[R-G] Shifting tar sands

[Anthony Fenton]

Here's a visual on the 'St Michael's Mount' analogy, presuming it is  
the same one the author refers to:

http://snipr.com/1qsqb

"The diggers and trucks operate 24 hours a day, seven days a week in  
Syncrude's two mines, processing about 700,000 tons a day, roughly  
the equivalent land mass of St Michael's Mount in less than a  
fortnight."


On Sep 16, 2007, at 5:19 PM, Macdonald Stainsby wrote:

> Shifting oil sands
> Telegraph UK Magazine
> 15/09/2007
>
> In the hunt for new fuel sources, a vast swath of western Canada is
> being mined for its precious 'oil sands'. Jack Fairweather visits the
> centre of the new gold rush. Photographs by Jonas Bendiksen
>
> Donnie Leblanc is surprisingly nonchalant for a man who has just blown
> $20,000 on a two-day trip to Las Vegas. But then, since he came to
> northern Canada, he hasn't had to worry too much about money - and  
> there
> is plenty more where that came from. In a few months' time he will  
> have
> saved enough to hit the casinos again.
>
> A former carpenter from Nova Scotia ('I was just about making ends  
> meet,
> and man, that's no way to live'), Leblanc, 44, packed his bags and
> headed west nine months ago, leaving behind his wife - 'basically, for
> good' - and few regrets. He spent the first few days sleeping in his
> truck and handing out his cv to prospective employers. He quickly  
> landed
> a job on a construction site crew in Fort McMurray, and was offered a
> berth in a camp 25 miles out of town.
>
> Heavy set, with a moustache and beer gut, Leblanc is typical of the
> thousands who have fled their old lives to earn more money than they
> could ever have imagined, in the mines of Fort McMurray, a small  
> town in
> the grip of what may be North America's last great gold rush. The  
> 'gold'
> in question is black, greasy, cake-like tar - oil sand - and there  
> is a
> lot of it buried beneath the rolling arboreal forests surrounding Fort
> McMurray. Dug out of the ground, steamed and refined, the sand turns
> into that balm of the world economy: crude oil.
>
> Just how much oil the Canadian government-owned land contains is a
> matter of some debate, but most analysts put the figure at 1.7  
> trillion
> barrels (of which 170 billion are recoverable at today's prices and  
> with
> current technology), spread across 87,600 square miles of forest and
> peat bog. Compare those figures with Saudi Arabia's 260 billion  
> barrels,
> which accounts for 24 per cent of the world's reserves, and it is easy
> to understand why the major oil companies are rushing to stake out the
> sands.
>
> A road sign at the entrance to Fort McMurray proudly declares, we have
> the energy. The regional headquarters of the oil sands industry is a
> town with a population of roughly 80,000, strung out along the  
> banks of
> the Athabasca river in the north-eastern corner of Alberta, one of
> Canada's western provinces. Edmonton, the nearest city, is a four-hour
> drive south. In every other direction there is nothing but forest and
> tundra.
>
> Set up in the 1870s as a trading post for the Hudson's Bay Company,
> which made its money in the fur trade, Fort McMurray looks like any
> other small Canadian town: a main street of liquor stores, burger
> joints, petrol stations; identikit suburbs and the ubiquitous Wal- 
> Mart.
> Long-term residents take pride in their community, their schools and
> shopping malls, family diners and their local hockey team, the Oil
> Barons. This is not a town for tourists. During the winter, which  
> lasts
> well into April, the town is blasted by Arctic storms and lies under a
> foot or more of snow. Things aren't much more pleasant in the summer,
> when clouds of mosquitoes emerge in the heat. The thousands of people
> who descend each month are looking for one thing - to get rich, quick.
> Salaries for basic labour jobs can top $100,000.
>
> Fort McMurray has become the sort of boomtown not seen in North  
> America
> since the Texan oil rush of the last century. The town's population  
> has
> almost doubled in the past few years; most houses have multiple
> occupancy, with basements and spare rooms often rented out.  
> According to
> one government estimate, more than 10,000 mine workers in the area are
> of no fixed abode, camping out by the river in the summer, sleeping in
> their trucks in car-parks. To relieve some of the pressures on the  
> town,
> the oil companies use massive military-style camps where workers are
> corralled into portable buildings.
>
> Seen from above on a cold winter's morning as your plane approaches  
> the
> air strip, Fort Mc-Murray is ring-fenced by mining works. The region's
> three largest mining operations to the north of the city resemble icy,
> man-made Grand Canyons measuring about 50 square miles in total; the
> valley floors buzz with 400-ton dump trucks that shift the sand,  
> and the
> nearby processing plants belch out vast columns of steam.
>
> Alberta's oil sands, while not the only such deposits in the world -
> Venezuela has substantial reserves - are by far the largest. They were
> formed more than 400 million years ago when a large swath of northern
> Canada lay under water, and organic matter gradually compacted in a
> process similar to oil formation in the Middle East and the Gulf of
> Mexico. What was different in Canada was the collision of the tectonic
> plates that created the Rocky Mountain range, which effectively poured
> the oil into low-lying valleys and river beds, which were then covered
> by a layer of debris.
>
> The potential of the oil sands isn't new. Eighteenth-century explorers
> spotted Native Americans tarring their canoes using the sands, and  
> ever
> since there has been a steady trickle of entrepreneurs trying to  
> make a
> buck near the banks of the Athabasca. What has always prevented the  
> oil
> sand development has been the cost. To produce oil here you need to  
> put
> almost as much energy into the sands as you get out in the form of
> crude, making it one of the most energy-intensive and environmentally
> damaging sources of fuel. That the oil sands are being developed at  
> all
> epitomises the remarkable crossroads at which the world stands in  
> terms
> of energy production. Plenty of oil is still out there, but it is
> increasingly difficult and expensive to access. This reality, usually
> played down by the oil industry, coincides with the rise of the 'peak
> oil' movement. The concept of 'peak oil' is based around the theory  
> of M
> King Hubbert, a geophysicist working in the 1950s who predicted -
> accurately - that US oil production would peak two decades later and
> then enter a rapid decline. The peak oil debate grew to prominence
> during the high oil prices of the 1970s, but in recent years a new
> generation of industry experts and geologists have added their voices.
>
> 'The days when you could just open the taps in Saudi Arabia and boost
> production are over,' Matthew Simmons, a Houston-based energy
> consultant, and a leading figure in the peak oil movement, says. 'The
> amount of conventional oil we can actually recover is declining.'
> Simmons explains that the rates of increase of worldwide oil  
> production
> have dramatically slowed down in the past few years. Production now
> stands at around 80 million barrels per day. 'There have been no major
> oilfield discoveries since the late 1960s,' Simmons says, 'and [oil
> companies] are desperate to find fuel sources.'
>
> New projects include gas injection of existing fields, ultra-deep-sea
> exploration off the coasts of Mexico and Nigeria, the development of
> alternative fuels such as ethanol, and, of course, the stampede on
> Alberta's oil sands. Ten years ago there were only two mines here,
> operated by small Canadian companies. But in the past few years, 15  
> more
> mines have sprung up. Between oil majors such as Shell, Conoco- 
> Phillips
> and Total E&P, more than $30 billion has been spent so far. Over the
> next decade, an estimated $150 billion will be spent digging vast pits
> to access the sands, building steaming and refining plants to process
> the oil, and laying down hundreds of miles of pipelines. The oil
> companies are betting, in effect, that the world's economy will remain
> dependent on oil for the foreseeable future - and that Fort McMurray
> holds at least part of the answer.
>
> With the air temperature hovering around -35C, Syncrude's oil-sand
> operation resembles two vast sugar bowls, the largest measuring 12
> square miles, slowly being crisscrossed by a line of ant-like  
> trucks. It
> is one of three mines in operation, and the region's biggest producer.
> Syncrude, a Canadian consortium with heavy investment from American  
> oil
> majors, mines and refines about 350,000 barrels per day, with plans to
> increase that figure to 500,000 over the next decade. That would  
> put the
> company roughly on par with a modest oil producer such as Yemen. The
> mine, begun in 2000, has a pit measuring just under three miles  
> across,
> and 180 feet deep. Five hydraulic shovels the size of semi-detached
> houses take monstrous chunks out of the landscape. They work on
> different levels - the first digger removing the topsoil that can
> measure up to 80 feet in depth, with staggered steps of oil sand
> reaching down to the pit floor where the lowest digger scrapes the  
> final
> residue from the limestone base.
>
> A fleet of Caterpiller dump trucks - a little smaller than the  
> diggers,
> but still capable of carrying 400 tons at a go - ferry the sand to  
> large
> industrial plants where it is steamed and the separation process  
> begins.
> The diggers and trucks operate 24 hours a day, seven days a week in
> Syncrude's two mines, processing about 700,000 tons a day, roughly the
> equivalent land mass of St Michael's Mount in less than a fortnight.
>
> For workers such as Leblanc, it can be tough work, especially over the
> winter months, he says: pitch black for all but seven hours a day, and
> -55C. The sub-Arctic climate means it is so cold that Leblanc's team,
> building the foundations for an oil processing unit, work in shifts
> laying concrete and metal girders: 20 minutes outside, 20 inside to  
> thaw.
>
>  From the oil industry's perspective, mines such as Syncrude's  
> represent
> a remarkable achieve-ment, even though the steaming method needed to
> turn tar into crude has been known about since the early 1900s. The
> Canadian government, which controls the land and leases it out, has
> always been keen to develop the oil sands. What has changed is that  
> they
> have found the right economy of scale to make money. The oil companies
> have also been given a boost by high oil prices. Today, it costs
> somewhere in the region of $20-$25 to produce a barrel of crude oil  
> from
> the sands, factoring in investment costs, labour and the cost of  
> energy
> to power the plants. Current oil prices are more than $60 a barrel.
> Charles Ruigrok, the general manager of Syncrude, an old-fashioned
> oilman with 20 years' experience in the field, is confident about the
> future. He predicts that oil prices will remain high, driven by a
> perfect storm of diminishing stocks of recoverable oil, war in the
> Middle East and insatiable demand from fast-developing nations such as
> India and China (which has made serious noises about investing in the
> oil sands).
>
> 'Conventional oil isn't going to be enough to meet demand, in the  
> US or
> elsewhere,' Ruigrok says. 'The oil sands can go a long way to meeting
> the slack.' By 2015, he says, the oil sands will be meeting 20 per  
> cent
> of North America's fuel demands. Beyond that, Ruigrok doesn't like to
> speculate. He says oil-sand deposits lying close to the surface  
> will run
> out, but technology is already being developed and improved to tap  
> deep
> deposits by pumping steam underground. 'I don't think anyone knows  
> just
> how much oil there is,' he says. 'But I think we have enough here to
> last 100 years, more even.'
>
> In the 1970s such claims from an oil executive would have been greeted
> with pats on the back; after all, cheap oil is partly the reason for
> North America's affluence, and continues to be the mainstay of the
> economy. But as Ruigrok readily admits, the issues have become more
> clouded in recent years, with the oil sands a particular lodestone for
> dissent, especially from the environmental lobby. To start with, there
> are health risks. Native Americans in the region say that wildlife  
> such
> as caribou are no longer safe to hunt because of high levels of  
> arsenic
> in their meat (a result of exposure to toxic waste water from the
> mines), and local doctors have warned of abnormally high cancer  
> rates in
> communities living downriver of the mines.
>
> Ricardo Acuna is the director of the Parkland Institute, an
> Alberta-based research centre that monitors the social and physical
> impact of the sands. From his offices in Edmonton he reels off a  
> list of
> problems associated with the sands: the open-pit mining destroys the
> boreal forest, the traditional hunting ground for Native American
> tribes. Tests on game have shown they contain dangerous levels of  
> heavy
> metals in the animals. To provide steam for refining, 359 million  
> cubic
> metres of water is diverted each year from the Athabasca river, with
> almost a fifth of that dumped, as waste, into mined-out pits. For  
> every
> barrel of synthetic oil produced, 80 kilograms of greenhouse gases are
> released into the atmosphere.
>
> 'This is the most dirty fuel there is,' Acuna says, 'and will
> single-handedly lead to Canada missing its commitment to the Kyoto
> Protocol.' (By 2012 the country has agreed to reduce its greenhouse  
> gas
> emissions by six per cent from 1990 levels.) He points out that  
> most of
> the oil-sand mines are fuelled by Canadian gas, which is due to run  
> out
> in seven years' time unless a 1,200 mile pipeline is built to the  
> Arctic
> Circle in order to tap the final large pocket of the country's  
> reserves.
> The pipeline is opposed by many of the Native American groups whose
> traditional land it crosses. 'Do you realise how crazy it is to burn a
> high-quality product like gas to heat up a vast bucket load of  
> tar?' he
> asks. But what worries him most is the future. Already a new system of
> pipelines is being laid to ship crude from Alberta to the American
> Midwest for refining, and there are plans for a second,
> 400,000-barrels-per-day pipeline from Edmonton to British Columbia, to
> export crude from the oil sands to China and Asia. 'Now is the time to
> be making hard choices about the future, and moving away from oil
> dependency,' he says. 'Instead, we're consuming more than ever, and  
> the
> developing world is following suit.'
>
> For now, Acuna's warnings are being ignored, not just by the oil
> companies but also by the region's impoverished Native American
> population, which recently settled a centuries-old land claim with the
> Canadian government and decades of opposition to the mines in  
> return for
> 18,600 square miles of land near the mines, and a multi-million dollar
> compensation package. A couple of hundred Native Americans live in  
> Fort
> McMurray, but the local hub is 30 miles north in Fort McKay, a  
> community
> of just over 500 abutting various mining claims. The town has the
> unmistakeable look of government-assisted living, with rows of
> ramshackle single-storey dwellings - there are high levels of  
> depression
> and alcoholism here. Most of the residents over 45 remember growing up
> living off the land, only to be forcibly resettled by the Canadian
> government in the 1950s and 1960s. The glaring exception to Fort  
> McKay's
> poverty is the brand new $3 million community centre, built using the
> tribe's new oil funds. Jim Boucher, chief of the Fort McKay First
> Nation, says the land settlement is the first step towards leading his
> community out of its desperate plight, and building an indigenous oil
> industry. 'Development of the oil sands is inevitable, we know  
> that,' he
> says. 'It's destroyed our way of life, but rather than fight  
> against it,
> it's time to share in the wealth.'
>
> This is not the first time that Fort McMurray has experienced an oil
> boom, and an influx of drifters such as Donnie Leblanc. During the  
> high
> oil prices of the 1970s, the town had its first wave of interest in  
> the
> oil sands. Fort McMurray's two oldest operators set up shop back then,
> sparking a hectic round of construction work. But for the most part,
> interest died away in the 1980s, allowing new residents to bed in,  
> and a
> sense of community to re-establish itself. What is different this time
> is the sheer scale of investment - and many fear this could have
> catastrophic consequences.
>
> Todd Jackson, 48, a local union leader, has lived in Fort McMurray for
> 27 years, and spent most of them working as a welder in the mines. He
> now works at the Communication, Energy and Paperworkers Union as a  
> staff
> officer; a neatly groomed and quietly authoritative figure, who  
> listens
> to workers' complaints and liaises with oil company officials. He  
> lives
> with his wife and two teenage sons in a modest clapboard  
> subdivision on
> the affluent outskirts of the town, and has witnessed the town's  
> recent
> transformation, little of it good. Overcrowding has been the most
> obvious physical impact, Jackson says: the hike in house prices, the
> traffic jams, five-hour waits to see a doctor, an increase in drug  
> abuse
> and prostitution. The homely smalltown vibe in which he raised his
> children has gone for good. 'There are young kids here earning  
> $100,000,
> and they've no idea what to do with it,' he says. 'So they buy a nice
> pick-up truck and cruise around town looking for trouble.'
>
> The lure of the oil sands has already created what Jackson refers  
> to as
> a 'civic deficit'. He notes that the understaffed school system has
> recently lost three former principles, who are now employed in the
> mines. Painters, carpenters, postmen and rubbish collectors have
> similarly left their jobs, or left Fort McMurray altogether, driven  
> out
> by high prices. Jackson tells me that one nickname for the town in the
> rest of Canada is 'Fort McMoney'. The other, more worryingly, is 'Fort
> McCrack'.
>
> Just behind the Oil Sands Hotel, a block from the main street, dozens
> gather near a homeless shelter to drink and smoke crack cocaine. Their
> stories are much the same - they came to Fort McMurray with problems
> that they thought wealth would cure. Ronnie McDonald, 44, is a painter
> and decorator by trade. He came to Fort McMurray a year ago, briefly
> lodged in a house but found he couldn't afford the rent. He moved  
> first
> to the upper floors of the town's Red Cross shelter, reserved for
> hard-up workers, and then, a few months ago, to the shelter's  
> basement,
> where the drug addicts stay. 'I guess I kind of gave up the will to
> live, and there's a lot of drugs around here,' he explains. 'Then, one
> thing led to another…'
>
> There are 485 registered homeless in the city, many of them Native
> Americans, although the figure is likely to be much higher.
>
> Melissa Blake is the town's mayor, a svelte and assured 37-year-old,
> dressed in a brown business suit. She is well aware of the problems  
> the
> town faces. Four months ago, Blake led a call for a moratorium on oil
> sands development, warning that Fort McMurray was on the verge of
> imploding. For all the money being invested in the mines, precious
> little had reached the town and its creaking infrastructure. The high
> salaries of workers are often taxed in their home states or provinces,
> and most of their income is spent in places other than Fort McMurray
> (recently, some oil companies have begun using foreign 'guest' working
> programmes - many workers are from South Asia - as a way of keeping
> salaries down, which has exacerbated the flight of money). The oil
> companies pay remarkably low taxes on the oil they produce -- just one
> per cent of revenue goes to the Canadian government, the lowest rate
> among oil-producing nations - so the town has been watching its oil
> wealth drain away. 'My job is to defend this town's interests, and  
> for a
> long time they weren't being met,' Blake says. 'The oil companies
> weren't always aware of the human dimension to the development of the
> oil sands.'
>
> Blake modified her position a little after the federal government
> awarded the town $400 million (she estimates $1.2 billion is needed),
> but the central dilemma has not changed. On the one hand, she welcomes
> the well-paying jobs offered by the mines, and the chance to  
> develop the
> town. 'We want to create a land of opportunity here, where people can
> raise a family, and expect their children to find a good job.' But on
> the other, she asks whether Fort McMurray's boom can create a
> sustainable future for her community. A resident of the town since
> childhood, she witnessed the last boom and bust, and wonders, if
> interest wanes, or the oil runs out, whether Fort McMurray will  
> survive
> the next downturn.
>
> Todd Jackson, too, is worried that no one is thinking long-term, that
> today's gold-rush town could well become tomorrow's ghost town. 'If  
> this
> is the last great oil rush, then what happens next?' he asks. 'Do we
> have a plan B for 20, 30, 40 years down the line, or are we just  
> rushing
> to make money while we can?'
>
> http://www.telegraph.co.uk/arts/main.jhtml?xml=/arts/2007/09/15/ 
> sm_oilsa...

*************************************

Anthony Fenton
Freelance Researcher/Journalist
Vancouver, B.C., Canada
fentona at shaw.ca
+604-836-2857