Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
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OIL SANDS Facing New Challenges Is Alberta ready for the next phase of oil sands development? E&MJ; looks at the opportunities and challenges facing Canada's energy export leader. By Simon Walker, European Editor Caterpillar equipment at Imperial Oil and ExxonMobil Canada's Kearl surface mine, where production began in April. (Photo courtesy of Imperial Oil) Since the 1970s, Alberta has supplied a significant proportion of Canada's hydrocarbon needs, producing a raft of petroleum products from the heavy crude oil and bitumen resources that underlie much of the north of the province. And, while the industry struggled for decades in the face of low international prices for oil produced from conventional sources, rising prices in the 1990s led to a string of new project proposals. Several have been implemented; more have been put on the back burner; and some have failed to materialize for either technical or financial constraints. Today, the oil sands industry produces around 1.7 million barrels per day (Mbbl/d) of synthetic crude oil (SCO) and diluted bitumen (dilbit), 1.4 Mbbl of which are exported via pipelines to refineries across the U.S. With the exception of oil shales, the Athabasca basin oil sands represent a unique resource in terms of their extraction potential, in that a proportion—albeit a relatively small one—is amenable to surface mining. Industry sources estimate that only around 3% of the total 142,200-km2 resource area is covered by less than 75 m of overburden—the cut-off point between surface mining using shovel-and-truck operations, and in-situ production systems. Clearly, the industry represents a major player in the North American energy market, both domestically and through its exports but, as has already been seen in relation to U.S. coal production, the amazingly rapid development of shale gas and "tight" oil over the past five or six years has transformed that market out of all recognition. And while official forecasts are predicting the oil sands industry will double its capacity by 2017, it is now facing a rather different energy scenario than was the case until very recently. Dilbit or SCO? Oil sands bitumen is handled in one of two ways. Non-upgraded bitumen is too viscous to flow through pipelines without settling out, so it must first be diluted using a light hydrocarbon fluid such as condensates or synthetic crude oil (SCO) to form "dilbit" or 28 E&MJ; • AUGUST 2013 Add to that an upsurge in concerns over its impact on the fragile boreal environment, health issues and rapidly escalating construction costs for new projects, and it is equally clear to see that the industry will have to come to grips with a number of new challenges if it is to develop as has been expected. Carbon dioxide emissions have provided a further focus for development opposition, while in the U.S., the extension of the existing Keystone pipeline to supply oil sands-derived crude and dilbit to Gulf Coast refineries awaits government approval in the face of concerted opposition from the environmental lobby. Resources and Production Systems Alberta's oil sands resources lie in three main areas: Athabasca, Peace River and Cold Lake, with the Athabasca deposits containing more than 80% of the 168-bil- "synbit." The upgrading process adds hydrogen, removes carbon, or both, converting the bitumen into SCO that can be handled through pipelines in a similar way to conventionally produced oils. All of the bitumen produced by mining is currently upgraded, together with a small proportion of in-situ output. www.e-mj.com