INTRODUCTION

In the distant past over millions of years, countless number of tiny marine creatures died, their bodies accumulating in layers of sediment. Over time, pressure and heat transformed this sediment into a complex mix of hydrocarbons and other compounds better known as crude oil or petroleum—petra, the Latin for rock, and oleum for oil.

^Ingenium

After Saudia Arabia and Venezuela, Canada has the third largest reserves of crude oil in the world, and almost all the proven reserves are in Alberta’s oil sands.

HARNESSING OIL

“Conventional” oil is already in liquid form and either naturally flows to the surface or can be extracted without being heated or diluted first. The first Canadian wells were drilled by pounding a pole back and forth into the ground. Today, a power drill spins through rock much more efficiently.

Some oil reservoirs seep to the surface, and some are more than six kilometres below sea level. They can be a few metres thick, or few hundred metres deep. Getting to the oil—“pulling dragons from the ground” as oilfield workers say—depends on many different factors: cost, oil type, location, and the available technologies.

Oil is found underground, but sometimes that ground is also underwater. Generally, offshore platforms apply extraction methods similar to those used on land. The platform often includes processing facilities. Tankers transport huge quantities of oil from platform to refineries. Ship design takes into account both storage and safety.

^{Fisheries and Oceans Canada}

Offshore oil is harvested from deposits deep under water. Offshore drilling has a relatively short history, fewer than a hundred years. A British Columbian offshore moratorium means that Canada’s rigs are mainly located off our east coast. The Hibernia project off the shores of Newfoundland is the largest oil platform in the world.

Some oil deposits are not contained in rock formations, but have seeped into sand and dirt. Oil sand has three layers: a grain of sand, a coat of water, and a film of bitumen (heavy oil) surrounding the water. Over time, bacteria have eaten components of the light crude oil attached to grains of sand and left behind heavy and difficult-to-extract bitumen. Alberta’s oil sands cover an area of 140,200 square kilometres—the largest reserves in the world.

^{Photo David Dodge, Pembina Institute}

Heating oil-saturated sands is crucial to extraction at sites where the oil-bearing sands are deep underground. Canadian engineers have become world leaders in developing new methods to get the oil out of the ground. Steam Assisted Gravity Drainage uses horizontally-injected steam to reduce oil viscosity. The steam heats the oil, making it flow more easily, and the heavy oil is subsequently pumped out of the reservoir.

As Canada’s conventional petroleum resources dwindle, the industry is turning to secondary and tertiary extraction methods, both in traditional wells and in the oil sands. While these methods allow us to extend our oil reserves, they require advanced technologies and are expensive.

USING OIL

If it’s a vehicle, it probably runs on petroleum. Transportation consumes almost half of all of extracted petroleum. The rest is used to manufacture thousands of products: plastics, paints, rubber, fertilizers, pesticides, detergents, dyes, textiles and solvents.

Opportunities and Challenges - Conventional Oil

Opportunities:

• Relatively inexpensive and efficient energy source.
• Secure and reliable.
• Easy to store and transport.
• Drives the Canadian economy.
• Contributes billions in revenues to provinces and the nation.
• Creates hundreds of thousands of jobs.
• Demand is growing. 
• Exploration, extraction and processing technologies are well established. 
• Life cycle analysis shows that only 20% of greenhouse gases are emitted during extraction and production.
• Government regulations safeguard the environment.
• New technologies allow mature fields to continue to be productive.
• Oil companies invest heavily to improve their environmental footprint.

Challenges:

• Decline in conventional oil production.
• Recovery rates from conventional reserves are between 20% and 30%.
• Accounts for 38.2% of emissions from industry, and 6.8% of total emissions in Canada.
• 80% of these emissions come from vehicles fuelled by oil.
• Recovery of unconventional oil is expensive, decreasing the return on investment. 
• Significant public concerns over oil spills and the environmental impacts of extraction methods.
• Emissions from the oil sector are rising.
• Processing and refining hydrocarbons release pollutants into the atmosphere.
• Impact on local water sources.

Opportunities and Challenges - Offshore Oil

Opportunities:

• Significant offshore crude oil reserves.
• Contributes millions in revenues to Atlantic provinces.
• Large employer for residents of Atlantic provinces. 
• Strictly regulated to ensure safety of workforce and the environment.
• Center for Offshore Oil, Gas and Energy Research studies environmental impacts increasing our knowledge of oceans.

Challenges:

• Operate in extremely harsh environmental conditions.
• Difficult working conditions.
• Offshore platforms can affect complex and fragile marine ecosystems.
• Significant public concerns over oil spills and the environmental impacts of extraction methods.
• Offshore spills are difficult to contain and clean.

Opportunities and Challenges - Oil Sands

Opportunities:

• Large reserves make Canada an energy giant.
• Secure and reliable.
• Easy to store and transport.
• 99% of Alberta’s proven oil reserves are found in oil sands.
• The energy sector accounted for 27.6% of Alberta’s GDP in 2011.
• Studies project that by 2020, the oil sands will have generated 174,000 industry-specific jobs, in addition to creating countless spin-off employment opportunities.
• By 2035, almost a third of the total unconventional oil production from non-OPEC countries will likely come from Canada’s oil sands.
• Canada has an expertise in extraction and production technologies.
• In-situ projects are less disruptive than open pit mines, and account for 80% of Alberta’s oil sands extraction.
• Recovery rates for open pit mining are over 90%.
• In situ projects use water resources more efficiently than open pit techniques. 
• Employed 145,000 people in 2008.
• Largest employer of First Nations people in Canada.
• Employs migrants from other provinces and abroad.
• Environmental impact is mitigated through land reclamation techniques, including the planting of more than 7.5 million tree seedlings.
• Has generated new research on the re-engineering of boreal soils and land reclamation.

Challenges:

• Tailings ponds cover 176 square kilometres in 2011, and are expected to expand to 250 km² by 2020. These ponds contain harmful heavy metals and organic compounds.
• Produces 87% more greenhouse gases than conventional oil.
• Open pit mining moves two tons of earth to produce one barrel of bitumen.
• Open pit mines destroy environmentally sensitive muskeg and boreal forests. 
• Processing causes erosion, changes salinity, and affects soil fertility
• Extracting and upgrading bitumen releases pollutants and contaminants
• Causes acidification of rain downwind from operations
• Extracting and processing bitumen requires both oil and gas, contributing to an overall depletion of nonrenewable resources
• Requires more water to produce oil from bitumen than conventional oil
• Downstream from operations, water contains a rising level of arsenic, mercury, and polycyclic aromatic hydrocarbons (PAHs) 
• Oil sands may be linked to a higher number of illnesses in residents close to operations
• Operations often cover an enormous area, threatening regional biodiversity
• Caribou herds in the region of the bituminous sands have declined by nearly 50% since 1993  
• Fish in Lake Athabasca and the Athabasca River have high levels of mercury, as well as hump backs, lesions and other deformities  
• Fish are adversely impacted by unnatural fluctuations in the river’s water level attributed to industrial use
• Affects the traditional way of living for local First Nations people

This page contains content provided by: Ingenium, Pembina Institute, Energy Alberta