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Oil Sands and the Keystone XL Pipeline ENGR40 Foothill College Slide 2 Overview Oil and bitumen Canada oil sands Extraction /refining process Keystone XL pipeline Economics / big picture Environmental concerns Slide 3 Oil and Bitumen Oil => petroleum (light, sweet, heavy) Flows easily at ambient temps (25 deg C) Oil and gas formed from/with kerogen Bitumen (asphalt) High MW phenols, hetero/polycyclic organics Not tar, which is a heavy distillate of coal Extra heavy oil Flows at 50 deg C, deposited in veins Slide 4 Oil Shale / Bitumen Oil shale, an organic-rich fine-grained sedimentary rock, contains significant amounts of kerogen (a solid mixture of organic chemical compounds) from which liquid hydrocarbons called shale oil (not to be confused with tight oilcrude oil occurring naturally in shales) can be produced. Shale oil is a substitute for conventional crude oil; however, extracting shale oil from oil shale is more costly than the production of conventional crude oil both financially and in terms of its environmental impact.fine-grainedsedimentary rockkerogenchemical compoundshydrocarbonsshale oiltight oilcrude oilenvironmental impact Asphalt also known as bitumen, is a sticky, black and highly viscous liquid or semi-solid that is present in most crude petroleums and in some natural deposits, it is a substance classed as a pitch. Until the 20th century, the term asphaltum was also used. [1]viscouspetroleumspitch [1] Slide 5 Bitumen Defined Bituminous sands, colloquially known as oil sands or tar sands, are a type of unconventional petroleum deposit. The sands contain naturally occurring mixtures of sand, clay, water, and a dense and extremely viscous form of petroleum technically referred to as bitumen (or colloquially "tar" due to its similar appearance, odor, and color). Oil sands are found in large amounts in many countries throughout the world, but are found in extremely large quantities in Canada and Venezuela. The crude bitumen contained in the Canadian oil sands is described by Canadian authorities as "petroleum that exists in the semi-solid or solid phase in natural deposits. Bitumen is a thick, sticky form of crude oil, so heavy and viscous (thick) that it will not flow unless heated or diluted with lighter hydrocarbons. At room temperature, it is much like cold molasses (Wikipedia Bitumen)colloquiallyunconventional petroleum depositviscouspetroleumbitumenhydrocarbons Slide 6 Bitumen Analysis Bitumen chemical structureBitumen Surface Structure Slide 7 Chemical Structure of Coal http://www.chemicals-technology.com/projects/medicinebow/medicinebow5.html Slide 8 Slide 9 Bitumen seeps naturally into the Athabasca River Slide 10 Unconventional Oil and other Hydrocarbons Heavy oil formed and flows at 50 deg C Unconventional oil (petroleum) Oil sands (sand, oil, and bitumen) Shale oil (tight oil, fracking recovery) Oil shale (unfinished breakdown, kerogen) Coal to liquid (CTL), Gas to liquid (GTL) Slide 11 Canada Oil Sands Unconventional petroleum deposits Oil sands, tar sands, bituminous sands ~ 180 B barrels estimated reserves Mostly located in Athabasca, Alberta Developed since 1967/1978 Heavy investment since 2000 Shell, Chevron, Syncrude Slide 12 World Oil Reserves SOURCE: Oil & Gas Journal, January 2011 Slide 13 What are the oil sands? Naturally occurring mixture of sand, clay, water and bitumen a very heavy oil Bitumen is separated from the sand and upgraded to refinery-ready crude oil Slide 14 Oil Sand Projects Located in northern Alberta Oil sands deposits underlie 54,903 square miles Surface mineable deposit 1,853 square miles Land disturbed to date for mining is about 232 square miles Less than 30% of mineable area has been approved for mining Total minable area is about 0.15% of Canadas Boreal forest Alberta and Oil Sands Overview - National Conference of State Legislatures Slide 15 Alberta is home to nearly all of Canadas oil sands. Slide 16 Alberta Tar Sands Big, Tough Expensive Job Not Economic Depends on government handouts Dirty Oil Pollutes the Environment Air: SO x, NO x, CO 2, climate Water: consumption, toxic sludge Land: Devastates Boreal forest Destroys society Slide 17 These enormous deposits make up about 23% of the province. Its an area of 149,000 square kilometers of boreal forest. 2005 The Washington Post, Photo by Melinda Mara, Reprinted with Permission An Industrial Landscape Slide 18 About one-third of all oil currently produced in Canada comes from the oil sands. Using todays technology, 174 billion barrels could be recovered. Its predicted that ultimately about 315 billion barrels will be recovered. Photo: Dan Woynillowicz, the Pembina Institute 1/3 of Canadas Oil Production Slide 19 Albertas Global Exports Alberta and Oil Sands Overview - National Conference of State Legislatures Slide 20 Alberta Geology Slide 21 Extraction/Refining Surface mining Cold flow Cyclic Steam Stimulation (CSS) Steam Assisted Gravity Drainage (SAGD) Solvent Extraction Toe to Heel Air Injection (THAI) Combustion Overhead Gravity Drainage (COGD) http://en.wikipedia.org/wiki/Oil_sands Slide 22 Oil sands: In situ and Mining Mining 20% of resource 55% of production 80% of resource 45% of production Steam Assisted Gravity Drainage Cyclic Steam Process In situ Alberta and Oil Sands Overview - National Conference of State Legislatures Slide 23 Producing Oil from Tarry Sands Oil sands are composed of sand, silt, clay, water and about 10% bitumen. Oil sands are either surface mined or the bitumen is extracted in situ (in place). Photo: Chris Evans, the Pembina Institute Slide 24 Surface Mining Production To produce one barrel of oil: 4 tonnes of material is mined. 2 - 5 barrels of water are used to extract the bitumen. Enough natural gas to heat 1.5 homes for a day is required. 2005 The Washington Post, Photo by Melinda Mara, Reprinted with Permission Slide 25 Mining Technology Change Truck and Shovel Hydrotransport Cold Water Extraction Consolidated Tailings Slide 26 Slide 27 Upgrading Bitumen to Oil To be refined into end products, bitumen must be upgraded to synthetic crude oil. 75% per cent of each barrel of oil is used for transportation fuel. 2005 The Washington Post, Photo by Melinda Mara, Reprinted with Permission Slide 28 Alberta Oil Sands Production Source: CAPP Update Dec 2008 Slide 29 Oil Sands Projects Athabasca Mining 1,115,000 2,977,000 Athabasca In-Situ 324,000 1,543,000 Cold Lake In-Situ 219,000 280,000 Peace River In-Situ 12,000 100,000 Slide 30 Underground Test Facility (UTF) Shaft & Tunnel Access SAGD Well Pairs Horizontal Injector And Producer Slide 31 Steam Assisted Gravity Drainage Steam injected in upper horizontal well melts the bitumen Bitumen flows by gravity down to the lower producing well Steam chamber grows as bitumen is produced Recovery over 60% Slide 32 SAGD Applicability Resources to Reserves 352 Billion @ 6% 239 Billion @ 10% EUB Reserves in 2000 173 Billion based on SAGD Steam Assisted Gravity Drainage Slide 33 Slide 34 Bitumen Upgrading Upgrading takes the black out of black oil, the tar (asphalt) Synthetic crude approximates crude oil for refineries SCO flows and distils to refinery fuel products Bitumen needs carbon out or hydrogen in Capital, energy and CO 2 intensive Refinery integration in US? Slide 35 Barrels/day (BPD) Production Slide 36 GHG Lifecycle Analysis Slide 37 Petroleum Supply Costs Slide 38 Source: ERCB ST98 Slide 39 Albertas location Alberta is relatively close to the US as an oil exporting nation, but requires extensive infrastructure to bring dilbit and syncrude to the US for refining. Currently much of this oil is transported by railcar, which has proven to be dangerous in derailment as chemicals mixed with bitumen are highly flammable. A permanent and expanded pipeline infrastructure would provide an assured supply of hydrocarbon for refining. Alberta covers 255,285 miles 2, an area slightly less than Texas Ottawa 1,769 miles Vancouver 507 miles New York City 2,032 miles Mexico City 2,469 miles Anchorage 1415 miles Alberta Houston 1,875 miles Image source unknown Slide 40 High Development Costs Slide 41 Keystone XL Pipeline Extension to Keystone Pipeline Connecting Canada to US pipe Promoted by TransCanada Supplies dilbit from Alberta Connects North Dakota (Bakken) Would reduce rail transport of oil Supplies syncrude directly to US http://en.wikipedia.org/wiki/Keystone_Pipeline Slide 42 Slide 43 Canadian and US Oil Pipelines Canadian and U.S. Oil Pipelines (Source: Keystone XL Assessment) Slide 44 Intra-US Oil Sands Crude Movement 2011 volume roughly 2.5 times greater than previous 5-year period Large volumes of oil sands derived crudes are moving from Midwest to Gulf Coast through indirect/inefficient routes Motivated by price differential Recent US EIA estimates: Indirect/Older Pipeline 166k bbl/d Tanker/Barge 28,000 bbl/d Truck/Rail Unknown, but may exceed pipeline shipments Alberta and Oil Sands Overview - National Conference of State Legislatures Slide 45 Keystone Pipeline Phases The Keystone Pipeline System is an oil pipeline system in Canada and the United States. It runs from the Western Canadian Sedimentary Basin in Alberta, Canada, to refineries in the United States in Steele City, Nebraska, Wood River and Patoka, Illinois, and in the Gulf Coast of Texas. [notes 1][2] In addition to the synthetic crude oil (syncrude) and diluted bitumen (dilbit) from the oil sands of Canada, it carries also light crude oil from the Williston Basin (Bakken) region in Montana and North Dakota. Three phases of the project are in operation and the fourth is awaiting U.S. government approval. Upon completion, the Keystone Pipeline System would consist of the completed 2,151-mile (3,462 km) Keystone Pipeline (Phases I and II), Keystone Gulf Coast Expansion (Phase III) and the proposed Keystone XL Pipeline Project (Phase IV).oil pipelineWestern Canadian Sedimentary BasinAlbertaCanadaSteele City, NebraskaWood RiverPatoka, IllinoisGulf Coast Texas [notes 1][2]synthetic crude oildiluted bitumen (dilbit)oil sandscrude oil Williston BasinBakken MontanaNorth Dakota http://en.wikipedia.org/wiki/Keystone_Pipeline Slide 46 Keystone XL is Controversial Slide 47 Economics and Security Canada is a neighbor, stable democracy Joint investment in oil production/ refining Canada could supply 2-5 mbd to the US With efficiency (CAFE) and advanced biofuels, US could reach oil independence Transfer of payments to industrial partner Slide 48 Sources of U.S. oil imports (2010) Total U.S. Demand: 19.15 million bbl/d Total Imports: 9.16 million bbl/d SOURCES: US Energy Information Administration National Energy Board (Canada) ALBERTA NOTE: Total does not add up to 100% due to rounding Slide 49 US Liquid Fuels Consumption Oil is forecast to be an important part of the U.S. energy mix for years to come Albertas oil sands are a vital part of the forecast s for oil supply and imports SOURCE: U.S. Energy Information Administration, Annual Energy Outlook, April 2011 Slide 50 Security: Corruption Index Alberta and Oil Sands Overview - National Conference of State Legislatures Slide 51 Major Oil Movement and Chokepoints Bab el-Mandeb 4 m bbl/d 2 mile wide channel Terrorist attack on tanker Limburg in 2002 Straight of Hormuz 17 m bbl/d (40% world total) 4 miles wide shipping lane Iran has threatened to close in the past Suez Canal 2 m bbl/d 2.3 m bbl/d Sumed Pipeline through Egypt also vulnerable Bosporous 2.9 m bbl/d mile wide Difficult navigation Strait of Malacca 14 m bbl/d Mideast oil to Asia 1.7 miles wide at narrowest point Piracy problem A 30 day closure of the Straight of Hormuz would cost the U.S. $75 billion in GDP CNA Military Advisory Board October 2011 Alberta and Oil Sands Overview - National Conference of State Legislatures Slide 52 The value of Alberta crude oil exports to the U.S. in 2010 was almost $38 billion. 90% of $38 billion = $34 billion in return U.S. exports to Canada. Source: US Census Bureau and Statistics Canada Alberta and Oil Sands Overview - National Conference of State Legislatures Slide 53 Environmental Concerns Significant water pollution risk Local air pollution (volatile organics) Transportation (rail, pipeline) Heavy crude refining (US) Continued carbon emissions We keep pumping more gasoline Headed towards 100 mbd globally Slide 54 Climate Impacts of Keystone XL Tar Sands Pipeline (NRDC) The proposed Keystone XL tar sands pipeline would pump up to 830,000 barrels per day of the world's dirtiest oil from Canada's Boreal forest straight through the heart of America's breadbasket to refineries on the Texas Gulf Coast. Building the 875-mile northern segment of Keystone XL would lead to a dramatic increase in the carbon pollution that worsens the effects of climate change. Hence, construction of the pipeline fails the all-important carbon test the president laid out in his June 2013 climate address to the nation, when he said Keystone XL's permit would be approved only if the pipeline "does not significantly exacerbate the problem of carbon pollution." http://www.nrdc.org/energy/keystone-pipeline/tar-sands-climate-impacts.asp Slide 55 Climate Change Emissions Soaring Canada is one of the most-energy intensive countries in the world. Under the Kyoto agreement, we agreed to reduce our greenhouse gas (GHG) emissions to 6% below 1990 levels by 2012. Canadas emissions are now 24% above 1990 levels. Photos: Dan Woynillowicz and David Dodge, the Pembina Institute Slide 56 Management of Tailings Ponds http://oilsands.alberta.ca/tailings.html Slide 57 Carbon Capture and Storage (CCS) Key element of Albertas Climate Change Strategy $2 billion for large-scale CCS projectsamong the largest single capitalized funding investments by any jurisdiction in the world Public funding will accelerate the development of projects and encourage investment from industry to make large-scale CCS projects viable Albertas geology ideal for CCS Alberta and Oil Sands Overview - National Conference of State Legislatures Slide 58 Canada Oil/Gas Industry Extensive business in Canada Major economic production/export Long term integration with Canada Partnering with US refining capacity Strong strategic/economic partnerships Slide 59 Summary Significant deposits of hydrocarbons Embedded with sand and water Extracted using steam, and digging Diluted for transportation by rail/pipe Distilled into hydrocarbon based fuel Keystone XL makes transport easier But does this keep us hitched to hydrocarbons deeper, and longer? Slide 60 References Canada - National Conference of State Legislatures (PowerPoint Presentation) Shell development in Canada Wikipedia (Unconventional Oil) Wikipedia (Keystone XL Pipeline) Wikipedia (Asphalt/Bitumen) Wikipedia (Oilsands/Bituminous sands)