AZ Central.com Arizona: U.S. has plans for Canada oil sands: “In the north of the remote Alberta province rests the equivalent of 1.7 trillion barrels of oil.”: "It's the single largest hydrocarbon deposit on the Earth, and it's next door to the biggest market for oil products: the United States. What's wrong with it? It's crap oil," said Neil Camarta, senior vice president of oil-sands operations for Shell Canada.”: “Don't mistake that for discouragement.”: Posted Monday 28 November 2005

Kevin G. Hall

Knight Ridder Newspapers

FORT McMURRAY, Alberta - Along a giant patch of Canada's Far North, where moose outnumber people, a vital part of America's energy future seeps out of riverbanks and is hidden below soft prairie grass.

These Canadian oil sands will help keep American SUVs running in the years to come.

In the north of the remote Alberta province rests the equivalent of 1.7 trillion barrels of oil. About 176 billion barrels is recoverable with today's technology, and perhaps twice that amount is potentially recoverable. But this oil can't be pumped from the ground the conventional way. It's spread across more than 54,000 square miles, about the size of North Carolina, and is mixed with sand and clay.

"It's the single largest hydrocarbon deposit on the Earth, and it's next door to the biggest market for oil products: the United States. What's wrong with it? It's crap oil," said Neil Camarta, senior vice president of oil-sands operations for Shell Canada.

"You've got to use a lot of energy and a lot of pots and pans to extract it from the sand, and you have low-quality oil. It's a high-cost business and a lot of capital and a lot of operating costs."

Don't mistake that for discouragement.

"The good news is, once you've got those pots and pans on the ground, you never run out of oil. The resource is almost infinite, so we never decline," Camarta said.

Canada already has surpassed Saudi Arabia as the United States' largest foreign supplier of crude oil and petroleum products. The U.S. Energy Department believes foreign oil will account for as much as 72 percent of U.S. supplies by 2025.

The sands contain a tarlike grade of crude oil called bitumen, which must be separated from the dirt through a costly, complicated boiling process. Hydrogen is added, sulfur and nitrogen removed, and the final product is synthetic crude oil.

Shell's Athabasca Oil Sands Project, a joint venture between Shell, ChevronTexaco and other companies, already produces about 155,000 barrels of oil a day. Within a decade, it should produce half a million barrels per day.

America consumes 20.7 million barrels a day, and of that about 12.1 million barrels are imports.

Shell runs the newest of the three well-developed oil-sands operations. All three expect to produce at least half a million barrels of oil within a decade. Suncor Energy Inc., formerly part of the Sun Oil Co., began producing synthetic crude oil in 1967. Syncrude Canada Ltd. has operated since 1978; 25 percent of it is owned by Imperial Oil, whose majority shareholder is ExxonMobil.

"This is the one place where you can bring on oil. You know the costs, you know what you're dealing with," said Robert Esser, director of global oil and gas resources at Cambridge Energy Research Associates. "It's in the process of taking off - it's not just starting. It's there. These are major companies and major sums of money entering this playing field."

Oil-sands operators are expected to produce this year more than 1.1 million barrels of oil a day, for the first time surpassing conventional oil production, which is forecast for 1 million barrels a day.

Oil-sands production is projected to reach 2.3 million barrels of oil per day by 2010, 3.4 million barrels by 2015 and 5 million barrels by 2035.

Arriving at those numbers won't be pretty.

Two tons of dirt must be mined and processed to produce a single barrel, or 42 gallons. Huge three-story trucks carrying up to 400 tons snake through vast mine pits that resemble mini-Grand Canyons.

"We really are digging the biggest hole on Earth," said Myles Kitiwaga, an environmentalist with Toxics Watch Society of Alberta in the provincial capital of Edmonton. The environmental group is one of several that fear strip mining is far outpacing the restoration of land. 

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