08/13/09 Pittsburgh, Pennsylvania
I had the unique opportunity to tour two different oil sands operations near Fort McMurray, in northern Alberta. I saw a massive open-pit oil sands mine, and the associated reclamation effort, operated by Syncrude Canada Ltd. I also visited an in situ oil sands recovery project called Surmont, operated by ConocoPhillips.
When we think about the concept of ’Peak Oil’ today, we need to keep in mind what we’re talking about. The curves show oil output peaking in so many parts of the world. This phenomenon is quite real, as long as you understand that it’s the light, sweet, easy-flowing oil that is getting harder and harder to find, certainly in significant quantity.
But there are a lot of other hydrocarbon molecules out there. Most of those molecules are not light, sweet crude oil. Indeed, most of the hydrocarbon molecules that the world will use in the future will be ’heavy,’ with lots of carbon atoms and not so many hydrogen atoms.
Here’s a graph from oil services giant Schlumberger that estimates the world’s heavy oil and bitumen resources. Canada’s 400 billion cubic meters of bitumen translates into something like 1.4 trillion barrels of oil equivalent. How much is that? Well, it’s about SEVEN times the total oil reserves of Saudi Arabia.
Sure, there are still issues about land disturbance, settling ponds, water usage, gas usage and myriad of other things that come up when you’re spending billions of dollars on a major mining effort. But Syncrude has built its business model around dealing with the ’other’ issues, and not just moving oil sands and recovering oil products. Don’t underestimate the ability of the Alberta government to regulate its energy producers. This is a long way from Appalachia.
Meanwhile, we’re talking about literally billions of barrels of bitumen (or oil equivalent) that the process makes available to the North American marketplace. And if the United States wants to get onto its environmental high horse about the source of the hydrocarbons from the oil sands — and tax or ban their importation — there are other buyers in the world. Like the Chinese, who have racked up many frequent flyer miles on their treks to Fort McMurray.
Byron King
Byron King is the managing editor of Outstanding Investments and Energy & Scarcity Investor. He is a Harvard-trained geologist who has traveled to every U.S. state and territory and six of the seven continents. He has conducted site visits to mineral deposits in 26 countries and deep-water oil fields in five oceans. This provides him with a unique perspective on the myriad of investment opportunities in energy and mineral exploration. He has been interviewed by dozens of major print and broadcast media outlets including The Financial Times, The Guardian, The Washington Post, MSN Money, MarketWatch, Fox Business News, and PBS Newshour.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
Well said. US has played politics and high horse with Alberta oil sands. It got quite annoying to Albertans and Canadians at large. Play this stupid game with our northern supplier and one day Canadian PM Harper will announce a supply deal with China and Japan. We just can’t go around the world pissing everybody when our own economy is pissed.
I am certain that the Canadian oil sands will be produced to their full extent, probably franticly so as light sweet crude output begins to decline more steeply.
It will be as sad as it is probable in my view.
Just my opinion.
Cheers.
…and one day Canadian PM Harper will be tossed out as the third carbon copy neo-con he is, and this eoc travesty will be on hold
until the “issues” are solved.
Oh, and when the fat boys can “arrange”
“financing”.
Figure it out on your own resource.
and while rhapsodizing about the canadian tar sands it should be noted that the usa has a good supply of its own along with oodles of oil shale which is also harvestable as shell is testing now….
peak oil is already a fraud but once folks recognize that oil is a renewable resource some of the hysteria will die down although most of it will shift into other shrill non-productive ventilators…
i am enthusiastic about the progress of science to capture the rich bounty of the lord’s earth…..
necessity is the mother of invention and there are more energy inventions to arrive.
Byron King writes: “Sure, there are still issues about land disturbance, settling ponds, water usage, gas usage and myriad of other things that come up when you’re spending billions of dollars on a major mining effort.”
____________________________________________
Couple of points:
1) ‘Myriad’ requires no preposition prior to the object. Myriad also alludes to thousands if not millions, as in uncountable on any realistic basis. As such, you have yet to speak to the depth and breadth of the the problematic nature of this boondoggle. In fact, you are arrogantly dismissive while being intellectually dishonest.
2) You mention spending billions on a mining project. That lends itself to saying I pay quite a bit for the popcorn and soda at the cinema. I am confident that you will be equally facile about how the spending will even itself out once the product of these efforts begins to flow. Well, Byron, the goo don’t flow, the goo won’t flow, and neither will the cash.
There will be more dollars spent, more energy consumed and more time and lives wasted in the pursuit of an ignorant attempt to extend and pretend toward a future in a hydrocarbon world.
Glad to see I wasn’t the only one who was disappointed to see an article like this on DR. It made me sad to be honest.
Oil is a renewable resource…as long as you live my the geological calendar. What’s a few million years amongst mortals?
Peak oil addresses the oil demand/recovery curve. Saudi lifts oil for a few bucks a barrel, Oil sands cost 10x or more. The cheap, easy oil is depleting rapidly (see Cantarel production declines), and remaining oil will, WILL be more expensive.
With India and China using more energy the cost of crude will not be measured by the last million barrels required to meet supply, and that last million BPD will cost dealy. Unless we can wait for nature to run her course and create new oil…in a few million years.
Do I sense “faith based” economics?
American has a choice, they can buy oil from their northern neighbour who shares their values of freedom and equality. Or to paraphrase Boone Pickens “buy oil from countries who don’t like us very much”.