Wells to Wheels

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Most of energy to heat the water or make steam comes from burning natural gas, which also supplies the hydrogen for upgrading. Precisely because it is hydrogen rich and mostly free of impurities, natural gas is the cleanest burning fossil fuel, the one that puts the least amount of carbon and other pollutants into the atmosphere. Critics this say the oil sands industry is wasting the cleanest fuel to make the dirtiest–that it turns gold into lead. The argument makes environmental but not economic sense, says David Keith, physicist and energy expert at the University of Calgary. Each barrel of synthetic crude contains about five times more energy than the natural gas used to make it, and in much more valuable liquid form. “In economic terms it’s a slam dunk,” says Keith. “This whole thing about turning gold into lead–it’s the other way around. The gold in our society is liquid transportation fuels.”

Most of the carbon emissions from such fuels comes from the tailpipes of the cars that burn them; on a “wells-to-wheels” basis, the oil sands are only 15 to 40 percent dirtier than conventional oil. But the heavier carbon footprint remains an environmental–add public relations–disadvantage. Last June Alberta’s premier, Ed Stelmach, announced a plan to deal with spend over $1.5 billion to develop the technology for capturing carbon dioxide and storing it underground–a strategy touted for years as a solution to climate change. By 2015 Alberta is hoping to capture five million tons of CO2 a year from bitumen upgraders as well as from coal-fired power plants, which even in Alberta, to say nothing of the rest of the world, are a far larger source of CO2 than the oil sands. By 2020, according to the plan, the province’s carbon emissions will level off, and by 2050 they will decline to 15 percent below their 2005 levels. That is far less of a cut than scientists say is necessary. But it is more than the U.S. government, say, has committed to in a credible way.

The oil sands are gold not only for the oil companies, but also for Alberta’s provincial government, which owns the mineral rights to virtually all the land and has encouraged the industry for three-quarters of a century.

Once thing Stelmach has consistently refused to do is “touch the brake” on the oil sands boom. The boom has been gold for the provincial as well as the national economy; the town of Fort McMurray, south of the mines, is a wash in New foundlanders and Nova Scotians fleeing unemployed in their own provinces. The provincial government has been collecting around a third of its revenue from lease sales royalties on fossil fuel extraction, including oil sands–it was excepting to get nearly half this year, or $19 billion, but the collapse in oil prices since the summer has dropped that estimate to about $12 billion. Albertans are bitterly familiar with the boom-and-bust cycle; the last time oil prices collapsed, in the 1980s, the provincial economy didn’t recover for a decade. The oil sands cover an area the size of North Carolina, and the provincial government has already leased around half that, including all 1,356 square miles that are mineable. It has yet to turn down an application to develop one of those leases, on environmental or any other grounds.