The future of oil sands lies just to the south of Fort McMurray. A helicopter pilot summed it up this way: “Steam goes down, money comes up.”
There, the pipes reach deep into the earth, below 400 feet, where most of the oil sands lie. where companies are injecting steam into the ground to melt the bitumen. Other pipes then suck up the thick crude.
This technique doesn’t leave the same size gaping holes in the earth as strip mining, but these new projects, known as “in situ” or “steam assisted gravity drainage” projects, use even more energy, which means the greenhouse gas profile of the oil sands overall isn’t improving. They account for nearly half of the oil sands production now and that figure will increase.
We went for a tour of a project run by MEG Energy, a relatively small company started by a former Amoco executive and expanded with help of the financial firm Warburg Pincus. The Chinese company, CNOOC, also bought a minority stake in the company.
The helicopter ride there lasted an hour, and we saw almost nothing but forest, with the occasional straight line cut for a pipeline. On the way back, however, we flew over big projects owned by Conoco Phillips and Nexen as well as an Enbridge tank farm and pipeline station. Lines in the forest showed where companies had done seismic testing for future expansion. And there were wide gaps cut through the forest for power lines and pipelines and railroad.
At its site, MEG has an 83-megawatt plant powered by natural gas it taps from shallow reservoirs in the area. It uses only 10 megawatts to generate the steam it currently needs (it plans to expand) and sells the rest back to the electrical grid. Since 65 percent of Alberta’s electricity comes from coal, MEG spokesman Brad Bellows said the company was actually making the provincial grid greener. He also says that the company (as required by regulation) uses water drawn from deep saline aquifers, not from the surface, and that it recycles water that comes up with the oil.
But it’s still using a lot of energy. A key metric here is steam-to-oil-recovered. MEG’s Burrows said the company has that ratio down to 1.3 barrels of water used for every barrel of oil produced. That’s good, relatively speaking. Other companies average more, about two to four barrels.