The deepening worries about climate change will be an important theme in the upcoming federal election. Each of the parties have staked out their positions and market them to the public; often distorting their opponents’ plans. One the one hand the Liberal and Conservative plans don’t seem to meet Canada’s international commitments for GHG reductions. And the Green and NDP plans call for dramatic economic transformation that will bear enormous risk for Canada and economic decline in Alberta. The oilsands in particular are the target of the environmentalist angst.
Meanwhile, in the oil patch, the wheels of innovation are whirring away; driven by low prices and environmental challenges in Alberta. Since 2014, rigorous cost cutting and developing new technologies has been paramount. The industry sees technology as a means to deal with environmental issues. This means lowering GHG emissions per barrel, using less water and reducing the footprint of development. It also means finding alternatives to overcome the pipeline delays.
Oil production from the oilsands that has grown from 1.2 million barrels per day to over 2.5 million in 2018. The oilsands has seen investment of over $220 billion to date. But when shale oil in the USA became a ‘thing’ Alberta’s market were disrupted and energy prices fell. Capital investment in energy projects was $61 billion in 2014 and in 2018 it was just $28 billion.
Oilsands extraction takes place in two ways, surface strip mining and drilling. The drill method (called in situ) entails drilling a few hundred meters deep, then turning the drill bit at right angles through an oil reservoir. Steam is pumped down the hole to warm the oil along the lateral line, enabling it to flow to a recovery well. The drilling technologies have improved greatly. For example, now the lateral portion of the well can extend underground almost 2 kilometers, thus reducing surface disturbance. Capital cost per barrel for “in situ” drilling has been reduced by about 70% over time.
The cost cutting and technological solutions have made oilsands more efficient. A decade ago, $65 was needed to make a decent profit. Today that number is $45.
Today’s per barrel emissions have been reduced by 33% compared with 2004. But production has increased, so total emissions also grew from 34 million tonnes of CO2 in 2004 to 73 million tonnes in 2018.
These emissions are a key complaint about oilsands. Technological improvements have led to better performance and now about 25% of oilsands production has a lower emission level than the average of USA oil industry emissions. And Canada continues to have high environmental standards. According to an industry official; if Canadian standards were applied across the globe; oil and gas industry emissions would be reduced by 23%.
There are a range of technological changes that are potential for the future. One option is to use solvents instead of steam to make the bitumen flow. Another option is to recover the solvents from bitumen at the railhead, so only inert bitumen is sent to the refinery thus reducing risks from spills and improving prices.
And there are a range of technologies or options that may come to fruition. One proposed technology would turn bitumen into solid ‘pucks.’ Another approach would ship bitumen by rail in containers, not rail cars. Another option is to extract hydrogen from the deposits without producing bitumen. Yet another idea that is to create fuel by capturing CO2 from the air.
The national political conversation is about climate change is generating more heat than light. Much of it is fantastical, with messaging aimed at various audiences in our divided country. Meanwhile the oilsands companies have their heads, down deploying technology as a necessity in the face of difficult times.