ConocoPhillips Canada has a leading land position in Alberta’s oil sands. Although production from these assets is comparatively small at present, they are an area of significant future growth for us. With this growth will come challenges that need to be managed as we continue on our journey.
Northern Alberta’s oil sands are one of the world’s largest known hydrocarbon deposits, considered second in size only to those found in Saudi Arabia. The oil sands are a resource that comes with challenges, as the oil is wrapped around sand and clay and this requires energy first to remove the oil and then to transform it into usable products.
The oil found in the oil sands is a heavy and viscous form of crude oil. Until relatively recently, it wasn’t economically viable or technologically possible to develop this vast resource. The oil sands are currently developed using two main methods—mining and in-situ (which is Latin for “in place”) development. About 18 per cent of the oil sands resource that’s considered recoverable lies within 75 meters of the surface, close enough to be recovered through surface mining. The vast majority of the oil sands deposits are too deep to mine, however, and can only be recovered using in-situ recovery techniques such as steam-assisted gravity drainage (SAGD).
Once extracted from reservoirs, the oil is either upgraded on site or blended with lighter types of oil and is sent by pipelines to upgraders where it is processed into a synthetic crude suitable for conventional refineries, or directly to refineries designed to process this heavy oil. At refineries the synthetic crude or diluted bitumen is turned into usable hydrocarbon products like gasoline.
Investment in Canada’s oil sands has been spurred by technological advances, particularly in-situ extraction techniques, higher oil prices, increased international recognition, a relatively stable investment climate, global growth in oil demand, the vast size of the resource base, proximity to the large U.S. market and potential access to other markets.
Developing this resource poses significant challenges. As an industry, we need to find a way to balance our need for this resource with the various impacts of developing the oil sands. The existing and forecast growth brings with it concerns about cumulative impacts from increased greenhouse gas emissions and water use, strain on local infrastructure and services, labour availability and wildlife habitat fragmentation. These concerns could inhibit the development of the resource.
Throughout our long history in the oil sands, from our first in-situ pilot project at Surmont, we have recognized these concerns and we are taking a leading role in many areas to proactively address them. In many cases we’re working with our stakeholders, peer companies and governments to find economically viable and environmentally acceptable solutions.