From Dragonfire, March 2006

In the Tar Sands

How America’s addiction to oil is changing Canada

by James Hrynyshyn in Saluda, North Carolina

Chief Keyna Norwegian’s home town is a long way from anything resembling a center of power. Fort Simpson, or Liidlii Kue to the Dene Indians she represents, is in the remote western reaches of Canada’s Northwest Territories. It has little experience dealing with government capitals and corporate headquarters. But Norwegian isn’t content to sit back and watch her land and culture transformed, along with the economic relationship between Canada and the United States. Not when the politics of petroleum are involved.

Today Norwegian is a member of a small group of opponents of a $7 billion proposal to build an 830-mile pipeline from the Arctic Ocean to northern Alberta. Most, if not all, of the natural gas that flows through that pipeline will feed furnaces that turn Alberta’s tar sands into oil.

Tar sands like those in Alberta are regions of sand that contain oil – in large quantities and, for the U.S., close to home. So why are we still hearing about cartels and importing oil from the unstable regions of the Mid-East? Because the product of the tar sands comes with a footnote: it requires processing before it can be turned into usable crude oil. And that processing requires energy – a lot of it – hence the natural gas pipeline, which will provide the energy required to produce the embattled but still-favorite energy source of the U.S: crude oil. And that oil is a critical part of U.S. President George W. Bush’s plan to wean his country off Mid-East supplies.

If that situation sounds like it could be intimidating to someone like Norwegian, it is.

“I consider myself a humble person. I never had to put myself on a pedestal,” says Norwegian. “Now I find myself recognized everywhere. It does put a lot of pressure on us as individuals.”

The pressure begins in Washington, D.C., where continental energy policy continues to focus on expanding fossil fuel supply, rather than curtailing demand. Despite his admission that America is “addicted to oil” in this year’s State of the Union speech, Bush’s 2007 budget requests again cut funding for research into alternative energy.

Domestic tactics to grease the wheels of the energy sector in the U.S. instead largely involve forgiving royalties from oil and gas wells drilled on federal territories – more than $7 billion worth between now and 2011, according to the Department of the Interior’s latest budget plan.

But money doesn’t make oil; only millennia of pressure and heat can, which they did by the billions of barrels beneath the boreal forests of northeastern Alberta. The result is what Neil Camarta, former president of Shell Canada, calls “the single largest hydrocarbon deposit on the Earth.”

At more than 55,000 square miles, the tar sands are larger than Florida. Just how much of this “unconventional” oil there is depends on what you’re willing to pay for it. The Alberta Energy and Utilities Board pegs the physical total at 1.7 trillion barrels, but most experts say we can afford to extract about 179 billion. Still, that makes Canada’s reserves second only to Saudi Arabia’s 259 billion barrels.

More important is the expanding gap between supply and demand, the “peak oil” scenario that posits we’re near maximum oil production rates. Given even conservative estimates of rising demand, conventional oil reserves will last 30 years at best. Meanwhile, prices will skyrocket, making the expensive tar sands well worth mining.

How serious is the petroleum industry about tar sands? “I’d say $100 billion in commitments to invest is a pretty sure sign that they consider it the next big thing,” says energy analyst Dan Woynillowicz of the Pembina Institute, a think tank in Alberta.

The first company to recognize the region’s potential, SunCor, has been refining its extraction process since 1967. It took about 30 years before the technology and economic conditions made sense. Today the company is responsible for more than a quarter of the one million barrels of oil flowing each day from the development. Brad Bellows, a spokesperson in the company’s Calgary headquarters, says each barrel will cost about $14 US to extract this year – several times conventional oil costs but still profitable.

Also at play in the tar sands are ExxonMobil, ConocoPhillips, Shell, and other international oil companies. The promised $100-billion figure is almost certainly outdated, as new projects are announced almost as fast as a web browser can be refreshed.

By 2030, the tar sands will be producing at least five times as much as today, based on the most conservative government projections. Given that 99% of Canadian oil is destined for American markets and that Canada is already the largest supplier of oil to the U.S., the northern half of the continent’s strategic value is poised to turn critical. That puts pressure on everyone and everything involved in delivering the oil.

Industry executives publicly proclaim confidence in the ability of the tar sands to meet demand, but there is a catch. Turning the mixture of silt, clay, water and bitumen into gasoline or home heating oil requires enormous energy. Companies are experimenting with new technologies, but the only economical option today is steam-cleaning it with a river basin worth of water.

For now, natural gas is the sole practical source of the heat required to turn that water into steam. Every four barrels of oil squeezed from the tar sands requires burning the equivalent of one more barrel in the form of natural gas. SunCor’s Bellows argues the ratio is closer to 8:1; other business analysts make it closer to 3:1. Regardless, it’s a wasteful process, sort of like turning gold into lead, as Toronto Globe and Mail columnist Eric Reguly once put it. Or composting caviar, as northern environmental consultant Petr Cizek suggests.

Which is where the Mackenzie Valley pipeline comes in. Vast reserves of natural gas sit just north of the Arctic Circle at the Mackenzie River Delta in the Northwest Territories. The plan is to pump 1.2 million cubic feet of it down the river valley to northern Alberta each day. For starters.

The biggest project ever undertaken in Canada’s Arctic “will fundamentally change the economy and the landscape,” says Stephen Hazell of the Sierra Club of Canada, warning of knock-on effects for decades to come. “Northerners will face a veritable tsunami of development that overwhelms regulators.”

There’s also the damage to rivers from diverting millions of gallons of water and the clearing of vast stretches of Alberta’s forests for the tar sands. As Cizek point out, “none of the oil sands area has ever been certified as reclaimed and no lands used for petroleum extraction in the Northwest Territories have ever been restored.”

What really bothers Hazell and Cizek is the missed opportunity to use the gas more efficiently. Burning it in the tar sands produces 2.5 times as much climate-changing greenhouse gases as conventional oil production. “Oil from the tar sands is the worst type of oil for the atmosphere,” says Hazell. The gas needed to produce a barrel of oil could heat a typical Canadian home for five and a half days.

Bellows says critics aren’t keeping up with the latest research on finding ways to turn what are now waste products into replacement fuels, he adds. “It’s a different world than it was in 1989.”

Industry executives insist the pipeline is needed even without the tar sands, and it’s not fair to tie the two together. Opponents point out that the same corporations – ExxonMobil, ConocoPhillips, Shell – are behind both projects, and argue that whether or not a specific molecule of Mackenzie Delta gas ends up in the tar sands is beside the point. Demand for gas is growing, and the tar sands will be the biggest customer for that gas.

The pipeline group, for its part, is spending millions trying to meet environmental standards. Speaking in January before a public hearing by Canada’s National Energy Board in the Mackenzie Delta town of Inuvik, a senior executive with Imperial Oil (the Canadian arm of ExxonMobil) promised “a rigorous route and site selection process” for all elements of the pipeline. “We have been and will continue to consult with local residents about the entire project and about the concerns to them,” said Randy Ottenbreit.

A sharper idea of the long-term impact for the Mackenzie Valley is beginning to take shape, however, thanks to the efforts of lawyers like Paul Falvo, representing the World Wildlife Fund. At the same public hearing, he asked the authors of an impact study commissioned by Imperial Oil about the number of gas wellhead sites needed to keep the pipeline full.

The answer was a lot more than the three sites that Imperial usually mentions when describing the project. According to author Keith Braaten, “to keep the pipeline filled longer than the three years, you have to add in undiscovered resources ... and the number of exploration wells required to do that is 124 in the onshore Mackenzie Delta.”

Not surprisingly, that worries Norwegian and the Liidlii Kue Dene. Visions of hundreds of miles of roads criss-crossing land once accessible only by canoe (or helicopter) don’t sit well with people who hunt and fish to feed themselves.

A February 13 vote on a community impact benefits package offered to the residents of Fort Good Hope, a Sahtu Dene village upriver from Fort Simpson, went badly for the pipeline proponents: 80 in favor; 114 against. Such opposition could cause problems for the pipeline. The Sahtu Dene recently settled a land claim with the Canadian government, giving them a say on development in their territory.

Norwegian’s people aren’t quite as lucky. Though some 40% of the pipeline route runs through their territory, they have yet to settle a land claim. Ottawa has recognized the need to consult the Deh Cho Dene, but their ability to hold up the pipeline’s development is uncertain.

Then there’s the fact that unemployment rates in the Mackenzie Valley hover in the high double-digits. The project’s engineers point out that each of the three initial wellhead sites will mean about 140 permanent jobs, and the federal government has offered the partners and affected communities almost $2 billion in incentives.

Given the forces behind the pipeline, from D.C. lobbyists to the world’s largest oil firms down to the other Dene and Inuit bands who will own a third of the pipeline, Norwegian is realistic about the outcome. In the end, she says, the pipeline will almost certainly be built. The only question is how much input on its design and impacts a small group of economically disadvantaged Canadians will have.

“We really don’t need this pipeline. It’s not something we need or want,” she says. But “if development happens here, it should happen on our terms.”

It will take at least another year to work out those terms. Final government approval for the pipeline is expected by 2007. But gas could be flowing, all the way to the tar sands, by 2011.


Freelance science writer James Hrynyshyn spent more than five years working in the Northwest Territories before relocating to his home in western North Carolina. His website is http://www.class-m.net.

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