What We're Doing: Climate Change

We will continue to reduce greenhouse gas emissions per barrel of production by improving our energy efficiency and by developing new technologies.

There is a fundamental challenge around the problem of oil sands greenhouse gas emissions. Global energy demand continues to grow, in spite of a general economic slowdown. Visit the U.S. Government’s Energy Information Administration for interesting charts showing world energy demand projections.

The role of renewable sources will increase in the overall energy mix, but studies continue to predict an increased demand for hydrocarbons including oil and gas. Particularly in the transportation field, we are still a long way from having a realistic alternative to oil. But hydrocarbons generate carbon dioxide (CO2) emissions from both production and use, which is a leading greenhouse gas linked to climate change.

Furthermore, the world’s supply of easily-accessible light crude oil is declining. Most of the larger sources of oil available today – like the oil sands – are more difficult to produce, often requiring more energy than historical oil reserves. This causes higher greenhouse gas emissions.

Energy and Climate Change – “Wells to Wheels”

Reducing the greenhouse gas (GHG) emissions associated with oil and gas production and use is crucial – but it won’t be easy. As supplies of “easy” oil, light crude, dwindle, we must turn to heavier crudes including the oil sands to meet our energy needs.

Both light and heavy crude are made into end products such as gasoline. Compared to conventional on-shore light crude oil production, oil sands crude takes two to three times more energy to extract, upgrade and refine into final products.

However, as the chart below demonstrates, most of the greenhouse gas emissions from fossil fuels come when the final product (such as gasoline) is burned.

Comparing various sources of oil across their entire life cycle – “wells to wheels” – gives a more complete picture.



A recently released report from CERA, titled Growth in the Canadian Oil Sands: Finding a New Balance, found that while impacts of the fuel combustion stage is similar, full life cycle GHG emissions are about 5 to 15 per cent higher from fuel derived from oil sands than they are from fuel derived from domestic onshore light crude oil. This gap is significant, and industry is committed to reducing it.

 

The Alberta Energy Research Institute (AERI) has also released a study entitled: Life-Cycle Analysis of North American and Imported Crude Oils, which is based on two independent studies that compare imported and oil sands crude processes in U.S. refineries. The independent reports demonstrate how greenhouse gas (GHG) emissions from the oil sands derived crude oils are similar to conventional oil production in some areas.The studies found that direct greenhouse gas (GHG) emissions from the oil sands are generally about 10 per cent higher than direct emissions from other crudes in the U.S. If cogeneration is taken into consideration, oil sands crudes would be similar to conventional crudes in terms of GHG emissions.

The fact that greenhouse gas emissions are so widely dispersed around the world makes it impossible to reduce global emissions by focusing on any single sector, industry, or geography. Very broad-based initiatives are required. The oil sands reside in Canada, but the issues surrounding them are global.

Reducing greenhouse gas emissions depends upon research and development, energy efficiency, smart regulation, and all of our individual daily energy use choices.

GHGs in the Oil Sands

The primary source of GHG emissions in oil sands mining is the energy required to mine and transport the oil sands, separate the oil from the sand, and process the oil. For in situ operations, the primary source of GHG emissions is the combustion of natural gas to generate steam.

Canada’s oil sands industry contributes approximately 0.1 per cent of the world’s GHG emissions. It makes up about 5 per cent of Canada’s total GHG emissions.

Oil sands emissions are growing, however, as production increases. Emissions from the oil sands may reach 8 per cent of Canada’s total emissions by 2015, if all planned projects go ahead. Canada is committed to reduce its GHG emissions, and the oil sands industry needs to do its part.

What industry is doing

Companies have invested significant money and effort in developing and implementing new processes and technologies to reduce greenhouse gas emissions. Some companies have also purchased GHG credits to offset their emissions.

While absolute GHG emissions are increasing as total oil sands production increases, industry is succeeding in improving efficiency and reducing the GHG emissions per barrel of production (which is called emissions “intensity”). Industry initiatives have reduced oil sands CO2 by more than 39 per cent  per barrel from 1990 to 2008.

Critics counter statistics about reduced energy intensity by observing that absolute emissions continue to rise, as production increases. This is a fair point. Globally, we don’t yet have a way to produce energy from fossil fuels without GHG emissions, or a way to meet energy demand without significant reliance on fossil fuels. By measuring energy intensity, we can at least ensure that the production of the energy we need is becoming more efficient over time.

For example, between 1990 and the end of 2007, Suncor Energy has prevented 61 million tonnes of carbon dioxide from entering the atmosphere, through its GHG management efforts. Over that period, the GHG emission intensity at Suncor’s oil sands has decreased by 44 per cent.

Shell made a voluntary commitment to reduce GHG emissions from its Athabasca Oil Sands Project by 50 per cent by 2010, making GHGs associated with Shell’s crude less than those associated with the imported oil it displaces.

Investing in New Processes and Technology

If it wasn’t for advancements in technology, the oil sands wouldn’t be the major energy source they are today. 50 years ago, many observers doubted that it was possible to produce the oil sands economically. Today, oil sands contribute half of Canada’s total oil production. Oil sands production technology has advanced tremendously since the early days of the industry.

Industry’s continuing focus is to develop new technologies that improve the efficiency and reduce the GHG emissions of oil sands production.

Energy Efficiency

Introducing cogeneration to oil sands production has improved energy efficiency considerably. Cogeneration technology produces both electricity and heat with highly efficient turbines. Cogeneration has proved to be an ideal fit with in situ oil sands production. Cogeneration units burn natural gas to produce both the steam required for oil sands production, as well as electricity that goes to the Alberta grid.

Also on the in situ side of the industry, producers are experimenting with low pressure SAGD, using electric submersible pumps to reduce the amount of pressure needed in the reservoir, which in turn reduces the amount of steam required. EnCana Corporation has found that using electric submersible pumps increases steam efficiency and results in GHG intensities as low as 0.06 tonnes of CO2 per barrel.

Industry is also finding ways to make use of waste heat. For example, Shell found a way to recover useful energy lost from process cooling water in its Muskeg River plant. Shell installed six new heat exchangers at the mine between 2006 and 2008. This investment in energy efficiency reduced the amount of cooling water used by about one-fifth, and delivered 160,000 tonnes per year of avoided GHG emissions.

Shell has also introduced a new froth treatment technology, which uses higher temperatures to more efficiently remove impurities from the oil sands froth. With this technology, Shell will be able to use smaller equipment, less water and less energy, saving about 40,000 tonnes per year of GHG emissions as well as air pollutants.

Carbon Capture and Storage

One part of the solution to oil sands GHG emissions may be carbon capture and storage (CCS). Government, industry and researchers recognize this technology as having potential to reduce emissions significantly in the future, although new technologies must be developed and existing technologies adapted in order for CCS to become technically and economically achievable. The Alberta government has committed $2 billion to CCS development, the federal government has committed $1 billion, and industry is also investing heavily. The estimated capacity to store CO2in the Western Canadian Sedimentary Basin is almost 4,000 megatonnes of CO2.

As an example, in 2000, EnCana began injecting CO2 into its 50-year old Weyburn oilfield to enhance the recovery of oil that remained in the reservoir. The project also demonstrates that the geological formation is useful as a permanent storage site for the gas. 99.8 per cent of the CO2 will stay securely underground for the next 5,000 years. The industry is now looking to the Weyburn project as a pilot of successful CO2 injection.

Shell is advancing plans for Quest, a large-scale CCS project at its Scotford Upgrader that would capture approximately one million tonnes of CO2 from the upgrader, processing it to create a high quality CO2 stream and then compressing it for transportation and storage in nearby deep geological formations. Shell is working with governments to make the project economically viable. While CO2 injection is proven technology, injecting it for the sole purpose of reducing GHG emissions is still quite new.

Several industry players are working to increase awareness and support for carbon capture and storage (CCS) technology through the Integrated CO2 Network (ICO2N). CCS has the potential to reduce CO2 emissions by at least 20 million tonnes per year by 2020 – the equivalent of removing four million cars from the road every year.

Emerging Technologies

THAI™

An example of a new technology is Petrobank’s toe-to-heel air injection (THAI™), an in situ process that relies on underground combustion instead of the more common steam process to warm the thick bitumen so it can be extracted.

Nuclear Energy

Nuclear energy is of course proven technology, but not in an oil sands context. Nuclear energy is an efficient and zero-emission way to produce steam, so nuclear could theoretically replace natural gas for steam generation for in situ oil sands production. There are hurdles to using nuclear though, including the fact that steam does not travel well to reach remote in situ sites, the requirement of large amounts of water for nuclear, and the very significant cost.

Geothermal Energy

In the realm of “blue sky thinking” is the idea of using geothermal energy to produce oil sands. The concept is to use the heated layer in the Earth’s crust to heat water. Water would be pumped several kilometres below ground, heated, then pumped back to the surface. While at the conceptual stage today, geothermal has the potential to become a low-emission alternative to the natural gas that is currently used to provide heat and steam for in situ oil sands production.

What government is doing

GHG reduction regulations and policies have been developed by the provincial and federal governments. They apply to all industries across Canada, including the oil sands.

Alberta was the first jurisdiction in North America to legislate industrial GHG emission reductions. Facilities emitting more than 100,000 tonnes of GHGs annually were required to reduce emissions intensity by 12 per cent by March 31, 2008, or pay $15 per tonne into a Climate Change and Emissions Management Fund. In its first two years, the legislation has resulted in approximately 6.5 million tonnes of actual reductions in Alberta and $122 million paid into the Climate Change and Emissions Management Fund.

The Alberta government forecasts that the measures in place will reduce absolute emissions by 50 per cent by 2050 compared to before the measures were put in place, or a 14 per cent absolute reduction below 2005 levels. However, since oil sands development will be expanding in the next 10 years, the 12 per cent reduction target will only slow the growth in Alberta’s GHG’s emissions until 2016. The longer-term targets will be driven by new technology, which is being funded by oil sands operators.

More information on the Alberta government’s climate change strategy is available at www.oilsands.alberta.ca.

The Canadian government is targeting an absolute reduction of greenhouse gases of 20 per cent by 2020. More information on the Canadian government’s climate change strategy is available at www.ecoaction.gc.ca.

Provincial and federal governments are also working toward a harmonized GHG regulatory system.

What we all need to do

Despite the progress made in reducing Canada’s GHG emissions, more needs to be done. There is no simple, single solution. Realistically, we can’t simply turn off the world’s reliance on coal, oil and natural gas. The solutions lie in improving energy efficiency to slow the rate of growth of energy demand, increasing the supply of renewable energy, reducing GHGs emitted in the production and use of hydrocarbons, moving to less carbon-intensive fuels, expanding CO2 capture and storage, and changing our lifestyles and habits to slow the growth rate of energy demand.