Around 70 countries possess oil-sands regions, but the overwhelming distribution of these neglected reserves is in three countries: Russia, Venezuela, and Canada. The two most important reserves are in northeastern Alberta and in the Orinoco region of southern Venezuela. In an oil-sands area, the ground is very oily down to depths of hundreds of metres. These dense and deep fields are 10-12% comprised of bitumen tar. Beneath the layer of tar-sand lie numerous large reserves of "heavy oil" also requiring non-conventional methods of drilling. But the main reserves are in the tar.
Oil-sands oil is not drilled down to, and then pumped up like conventional oil. The oil is dug out of the ground with large shovels and placed into large dump trucks, then dumped into specialized conveyers linked to large refineries. The tar then must be steamed and refined to produce marketable oil.
The fields are humongous. Alberta's oil-sands cover 141,000 square kilometres of the northern and eastern regions of the province, an area roughly within a 300- to 400-kilometre arc southwest of Lake Athabasca. In total they possess 1.63 trillion barrels of oil. The amount of reserves harvestable with current equipment at current prices is 310 billion barrels, an amount exceeding the petroleum reserves of Saudi Arabia.
Back in the 1970s, when OPEC-related oil price increases prompted pioneering research, the fields were called the "Athabasca tar-sands." In the 1980s and 1990s, public relations persons from the companies involved changed the name of the area to the "Alberta oil-sands." Tar is a boo word. Nevertheless, President Bush has recently referred to the area as "those Canadian tar-pits."
Whatever the name, output from the area has gone from zero in the 1970s to 654,000 barrels a day throughout 2001. This includes primarily the work of ground miners Suncor and Syncrude but also the work of 11 heavy-oil steam-assisted drilling projects.
The tar-sands industry is a revolutionary development both because of the scale of the reserves and because in today's market the companies involved are profitable commercial enterprises. This has gradually gained the attention of the energy planners of today, particularly the Euro-centred thinkers such as in the IEA. They summarize past and future developments (all monetary figures in this article are in $US):
"Between the early 1980s and the late 1990s, Canadian operating costs fell from $22 to $10/barrel through continuous process improvements and recent major innovations in truck and shovel mining and hydro-transport techniques. Industry analysts anticipate that further improvements in technology and operating methods may reduce average operating costs (in money of the day) for integrated mining and upgrading units from $8-9/barrel today to $7 by 2004 and to $6 by 2015 .
There have been a number of innovations over the last 25 years in oil-sand technology. One innovation has been "hydro-transport" or mixing the oil-sand with very hot water and transporting the steaming slurry to the refinery via pipeline. The engineers have modified this process so that the product arrives at the refinery with much of the work of the refinery already done. As well, the "Natural Froth" that naturally formed in the inner surface of the pipeline has been successfully re-deployed into a sheath-like device creating a super-lubricity in the oil-sand pipelines. Two other major innovations were the implementation of the world's largest shovels and the world's largest dump trucks. Front-end loaders capable of digging 43 cubic metres a scoop and 380-ton trucks are now popular tourist attractions in northern Alberta.
A word should be said about the measure of the size of the deposit. There are 300 billion barrels of extractible oil and 1.4 trillion barrels not considered economically feasible. The current level of production (700,000 barrels per day) was not considered feasible thirty years ago. This level of production could go on for 400 years before we reach the difficult-to-obtain deposits. Moreover, present trends continuing, extraction technologies will have progressed to the point where a substantial portion of the 1.4 trillion barrels currently too costly to extract will be within the range of the economically feasible within the next 30 years. In short, the Alberta oil-sands could easily meet all of North America's petroleum needs for rest of the century, with production costs for much of that period well south of $5 per barrel.
Oil-sand oil recovery was an experimental industry in the 1970s. Today it accounts for 40% of Alberta's, and 30% of all Canada's, crude oil production. The bulk of this oil is exported to the United States.
The main point is this: Uncle Sam is importing 11.6 million barrels of oil a day. They are buying 2.7 million barrels a day from Persian Gulf states. The security costs of maintaining a presence in the region, the fighting of wars, provision of military aid, maintenance of bases, etc. has exceeded $200 billion over the last 15 years and is likely to double in the near future.
The December 6, 2002 Economist provides some speculation on the impending war's cost. The optimists are guessing it will be a $50 billion war with a little more than that being spent in a follow-on occupation for total of Iraq-related war expenses of around $120 billion. The pessimists see a massive, protracted war costing hundreds of billions followed by a multi-year occupation, the West-Bank-times-forty scenario, creating a total cost over the next several years well above a trillion dollars.
We know that a $40 billion investment in the Alberta oil-sands will culminate in an output of 1.7 million barrels a day of Sweet Syncrude Blend, at $6 per barrel production cost. Hence, an investment in the neighbourhood of a mere $80-100 billion would allow increased oil-sand production to completely eclipse Middle Eastern oil imports.
What's more, the Alberta oil-sands could sustain that level of production until the year 3702 AD.
So, in terms of a cost-benefit analysis, these "wars for oil" don't make much sense. If Uncle Sam were really that desperate for an oil fix, he would tap the vast Canadian or Venezuelan reserves before he would spend several times as much to go after Iraq's relatively meagre deposits. There are also vast reserves of oil and gas in and around Alaska and off the Pacific coast. North America is a powder keg of fossil fuels reserves. The size of its coal reserves is mind-boggling.
No, if the war with Iraq were just over oil, it would not happen at all.
This war is about exactly what the National Security Council says it is about. It is about arms control. The war is an effort to forcibly suppress a military-industrial upstart.
If only it were about oil.
By William Kay BA LL B
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