Mon Mar 27th, 2006 at 05:15:03 PM EST
According to a WSJ article printed today, $70 billion will go into mining previously impractical oil, kept in the form of sludge in the earth.
In February, engineers from French oil giant Total SA fired up colossal drum boilers to generate steam that will be pumped to a depth of 300 feet under the frozen ground here. If all goes well, by May, the steam will marinate a tar-like mix of oil and sand until the crude begins to flow.
Nearby, Total will go after the oil-soaked sands closer to the surface, scraping away an ancient forest of spruce and poplars and shoveling the black soil into two-story dump trucks. Fully loaded, the trucks weigh as much as a Boeing 747. Total will then use industrial versions of giant washing machines to remove the oil, generating enough liquid waste to create vast toxic lakes.
Heavy-duty oil-extraction projects like these are turning Fort McMurray into the first great oil boom town of the 21st century. A Florida-size section of sandy soil beneath the boreal forest in this sparsely populated area of Northern Canada is loaded with bottom-of-the-barrel petroleum.
The surging interest in Canadian oil sands is stark evidence that the world isn't about to run out of oil. Instead, it is running low on readily accessible light, sweet crude -- oil that flows like water, has few impurities and can be easily turned into gasoline. As the good stuff gets scarce, Big Oil is turning its attention and pouring money into extra-heavy crude,,,,
While previously this was economically impractical since it costs $25 per barrell, versus $5 in Saudi and $15 lin the Gulf of Mexico, with prices now at $60 per barrel, voila!
Sounds like it has some enormous environmental problems, but the companies and Canada claim to be working on that.
In northern Alberta, the oil-sands boom is remaking the landscape. The mining operations have clear-cut thousands of acres of trees and dug 200-foot-deep pits. The region is dotted with large man-made lakes filled with leftover waste from the mining operations. To chase off migratory birds, propane cannons go off at random intervals and scarecrows stand guard on floating barrels.
Alberta's energy minister, Greg Melchin, says oil-sands development creates a minimal environmental disturbance that is outweighed by the opportunities and jobs created. "It's worth it. There is a cost to it, but the benefits are substantially greater," he said.
Environmental groups are increasingly critical of the government's reluctance to regulate the oil sands. "The pace of development is outstripping our ability to manage the environmental issue," says Mr. Raynolds of the Pembina Institute. "Our unwritten energy policy is dig it up and sell it as fast as possible."
But the addition to world oil supplies is significant according to sources in the journal article, and therefore well worth it.
Canada's northern forest contains at least 174 billion barrels of recoverable heavy oil, equivalent to five years' supply for the planet, according to the Alberta Energy and Utilities Board. Venezuela has perhaps even more in the Orinoco River delta. By comparison, Saudi Arabia has about 260 billion barrels of more traditional crude, or 8½ years' global supply, according to the Energy Information Administration, the statistical arm of the federal Department of Energy. Heavy oil also is being produced in the Middle East, the Caspian Sea, Brazil and even in California's San Joaquin Valley.
It sounds as though there are a number of obstacles to be overcome--environmental, technical,,, But as the price of oil goes up, it's going to open up alternatives that did not make economic sense in the past. Is this one of them? Could this be a part of the bridge that gives the world a "soft landing" in oil--soft in the sense that it is one of hopefully other alternatives that can help us bridge from oil to alternative fuels--, rather than the supply dry up quickly, causing chaos?
I'm sure this is not news to Jerome, and he likely already has this in his predictions. But it's hard for me to remember the specifics in previous diaries on the impact of this, and perhaps Jerome will chime in with facts and predictions again.