[R-G] Canada's black gold glimmers but tarnishes

[Anthony Fenton]

Copyright 2007 Los Angeles Times
All Rights Reserved
Los Angeles Times

July 8, 2007 Sunday
Home Edition

SECTION: MAIN NEWS; Foreign Desk; Part A; Pg. 1

LENGTH: 2292 words

HEADLINE: Canada's black gold glimmers but tarnishes;
Cash and jobs flow from Alberta's oil sands, but they come at a cost  
to the environment.

BYLINE: Tim Reiterman, Times Staff Writer

DATELINE: FORT MCMURRAY, CANADA

BODY:


The Aurora Mine exudes the odor of petroleum and the look of untapped  
riches.

The open pit mine plunges 250 feet deep and ranges over a couple of  
square miles, carved out of pine and spruce forest by gigantic  
machines that operate 24/7, even in the dark of winter at 40 below zero.

This is the heart of Alberta's oil sands, a remote Florida-sized  
region where moose, bears and beavers inhabit watery woodlands atop  
the world's largest proven petroleum reserves outside Saudi Arabia.

The unusual deposits -- where oil is locked in the tarry soil rather  
than pooled beneath the surface -- are yielding a bonanza of  
investment dollars, government revenue and jobs.

Almost half of Canada's oil production comes from the oil sands --  
and the energy industry estimates that enough oil can be economically  
extracted to fill the country's needs for three centuries.

The vast majority of Canadian oil exports goes to the United States,  
and the Bush administration sees the remaining resources as America's  
best hope for reducing dependence on Middle Eastern oil.

"No single thing can do more to help us reach that goal than  
realizing the potential of the oil sands," Energy Secretary Samuel  
Bodman said during a visit last July.

The benefits may be great, but the toll on other natural resources is  
also enormous.

Separating petroleum from sand burns so much natural gas that the  
enterprise is becoming the largest source of greenhouse gas emissions  
growth in Canada. The oil sands lie within a major intact ecosystem,  
the boreal forest covering almost a third of Canada's land mass.

The forest is one of the world's biggest freshwater storehouses and  
absorbs a vast amount of carbon dioxide. It also provides habitat for  
hundreds of species of birds and is home to caribous, wolves and  
bears. Expansion of the oil sands operations could tear huge holes in  
a forest already rent by logging, oil and gas exploration and other  
industries.

With development expected to triple, or even quintuple, in the next  
few decades, producers and government officials puzzle over how to  
harness the oil sands' potential with less cost to the climate, land,  
water and the well-being of native peoples who fear that cancer cases  
in a downstream community may be a sign of lethal industrial pollution.

Current leases for open-pit mining cover an area several times the  
size of New York City, according to the Pembina Institute, an  
environmental research group in Alberta. But more than 50,000 square  
miles is potentially available for various types of oil extraction,  
which has prompted environmentalists to call for stopping development  
until ecological effects can be reduced.

"The very nature of oil sands means that developing them ... causes  
an incredible disruption to land and landscape over immense areas,"  
said a March report by the House of Commons natural resources committee.

Although the U.S. is the primary market for the oil, pressure for  
development also comes from Chinese companies that have been  
investing hundreds of millions of dollars in leases.

Not for the 'faint of heart'

Cavernous pit mines account for the bulk of the 1.2 million barrels  
of oil generated daily in a region with an estimated 174 billion  
barrels in reserve.

Syncrude Canada Ltd., a joint venture that includes Exxon Mobil Corp.- 
controlled Imperial Oil Resources, has 8,000 workers; it spent $4.2  
billion last year and has invested billions more in capital  
improvements.

"It is not a business for the faint of heart," spokesman Alain Moore  
said.

At Syncrude's Aurora Mine, dozens of electric shovels eat away at the  
tarry deposits. With each scoop, the behemoths drop 100 tons of dirt  
into trucks with beds as big as small houses.

Amid clouds of dust, the trucks deliver their payload to machinery  
that crushes and screens it before it is mixed with hot water and  
piped into a cone-shaped tank. A form of petroleum called bitumen  
rises to the top, then is upgraded in a maze of smokestacks, pipes  
and steel structures up to 23 stories high.

The leftovers are stockpiled on the surrounding landscape. Huge  
yellow blocks of sulfur impurities are stacked pyramid-fashion. Dunes  
of sand expelled from the plant sweep toward the horizon. On lake- 
sized tailings ponds, floating scarecrows and bursts from air cannons  
discourage birds from alighting on the oily wastewater that would  
kill them.

Recovering oil from sand requires the use of natural gas to heat  
water, which produces greenhouse gases and other air pollutants. The  
water itself is drawn from the nearby Athabasca River, which flows  
765 miles from glaciers in the Canadian Rockies through numerous  
small communities and sustains waterfowl, fish and other wildlife.

Although improved technology and recycling have reduced the amount of  
water and energy needed for each barrel of oil, Syncrude's reports  
show overall quantities growing along with oil production.

The oil sands operations accounted for 4% of Canada's greenhouse gas  
emissions in 2005, and energy regulators say it has been increasing.

University of Alberta ecologist David Schindler projects that oil  
development, coupled with climate change, could cut the Athabasca  
River's low winter flow in half or more by midcentury.

"What they want to withdraw is an unsustainable amount," he said.

Alberta environmental officials recently established water use rules  
to prevent biological damage to the river, and the provincial  
government has required a 12% reduction in greenhouse gas emissions  
per barrel of oil.

But experts at the Pembina Institute maintain that those measures are  
inadequate.

The industry, which generates billions of dollars in economic  
activity, royalties and taxes each year, says it plans to minimize  
environmental effects through improved efficiency and land  
restoration required by government leases.

Syncrude reports that it has reclaimed a quarter of the land  
disturbed by mining, although the government has not yet certified  
the land's ability to sustain wildlife and plants.

Greg Stringham, vice president of the Canadian Assn. of Petroleum  
Producers, said oil sands operators were looking at alternatives to  
natural gas for heating water, including starting controlled fires  
underground or using nuclear power. Some companies, he said, are  
looking at ways to sequester carbon dioxide underground.

"The government does not want to shut down the development because it  
provides benefits [to the country] and revenues to them," Stringham  
said. "All anyone can hope for is the best available technology, not  
just stop producing oil."

High-paying jobs

Like a modern gold rush, the oil sands development has lured  
thousands of workers with jobs that may pay more than $100,000 a  
year. Along forested Highway 63 north of Fort McMurray, the main road  
to the oil sands, mining operations look like company towns -- office  
buildings, warehouses, equipment yards, dormitories and cafeterias  
contribute to the boomtown aura.

The population of Fort McMurray, a former fur trading settlement, has  
nearly doubled since 1995 to more than 65,000. The highway through  
town is clogged morning and night with commuting mine workers. And  
affordable housing is so scarce that some people live in garages or  
their vehicles.

At a trailer park, equipment operator Alayne Guibeault made a home in  
his pickup for months, using an electric heater against subzero  
temperatures.

"My plan is to make money, bring my wife and girl here, and maybe  
after four years buy a house ... near Banff in the Rocky Mountains,"  
said Guibeault, who is from Quebec.

Chamber of Commerce official Michael Allen owns a music store near a  
popular strip club and bar in an area that has drug dealing and  
prostitution.

Gesturing toward the planned site for the town's first condominium  
towers, Allen said the oil boom was a net plus.

"There has never been a better time for business here," he said.

Even those who claim harm from the fallout say the oil boom has its  
advantages.

Ivy Simpson, a 28-year-old who works at an all-terrain vehicle  
dealership, developed cervical cancer 10 years ago. Simpson believes  
she was exposed to pollution from oil developments while living in  
the downstream hamlet of Fort Chipewyan. But she later took a job at  
a mine for about $30 an hour -- enough to pay rent and buy a truck.

"Being a single mom and recently widowed, I needed the work, and I  
had to pay the bills," Simpson said. "It's expensive to live here."

Fish defects

Fort Chipewyan, the oldest settlement in Alberta, is a 50-minute  
flight and worlds away from Fort McMurray. The town's quiet streets  
run between dense woods and the rocky shoreline of Lake Athabasca,  
which receives water from the Athabasca and other rivers.

"To have a lake like this and not be able to drink from it is a real  
shame," said Ray Ladouceur, 65, a commercial fisherman who has caught  
fish with humped backs, cysts and other deformities. "I call this a  
red zone, a danger zone, to live in."

An industry-funded monitoring program that includes government  
agencies and environmental groups has studied fish in the river but  
not the lake.

"We see some [tumors and cysts] occasionally," said Fred Kuzmic, an  
oil company biologist who heads the program. But he said the  
proportion of observed abnormalities had dropped by more than half  
since 2005, when 7% of the fish sampled were deformed and that most  
of the abnormalities probably were caused by scrapes on the swift  
river's bottom.

Dr. John O'Connor, the regional chief of family practice, was  
disturbed by the fish abnormalities. O'Connor said he had seen an  
alarming number of rare cancers and cases of autoimmune diseases such  
as lupus and rheumatoid arthritis.

"It raised the question," he said. "Were the numbers and types of  
illnesses we were seeing the result of genetics, lifestyle, bad luck  
or environmental?" He worried that the oil sands might be an  
environmental cause.

O'Connor was especially concerned about a bile duct cancer called  
cholangiocarcinoma, which had previously claimed his father's life.  
This disease occurs in about two of 100,000 people. But O'Connor was  
certain of four cases and suspected one or two others in Fort  
Chipewyan, which has fewer than 1,200 residents.

Statistics recently compiled by the local nursing station show an  
increase in mortality and of cancer-related deaths in the last  
decade. Twenty-one residents died last year, eight of cancer.

After the doctor expressed his concerns in a radio report last year,  
federal health authorities filed a complaint this year alleging that  
he was unduly alarming the public. Alberta's medical licensing body  
is investigating the complaint.

A year ago, the Alberta Health & Wellness ministry had conducted a  
study that found more cases of certain cancers than expected in Fort  
Chipewyan, but only one case of cholangiocarcinoma. It concluded that  
overall cancer levels were not significantly different from elsewhere  
in the province.

But local residents and colleagues of O'Connor questioned the  
thoroughness of the study and accused the government of trying to  
shut up the doctor to protect the oil industry.

"The message for anyone who blows a whistle is you will be  
clobbered," said Dr. Michel Sauve, the regional chief of medicine.

Provincial water officials say they know of no water pollution from  
the oil sands, but some elders who once drank directly from the lake  
now even avoid drinking from remote streams when they hunt and trap.

Joe Wandering Spirit, 67, whose one-room cabin is in the bush several  
miles from town, drinks water collected in a rain barrel, not from  
the Quatre Fourches River at his doorstep.

"Long ago, people never died of cancer, but recently a lot died," he  
said in Cree. "I don't know if that [industrial pollution] is causing  
illnesses, but it might be, because we don't really know what the  
white people are doing at the oil sands."

Recently, Ivy Simpson's mother, Mary, visited the grave of her own  
mother, who died of leukemia in 1989.

Reflecting on cancer in her town, Mary said, "Sixty ... years down  
the line, there will be no more oil, so all these oil companies will  
leave the aboriginal people here with all our sickness. I pity my  
five grandchildren."

In Fort McKay, which is surrounded by oil mines, tribal Chief Jim  
Boucher recalled the hard times before the oil sands were developed.

Worldwide anti-fur campaigns in the mid-1980s had destroyed  
traditional trapping, and the town of a few hundred was left with the  
choice between welfare or seeking another economic opportunity.

"We decided to work with the resource development sector," Boucher  
said. "I am proud of our ability to make a transition and make a good  
living."

Besides providing jobs, oil sands operators contract with several  
tribal businesses and donate money for education and community  
facilities. But the chief acknowledged his tribe's deep fears about  
environmental and health effects.

"We have been saying for some time that changes have been happening  
to land, air, water and wildlife," Boucher said. "The one thing we  
don't appreciate is being the canary in the coal mine for the oil  
industry."

tim.reiterman at latimes.com

--

()

Canadian oil boom

Alberta's oil sands, which hold an estimated 174 billion barrels of  
crude that can be economically extracted, are the largest proven oil  
reserves outside Saudi Arabia. The deposits are concentrated in three  
regions of the province.

Oil sources

Aside from Canada, most of the countries with the largest proven  
crude reserves are in the Middle East. Here are the top 10, in  
billions of barrels, 2007 estimates:

Saudi Arabia: 262.3

Canada: 179.2*

Iran: 136.3

Iraq: 115.0

Kuwait: 101.5

United Arab Emirates: 97.8

Venezuela: 80.0

Russia: 60.0

Libya: 41.5

Nigeria: 36.2

* Conventional crude and oil sands

--

Sources: ESRI, TeleAtlas, Alberta Geological Survey, Energy  
Information Administration, Oil and Gas Journal

GRAPHIC: GRAPHIC: MAP: Canadian oil boom CREDIT: PAUL DUGINSKI Los  
Angeles Times PHOTO: DOCTOR'S CALL: Dr. John O'Connor examines Lila  
Ahyasou of Fort McKay, Alberta, during a house call. Last year,  
O'Connor reported seeing an unusual number of rare cancer PHOTO:  
MASSIVE MACHINERY: At the Aurora Mine, a worker is dwarfed by the  
mouth of an electric shovel used to dig oil sands. The vast majority  
of Canadian oil exports goes to the United States. PHOTO: A GRAND  
MINING CANYON: Syncrude operates a mine near Fort McMurray in one of  
Alberta's three huge oil sand deposits. The industry says  
environmental damage can be minimized. PHOTOGRAPHER: Genaro Molina  
Los Angeles Times PHOTO: (BD)GROWING PAINS: A densely packed mobile  
home park is a sign of Fort McMurray's expansion resulting from oil  
sand mining.