; over 60% increase since 1998. • 1,200 Aboriginal trade apprentices in Alberta; 400% increase since 2002. • From 1998 to 2009, Aboriginal-owned companies secured $3.7 billion worth of contracts from oil sands companies in the region.  This includes $810 million in 2009 alone.•* Does not include construction related employment
  • Public health• 2006 investigation responded to media reports There is currently of rare cancers (cholangiocarcinoma) in no credible evidence of community of Fort Chipewyan. Investigation environmental found one of these rare cancer cases, in contaminant contrast with six reported in news media. exposures from oil sands reaching• Report updated and revised in 2009. Number of Fort Chipewyan at cholangiocarcinoma cancers increased from levels expected to one to two. Identified a potential elevation in cause elevated human cancer overall cancer cases; findings were not rates. statistically significant and inconclusive. •Royal Society of Canada:• Cancer reporting process deployed in the ―Environmental and Health Impacts community to ensure early detection of of Canada‘s Oil Sands Industry‖ •December 2010 suspected cancer cases.• Alberta working with residents to create a participatory, community-based health study.