Monday 25 August 2008

Sitting on a fortune in black gold, but is this too high a price to pay?

Published Date: 25 August 2008
By Rob Gillies

THE largest dump truck in the world is parked under a massive mechanical shovel waiting to move 400 tonnes of oily sand.
Each Caterpillar 797B heavy hauler – three-storeys high, with tyres twice as tall as the average man – carries the equivalent of 200 barrels of heavy oil, worth £12,500 at today's prices."It's like sitting on your back porch and driving your house," said Todd Dahlman, the manager of Shell Canada's Muskeg River open-pit oilsands mine in Alberta's Athabasca region.Shell, which has 35 of the huge loaders working 24 hours a day, seven days a week, has ordered 16 more – at £2.7 million each – as it expands its open-pit mines. Shell, Exxon-Mobil, Chevron, Canada's Imperial and other companies plan to strip an area of 55,000 square miles that could yield as much as 175 billion barrels of oil. Daily production of 1.2 million barrels from the oil sands is expected to nearly triple to 3.5 million barrels in 2020. Overall, Alberta has more oil than Venezuela, Russia or Iran. Only Saudi Arabia has more.High prices are fuelling the Canadian province's oil boom. But the amount of energy and water needed in the extraction process has raised fears among scientists and environmentalists."Their projected rates of expansion are so fast we don't have a hope in hell of reducing greenhouse gas emissions," said Dr David Schindler, an environmental scientist at Alberta University.Oilsands operations, including extraction and processing, are responsible for 4 per cent of Canada's greenhouse gas emissions, and that is expected to triple to 12 per cent by 2020. Oilsand mining is Canada's fastest growing source of greenhouse gases and one reason it reneged on its Kyoto Protocol commitments. Producing a barrel of oil from sands is said to result in emissions three times greater than a conventional barrel of oil.Brian Maynard, of the Canadian Association of Petroleum Producers, admits: "Industry has to improve its environmental performance."But Dave Collyer, Shell's chairman in Canada, said world demand meant oil companies had to exploit unconventional sources of energy. "You have to consider the environmental impact in a broader context," he said. "There is significant economic benefit from the development of oilsands. The oilsands represent a very secure, reliable, long-term source of supply."David Suzuki, Canada's best known environmentalist, cautioned against accepting the argument that the oil industry would develop safer techniques, such as carbon capture storage, noting that the time and money needed for such methods could not be predicted."They say, 'No, no, we're going to do research and really clean up our act'. You can't give these guys permission to go ahead on the promise that something is going to happen in the future," he said.Many say the environmental ramifications are too dire to ramp up oilsands production. They claim Canada's boreal forest, one of world's largest intact ecosystems, is being torn up to make way for the mines and that too much water is being taken from Alberta's Athabasca river.There are concerns, too, about the tailing ponds that sit next to the river. They contain waste from the separation of oil from sand and take up 50 square miles of northern Alberta. Jeff Short, a scientist who studied the long-term effects of the Exxon Valdez oil spill off Alaska, said if one of the ponds spilled into the river, "it would be the equivalent of several hundred Exxon Valdez oil spills". A flock of 500 migratory ducks died recently after landing in one of the ponds.