Baltimore, MD--Today, the most popular oil sands extraction method is dependent on natural gas. And considering that 80% of bitumen is located deep underground, the question is whether or not there is a future for oil sands once Canadian natural gas runs dry.
Over the last two weeks, a good number of you have been asking me about oil sands. And the majority of you were specifically asking about the various extraction methods.
Rather than look for secondhand information on the matter, I went right to the source. I spent the next few hours on the phone with a friend of mine. He has a front row seat to all the action. He's lived and worked in Alberta's oil sands for decades.
For the past few years, he's seen the boom that Alberta has experienced from oil sands. With hundreds of billions of dollars pouring into projects, it's no surprise that people are flocking there.
After exchanging pleasantries and catching up, I wanted to get down to business. I asked him to give me a better idea of what's going on up there.
"The problem is that the gas is going to run out," he said. But we already knew that Canadian natural gas production peaked years ago.
Before I could mention that, he continued, "This is going to really complicate things when they're going after the bitumen. Most of the oil companies out there are using huge amounts of natural gas during extraction."
He was referring to the SAGD (Steam Assisted Gravity Drainage) process. Basically, a company uses natural gas-powered plants to generate steam to heat up the bitumen. The stem is injected into one horizontal well. Once melted, the bitumen flows into a lower horizontal well and pumped to the surface.
But like my friend just mentioned, there's a massive amount of natural gas being used right now. It takes about one thousand cubic feet of natural gas to extract a barrel of oil. Naturally, the peaking of natural gas production will dramatically the cost to produce oil sands.
Since oil sands production are expected to triple within the next decade, this will mean a significant amount of trouble for producers...
Or will it?
My solution was simple enough, "Even if there isn't enough natural gas for them to use, wouldn't they just start using nuclear energy?"
I've long felt that nuclear energy is going to continue growing by leaps and bounds in the future. The way I see it, it's the only potential energy source that will be able to generate enough power on a global scale. Just remember that the earth's population is estimated to reach over nine billion people by 2050.
To him, it wasn't matter of "if", but rather "when" that nuclear power would be used during the in-situ processes. Yet that "when" was a bigger question.
"Could be nuclear," he started, "but those power plants take more than a decade to come onto line." I couldn't argue with his logic. There are still a lot of hurdles for nuclear energy to overcome. As one of my colleagues is fond of saying, "Show me the BTUs."
However, I noticed that my friend wasn't worried about the billions of dollars needed to build the plants. That is one thing there's plenty of in Alberta. Just within the last week, several major oil companies added another $38 billion that would be spent on oil sands activity. Even despite the higher construction and labor costs, we're seeing record investments being made.
"Okay, so if you think natural gas is circling the drain, and there's not enough time to go nuclear, where does that leave us?" I couldn't help asking him.
We spent the rest of the time talking about a newer method being used today that only uses a trivial amount of natural gas and steam. Not only does that drastically reduce operating costs, but this process can also recover a greater amount of bitumen.
This is precisely the kind thing that a lot my readers are ready to take advantage of. It might be time for you to join us. You can find more out about it here.
Until next time,
Keith Kohl
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