Oil Sands 101 « Secure Our Fuels

Oil Sands 101

Already America’s most important trading partner, and increasingly among its most important strategic allies as well, Canada sends the United States more than 2.5 million barrels of petroleum each and every day. And it’s a good thing it does. Without Canadian crude, U.S. consumers would be forced to find those supplies elsewhere, forced to pay more to get them, and forced to rely on people and places halfway across the world whose values and interests don’t always align with our own.

As explained on this site, a Low-Carbon Fuel Standard (LCFS) represents a clear (if less than straightforward) attempt to stop these secure sources of affordable energy from crossing the U.S. border, directing them instead to hungry markets in China and India that would be more than happy to take these extra supplies off our hands.

But why are the Canadian oil sands being targeted? What are “oil sands” in the first place? How are they produced? How much of America’s energy portfolio is tied to them?

These are some of the questions presented, considered and answered in the section below.

What are oil sands? Are we talking about a liquid here, or does this oil actually come in granular, sand-like form?

Canadian bacon doesn’t quite look or taste like conventional bacon – and Canadian oil sands don’t actually resemble the sands you play on and lay on at the beach. Fundamentally, oil sands are naturally occurring mixtures of sand, clay, water and a form of petroleum called bitumen. This bitumen, once refined can be used to make gasoline, asphalt and jet fuel with the same energy profile and carbon content as you’d find from any other source of oil – including so-called “light” oil from the Middle East.

How is this oil produced? How has the technology for producing it evolved over the years?

Currently, two different methods are used to produce oil from Canadian oil sands formations: traditional surface mining, and a process known as “in situ.” Most in situ operations use steam-assisted gravity drainage (SAGD) to deploy large concentrations of steam underground to liquefy the bitumen and help deliver it to the surface, which means that very little surface land needs to be disturbed in bringing these resources to the market.

First developed and deployed in the 1960s, the technology that makes in situ exploration possible has advanced rapidly over the years, and is expected to be deployed with much greater frequency and efficiency in the future. That’s because more than 80 percent of all oil sands resources are found at depths too far down to access through traditional mining techniques. Thanks to in situ technology, that resource base is no longer considered unrecoverable – and the land that resides above those resources, no longer subject to disturbance.

How much do we have up there?

The Canadian oil sands are one of the world’s largest known hydrocarbon deposits, considered second in size only to those found in Saudi Arabia. For some scale, consider that Canada’s proven oil reserves currently stand at 179 billion barrels of oil. Oil sands represent 97 percent of that figure.

Over the next decade, production from Canadian oil sands is expected to rise from about 1.2 million barrels per day to about 3.3 million barrels per day – more than double what we import daily from Saudi Arabia.

Is oil from oil sands of a lower quality than oil produced elsewhere? Will it ruin my engine?

The energy developed from oil shale has the same energy content and carbon profile as oil produced anywhere else – and once refined, yields gasoline, asphalt and other related products as good or better than products derived from so-called “light” oil.

In fact, gasoline and other fuels made from oil sands are being used right now in the United States. And they figure to be used even more in the future, as abundant supplies of secure, affordable energy continue to be harvested from Canada’s oil sands.

Is it true an LCFS would effectively prevent oil sands energy from crossing the U.S. border? How so?

We’ve already established that oil from the Canadian oil sands region contains no more carbon than oil found elsewhere, and once refined, yields fuel products of no less quality. Still, because of the density of this oil and the remote location from which it’s harvested, in some cases it takes more energy to find, produce and deliver this oil than it would otherwise take with oil reserves closer to the surface, and easier to transport.

Under an LCFS, if the oil isn’t “Jed Clampett” ready – that is, able to be produced without much time, talent or effort – it isn’t a form that’s treated kindly. And since so much of Canada’s oil resources are classified as “heavy,” very little of it will be eligible for shipment to U.S. markets – forcing American consumers to contract with foreign, unstable suppliers half-a-world away instead.

How many U.S. states depend on Canadian oil to run their economy?

At least 16 U.S. states (at last count) directly import supplies of so-called “heavy” oil from Canada, and especially in the Midwest, a number of states rely on that crude for an extraordinary amount of their total energy supply. In Minnesota, 83 percent of the oil consumed in that state comes from Canada. In Montana, that number approaches 93 percent. And even in states beyond the upper Midwest – in Pennsylvania, Oklahoma, even Virginia – heavy crude imports, such as the ones that would be banned under an LCFS, make up a significant portion of their energy portfolios.

What’s being done to mitigate the environmental impact of this oil exploration?

Make no mistake: Producing oil in the Canadian oil sands region is not without its technical and environmental challenges. But thanks to breakthroughs in new technology and a new focus on limiting the amount of surface water used in the process, operators in the area have made tremendous strides to meet stringent environmental and regulatory requirements with an eye on offsetting the impacts that new production creates.

It’s also worth pointing out that, under an LCFS, efforts to aggressively find, produce and deliver Canada’s oil sands wouldn’t necessarily stop. Far from it. The only difference is that those shipments of oil – banned from entering U.S. markets under an LCFS – would likely be sent via tanker to our competitors in China and India instead. Some experts even believe that an LCFS could increase the amount of carbon dioxide emitted into the air, since oil previously destined for the United States would need to be shipped in a carbon-intensive way to ports of call half-a-world away.

The United States can manage these considerations far better than regions of the world with far less stringent environmental standards.