Oil Sands Talk by Nick Olds

Achieving Balance The Canadian Oil Sands Story

Oil Sands

Presenter

Presentation Notes

While it may seem like the oil sands are the new kid on the block in the petroleum industry, the oil sands have been around for a long, long time. In the 1700’s, aboriginal people used to use the sticky substance to waterproof their canoes. In 1883, a gentleman named GC Hoffman was working with the Geological Survey of Canada and he was the first person to successful separate bitumen from the oil sands using water. By the early 1900s many people thought that the oil sands would be really valuable as a way to surface the roads and tar their roofs….and that’s when the real research began to investigate what the oil sands could do. It wasn’t until the 1930’s that they realized that oil sands could be refined enough to use as a commercial fuel. By the 1960’s and 1970’s companies like Syncrude and Suncor were setting up shop in the oil sands region and the rest, as they say, is history. So, where are the oil sands?

Oil Sands Projects in Three Deposits

In Situ ProjectsMining ProjectsIn Situ ProjectsMining Projects

FortMcMurray

Cold Lake

Fort Hills

Horizon

Joslyn Creek

Syncrude

Suncor

Muskeg RiverAlbian

Dover

MacKay River

Firebag

Hangingstone

Long Lake

Surmont

Christina Lake (ECA)

Foster Creek

Wolf Lake/Primrose

Hilda Lake

Cold Lake

Tucker Lake

Jackfish

KearlLake

Jackpine

Peace River

Peace River

Seal

Peace River

Peace River

Seal

Northern Lights

White Sands

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The oil sands are located in northern Alberta in three deposits. These deposits are in Athabasca region, Peace River and Cold Lake. As you can see on this map, the Athabasca oil sands area in the middle is by far the largest of all surface mining projects and most in-situ underground extraction projects. You may have heard of Fort McMurray - this city is in the Athabasca region.

Oil Sands ProductionTechnologies

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There are two ways we can get bitumen out of the oil sands. If the deposits are close to the surface, we recover the bitumen through mining. The second method is through in-situ extraction.

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Mining

20% of the oil sands resource is less than 200 feet deep3% of the oil sands land area

Source: Canadian Centre for Energy Information

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In a typical mining operation, the sand is collected in buckets that hold about 100 tonnes, and it’s loaded onto 400 tonne trucks. The oil sands are then taken to an ore preparation plant to be processed.

Mining

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If the deposits are more than 75 meters below the surface, we use another method known as in-situ recovery.

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Drilled Oil Sands

Source: Canadian Centre for Energy Information

80% of the oil sands resource is more than 200 feet deep97% of the oil sands land area

Steam Assisted Gravity Drainage (SAGD)

In Situ:• No mines• No tailings pond• No water from the

Athabasca River• Smaller footprint

Cyclic Steam Process

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is-situ means pushing steam into the ground and softening the bitumen so it can flow easily to the surface for processing. Interesting to note – more than 80% of Alberta’s recoverable oil sand reserves will be extracted using in-situ technology environmental benefits to this process: smaller land footprint uses less water (take no water from Athabasca) no tailings ponds This is a really exciting method of recovery because technology and research is constantly evolving to find new and better ways to utilise this method using LESS water and LESS energy.

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Example of SAGD project

Photo: ConocoPhillips - Surmont

Schematic: Devon - Jackfish

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SAGD or steam-assisted gravity drainage is just one in-situ method. Devon Energy Corporation has produced a really nifty 3-D animation which shows how the in-situ oil sands process works at their Jackfish Project.

Why are oil sands so important?

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So now you know the basics of what oil sands are and how we recover oil from them. But why are they so important?

Global Energy NeedsGlobal economic growth will require more energy of all kinds

Energy supply mix:Increasing role for renewablesContinuing reliance on hydrocarbonsDeclining conventional means increasing role for non-conventional crude oil & natural gas

Source: EIA ‐

International Energy Outlook 2008

World Energy Demand 1980 - 2030

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100

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600

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1980 1990 2000 2010 2020 2030

R e n e w a b le sN u c le a rC o a lN a tu ra l G a sO il

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IEA predictions suggest that the move away from oil will be slow, because of basic demand issues We must act to address environmental and social concerns about the use of fossil fuels, recognizing this fact

Global Crude Oil Reserves by Country

Source: Oil & Gas Journal Dec. 2008

2 13 03 64 4

6 0

929 91 0 2

1 1 5

1 3 6

1 7 5

2 6 4

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1 0 0

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Sa udi A ra b ia Ca na da Ira n Ira q Kuw a it V e ne z ue la A bu Dha bi Rus s ia Liby a Nige r ia Ka zha khs t a n Unit e dSt a t e s

billi

on b

arre

ls

Includes 170 billi

on barrels

of oil s

ands reserves

OtherAccessibleReserves



State ownedor controlled

Accessible

Canada’sOil Sands

World OilReserves


53%

47%

AccessibleOil Reserves

Total Canadian Oil Production7th largest global producer and growing

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Oil sands production is forecast to grow gradually over the next 15 years from 2009 levels of 1.4 million bbl/day to 3.3 million bbl/day by 2025.

The Canada-U.S. energy relationship is deeply integratedCanadian & U.S. Crude Oil Pipeline Proposals

Environmental Stewardship in Canada’s oil sandsAir, Land, Water

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Oil sands producers understand and acknowledge the responsibility we have for responsible development and environmental stewardship. Our commitment to sustainable development is one that we take very seriously. We’ve achieved a number of successes along the way but we must keep raising the bar. Now I am going to take some time to look at these challenges and concerns and talk about what industry is doing to meet those challenges head on.

Guiding Principles for Oil Sands Development

PeopleWe will provide a safe environment for our employees, contractors and the communities where we operate.We will provide employment and business opportunities for regional communities, including Aboriginal peoples.We will consult with directly-affected stakeholders though all stages of our operations.

AirWe will design and operate our facilities to ensure that regional air quality continues to exceed provincial air quality objectives.We will continue to reduce greenhouse gas emissions per barrel of production by improving our energy efficiency and by developing new technologies.

Guiding Principles for Oil Sands Development

WaterWe will continue to reduce the amount of fresh water required per barrel of production by improving water recycle rates, using non-potable water sources where feasible, and by developing new technologies.We will safeguard the quality of regional surface and groundwater resources.

LandWe will mitigate our impact on the land while maintaining regional ecosystems and biodiversity.We will progressively reclaim all lands affected by oil sands operations, returning them to self-sustaining landscapes.

Managing Climate Change

The expected growth in oil sands production will add to GHG emissions in Canada, but improvements are ongoing

GHG intensity reduced by 33% from 1990 to 2007Government regulations to limit GHG emissions will continue improvementsSignificant investments in carbon capture and storage will play a role

GHG emissions from oil sands are:5% of Canada’s GHG emissions0.5% of United States GHG emissionsless than 0.1% of global GHG emissions

United States22%

China20%

Europe17%

Eurasia9%

Japan4%India4%Canada2%Australia

1%

Other21%

Global Energy Related Emissions By Country

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The Government of Alberta introduced regulations in 2007 that requires a 12% reduction in emission intensity for large emitters The Government of Canada has committed to reduce our total GHG emissions by 20% by 2020, and 60 - 70% by 2050

Canada’s Greenhouse Gas PoliciesAlberta Government

Legislation passed, July 2007Requires immediate 12% reduction in emission intensity for large emittersCompliance mechanims:

Physical Reductions$15/tonne CO2 levy into Technology FundOffsets

$4 Billion investment$2 Billion to Carbon Capture

Shell’s Quest CCS Project$2 Billion to Public Transit

Federal GovernmentReductions of 20% from 2006 by 2020Focus on technologyCompatible with USUp to $1 billion for CCS

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Weyburn, discovered in 1954 has been sequestering CO2 from a coal fired US electricity plant since 2000 and has sequested over 12 megatonnes, 2 per year is equivalent to taking 2 million cars off the road for one year or the annual generation of 500,000 people (25 tonnes/person) – and it recovers more oil from the reservoir at the same time

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S au d i M e x ic o Iraq V e n e zu e la N ig e ria U S G u lfCo ast

Califo rn iaT h e rm al

O il S an d sM in in g -

U p g rad e dB it u m e n

In sit u o ilsan d s -D ilu e n t

B it u m e n

In sit u o ilsan d s -

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In sit u o ilsan d s -

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GHG Emiss ions f romProduct ion a nd R e f in ing

GHG Emiss ions f rom Ga so lineC onsumpt ion

Full Cycle GHG Emissions

Source: Jacobs Consultancy, Life Cycle Assessment Comparison for North America and Imported Crudes, June 2009

App

rox

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of 2

008

oil s

ands

pro

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App

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oil s

ands

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n(li

kely

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re s

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rio)

98102 102 102 106 104

114108 105

116 113 Range of CommonU.S. Imported Crude Oils

U.S.Domestic

Common U.S.Conventional Oil Imports

Oil Sands

On a life cycle basis, oil sands have similar GHG emissions toother sources of oilFull cycle emissions or “wells to wheels” is the appropriate measure to use in setting carbon policies

Presenter

Presentation Notes

And while disturbance is occurring daily, in more than 40 years oil sands mining has disturbed about one hundredth of one per cent of the Canadian boreal forest – some 500 square kilometers. As part of industry’s commitment to reducing our environmental footprint, companies are always reclaiming abandoned well sites and returning the land to the way it was. To help you better understand and see how reclamation works, I am going to show you a quick video CAPP has produced showing a time lapse of the reclamation process.

Land

Presenter

Presentation Notes

And while disturbance is occurring daily, in more than 40 years oil sands mining has disturbed about one hundredth of one per cent of the Canadian boreal forest – some 500 square kilometers. As part of industry’s commitment to reducing our environmental footprint, companies are always reclaiming abandoned well sites and returning the land to the way it was. To help you better understand and see how reclamation works, I am going to show you a quick video CAPP has produced showing a time lapse of the reclamation process.

Footprint and ReclamationIn situ operations have a much smaller footprint, with road and pipeline infrastructure being the most obvious impact

Impact about 15% of lease surface areaOil Sands mining area is limited

Mineable area represents one-tenth of 1% of Canada’s boreal forestAfter 40 years of development, the area disturbed by mining is about 530 square kilometres - an area about 1/10th the size of metropolitan TorontoCompanies must restore land to productive status - land reclamation is a condition of approvalReclamation underway but it takes years - 12% of mined area to date is actively being reclaimed and 7.5 million seedlings have been plantedAlberta holds $820 million in reclamation security bonds from industry

ConocoPhilips Surmont In Situ Project

Syncrude Mine Reclamation

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Entire oil sands area underlies an area the size of Florida, but the mineable area is roughly the size of Rhode Island Brief discussion about differences between mining and in-situ operations Syncrude has reclaimed 22% of disturbed land, and received first mining reclamation certification

Water use from Alberta Rivers

23Source: Alberta Environment: state of the basin website

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In Alberta, there is some concern about the amount of water oil sands producers are taking from rivers in the province such as the Athabasca. The Athabasca is a very large river with a large natural supply. It is also one of the least utilized rivers in Alberta The Government regulates and allocates the amount of water the oil and gas industry can use from these rivers and even with that, the industry only uses a small amount of that allocation.

Water – Regulated and Monitored

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This brings us to water. Water is an important part of oil and gas production, and as Canada’s oil and gas industry grows, so does the demand on Canadian water resources. In this province, Alberta Environment regulates oil and gas industry water use under the Water Act. Oil and gas companies are subject to the same conditions for use as any other licensed water user in Alberta. All the companies operating in the oil sands are committed to using water responsibly. The industry is a leader in developing recycling techniques and reusing water. Here’s another really neat fact – did you know oil sands projects in northern Alberta continually recycle about 90 per cent of the water they use. You may have heard that it takes an average of two to three barrels of water to produce one barrel of bitumen from a mine, but did you know that almost all the water involved in that process is reused/recycled.

Tailings Containment and Settling Ponds

Sour

ce:

OSD

G

Research on dry and consolidated tailings

CO2 injection into tailings – CNRL HorizonTailings Reduction Operations - Suncor

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Some of you have likely have heard of tailings ponds. If you haven’t, tailings contain the water, residual bitumen, sand and clay that is left over when the bitumen is separated from the sand. In the ponds, the solids separate from the water so the water may be recycled into the process again. The size of tailings ponds and the time it takes to restore them to a sustainable landscape, as well as the protection of wildlife are issues our industry must address. But through research, technology and efficient production, we are reducing the size of tailings ponds to protect wildlife, and developing new techniques to return them to a sustainable landscape. Suncor has recently planted the first trees on what will be the first tailings pond reclaimed by the oil sands industry and they plan to have their first pond reclaimed in 2010. Tailings are part of the mining process, but are approved, regulated, managed and are being reclaimed.

Drilled Oil Sands – Water Use

In sit

u Oil S

ands

Produc

tion

Saline Water

1985 1990 1995 2000 2005

Volu

me

(Milli

ons

m3 /yea

r)

Source: GEOWA, 2009 and CAPP, 2008

New Technology - Reducing Impacts

Less energy = less GHGLow energy extraction 35ºC instead of 80ºC = 1/3 less energy

Less water:THAI process uses underground combustion rather than steamUsing solvent to reduce the need for both water and energy (steam)Using electricity instead of steam to warm the bitumen underground

Saline (non-potable) water:Some new projects use 100% saline waterOther in situ oil projects significantly increasing saline water use

Syncrude Low Energy Extraction – Aurora Mine

Petrobank THAI process

Devon’s Jackfish In Situ project

Cambridge Energy Research AssociatesGrowth in the Canadian Oil Sands: Finding the New Balance

Council on Foreign RelationsThe Canadian Oil Sands: Energy Security vs. Climate Change

Alberta Energy Research Institute/Jacobs Eng.

Comparison of life cycle GHG among crude oil types

Canadian Energy Research InstituteEconomic Impacts of the Petroleum Industry

$1.7 trillion in economic benefit created

Third Party Studies

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Economic Benefits and Jobs Across North America

Presenter

Presentation Notes

Oil sands producers understand and acknowledge the responsibility we have for responsible development and environmental stewardship. Our commitment to sustainable development is one that we take very seriously. We’ve achieved a number of successes along the way but we must keep raising the bar. Now I am going to take some time to look at these challenges and concerns and talk about what industry is doing to meet those challenges head on.

Economic Benefits of Oil Sands (in Canada over the next 25 years)

Economic impact generated= $1.7 trillion (GDP)

Employment created= 11.4 million person-years

112,000 jobs rising to 500,000 jobs over 20 years

Government Revenues= $491 Billion

Federal Tax = $188 billionProvincial Tax = $118 billion

Alberta = 80% of totalAlberta Royalties = $185 billion

$7.4 billion per year

F e d e ra l T a x e s

P ro v in c ia l T a x e s

P ro v in c ia lR o ya ltie s

Impact of Oil Sands on US Economy and Jobs

National Impacts($US Billion)

2010 2015 2020 2025

U.S. Gross Domestic Product 11.5 34.0 40.4 42.2

National Impacts(Person Years)

2009- 2010

2011- 2015

2016- 2020

2021- 2025

U.S. Employment (Thousand) 172 343 88 22

CERI 2009

Oil Sands Benefits by State

Illinois55% of Illinois’ oil comes from Canada

In Illinois, oil Sands creates:$1.45 billion (2010-2025) in additional GDP14,600 person years employment (2011-2015)

Minnesota83% of Minnesota’s oil comes from Canada

In Minnesota oil sands creates:$588 billion (2010-2025) in additional GDP6800 person years employment (2011-2015)

Examples of Oil Sands partnerships Across North America

Integrated trade means that funds used to purchase crude oil from Canada are more likely to be spent in the U.S.Oil Sands Heavy Hauler Trucks

The 200th Caterpillar 797 hauler delivered April 2009The engine is made in Lafayette, Indiana; the largest frame component is cast in Amite, Louisiana, the cab is made in Joliet, Illinois welded together and the engine is installed in Decatur, Illinois; huge Michelin tires are made in Lexington, South CarolinaThe dump body and final assembly takes place at the mine site near Fort McMurray, Alberta

Oil Pipeline ConstructionBillions of dollars of pipelines being built

eg. Enbridge Clipper and TransCanada KeystoneUsing steel and creating jobsMajor regional economic stimulus

Refinery expansions underwaySeveral expansions and modifications are underwayProviding significant jobs and local benefits

Achieving Balance

Providing Energy Security

Ensuring Environmental Stewardship

Generating Economic Benefits

Oil Sands Talk by Nick Olds

Education

Transcript of Oil Sands Talk by Nick Olds