Moving From Fringe to Mainstream

Just below the 60th parallel and well above the 40th parallel there is a place where bird watchers, First Nation peoples, and "Big Oil" mingle. What would otherwise be considered unlikely is relative in this land where sand dunes exist in tandem with wetlands and a boreal forest, and cold snaps bring temperatures to −40°F. The Canadian landscape just south of the Northwest Territory is a nature artist's study in the unlikely. It is here, in the northern city of Fort McMurray, that oil companies—small and large, state-owned and independent—are strategically flocking into a fast-changing energy landscape. In the 1990s, when oil was trading at U.S. $12/bbl, it was unlikely that Canada would witness such a rapid step-up in heavy-oil and oil-sands development. Now conventional oil is on its way to being displaced by synthetic crudes built by 19 separate heavy-oil streams currently being marketed out of western Canada (Fig. 1). Oil sands now account for 39% of Canada's total oil production at approximately 1 million BOPD. By 2020, production could grow to 4 million BOPD. No Longer a Footnote Alberta's oil-sands deposits contain one-third of all known oil reserves in the world, according to the Oil Sands Discovery Center, and are one of the few remaining developments still open to private investment (Fig. 2). The most northerly dune complex in the world exists in Canada; the dunes can reach 35 m in height. Beneath these dunes lies a small percentage of Canada's heavy oil. The largest percentage of heavy-oil reserves lies beneath muskeg, either close enough to the surface to be mined economically by removing the overburden or deeply buried but recoverable by steam-injection methods. The reserves found in three Alberta deposits—Athabasca (40 000 km2), Cold Lake (22 000 km2), and Peace River (8 000 km2)—contain resources that could supply Canada's energy needs for more than 475 years, or total world needs for up to 15 years. With improvements in technology and commercial viability, the production potential of all the oil-sand deposits could be as high as 2.5 trillion bbl of bitumen. The Athabasca deposit, twice the size of Lake Ontario, is estimated at a minimum of 1.6 trillion bbl of bitumen in place. Extraction is not an easy process from the technological perspective, and the environmental perspective is also particularly challenging. The Athabasca oil sands are located in wetland and boreal forest ecosystems, and they are extraordinarily diverse biologically. The forest is home to more than 300 plant species, of which 42 are rare, and 10 are not found anywhere else. The boreal forest is also home to 30 species of wood warblers. The Alberta government calculates that, at today's prices using current technology, approximately 175 billion bbl of crude bitumen is economically recoverable from the three Alberta oil-sands areas. Approximately 315 billion bbl is ultimately recoverable with technological advances. Oil-laden sand may provide a bridge between the hydrocarbon era and future energy forms, so much so that oil-sands production is expected to quickly double during this second growth wave. By 2015, oil-sands production is expected to triple, which will make Canada the fifth-largest producer in the world.

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