STOP: Stop Tar Sands Operations Permanently

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Oil Sands Boom Swamps Canadian Wilderness

Posted by mhudema on July 24, 2008

Oil sands boom swamps the Canadian wilderness
Environmentalists want tougher laws to halt the damage, writes Tim Webb
Tim Webb
Sunday July 20 2008
The Observer

Todd Dahlman scoops up a handful of oily sand and smiles. ‘This is the money
– it even smells like money,’ says the manager of Shell’s Muskeg River oil
sands mine in the Athabasca region of North Alberta in Canada.

We are standing in the middle of a pit 50m deep that giant diggers have
hollowed out of the earth. Some 150m beneath our feet lie almost a billion
barrels of oil.

With Brent crude at $131 a barrel on Friday, the oil sands frenzy is in full
swing. Canada holds estimated reserves of 179 billion barrels of oil, the
majority from oil sands, putting it second only to Saudi Arabia. Currently,
Canada’s oil sands produce just over a million barrels per day but this is
set to triple by 2020, making the country one of the largest producers in
the world.

Shell, which operates the mine with Chevron and Marathon Oil, has 20 billion
barrels of potential reserves in the sands, representing a third of its
entire potential reserve base. It currently produces about 150,000 barrels a
day from its oil sands operations, around 5 per cent of total production,
but plans to increase this figure fivefold.

For oil majors who are finding it difficult to locate new reserves, the
attraction of Canada’s oil sands is strong. Resource nationalism, where
countries bar foreign companies from their oil, is on the rise, as shown by
BP’s spat with its Russian partners over its joint venture TNK-BP. The issue
of reserves is particularly sensitive for Shell, which had to downgrade
almost a quarter of its booked proven reserves four years ago, a scandal
that led to the ousting of then chief executive Phil Watts.

But development is controversial. Untreated oil sands have the same
consistency as peanut butter. Steam is pumped into the sludge to separate
the oil from the sand and water. Huge upgraders are needed to treat the oil
before it can be refined conventionally, and the process creates at least
three times as many greenhouse gas emissions as conventional oil production.
The environmental organisation, the Pembina Institute, estimates that by
2030 the emissions produced by the industry in Canada could total more than
a quarter of the UK’s current emissions. Production also devastates the
boreal forests and wetlands which cover northern Alberta.

Increasingly, Shell – and other oil sands operators – are being targeted by
environmentalists. The First Nations tribes – around 6,000 native Indians
live in the Athabasca Region – are taking legal action against some
companies. And the US is passing an environmental law which could restrict
imports of the most polluting types of fossil fuels such as oil sands.

George Poitras is a former chief of the Mikisew Cree, the largest First
Nation tribe in the Athabasca region. Now he negotiates on their behalf when
they lease land to oil companies. His office is in Fort McMurray, an hour
and a half away by plane from Calgary, and the epicentre of the oil sands
boom. With the highest GDP per capita in Canada, locals have dubbed their
town ‘Fort McMoney’.

Poitras says the development of the oil sands is poisoning the Athabasca
River. He says the fish taste different since development began 40 years
ago. ‘We think the water is giving us cancer.’

The three deposits of oil sands in the province, of which the one in
Athabasca is the largest, lie in 149,000sq km, covering a quarter of the
province. Not all of this will be extracted, and much will be extracted
using ‘in-situ’ methods where the material is pumped out of the ground,
rather than mined, and so less forest has to be cleared. The industry says
420sq km of forest has been ‘disturbed’ so far. Meanwhile, the Pembina
Institute says that 2,000sq km of forest is likely to be affected.

Oil companies are required by law to ‘reclaim’ the land after they cease
operations there, and promise to plant native species of grass and trees and
reintroduce wildlife. Poitras is scathing. ‘Our elders laugh when the
industry says this. Who do they think they are – God or the creator?’

Campaigners say environmental regulations covering the industry are
inconsistent and ineffective. The Alberta government requires companies to
reduce the greenhouse gas emissions’ ‘intensity’ per barrel produced by 12
per cent, but there are no limits on reducing overall emissions which will
mushroom as operations expand. The federal government has proposed tougher
laws and higher levies for companies that miss their targets. It is not
clear whether these will take precedence over Albertan regulations.

Shell has put forward proposals to equip the Scotford Upgrader – which
treats the oil from the Muskeg River mine – with carbon capture and storage
technology to reduce emissions. Even if this happens, it would only cut
emissions from the upgrader, when it is expanded, by a fifth.

David Collyer, vice president for sustainable development at Shell in
Canada, says that regulations will get tougher. Shell has already made a
voluntary commitment to reduce emissions from its existing Muskeg River
operations by 50 per cent by 2010 through greater energy efficiency,
technologies like carbon capture and offsets. Collyer says this would make
oil sands no dirtier compared to other oil imports and so would appease US
lawmakers. Shell and other operators know that they must raise their
environmental standards to head off tighter laws. The company, which last
week flew a group of journalists out to visit its Muskeg River Mine, also
wants to build a proper visitor centre there. Canadian oil companies trade
body CAPP has also recently launched a public relations offensive in an
attempt to stem criticism of oil sands development.

But how tough environmental regulations become remain to be seen. The US is
in no position to choose what kind of oil it gets when the alternatives
suppliers are unstable countries like the Middle East or Venezuela, points
out Lawrence Poole, an analyst from research firm Global Insight. And the
Canadian government is loathe to do anything to kill off the oil sands
golden goose. Shell and other companies will have to do more to reduce their
environmental impact, but like it or not, oil sands are here to stay.

Copyright Guardian Newspapers Limited 2008

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