Friday, July 11, 2008

Canadian Oil Sands - Painful Choices

Energy Hunt: Fort McMurray was a sleepy town on the Canadian frontier until oil transformed it into a boomtown with tons of opportunities - and concerns.

Money pouring into the town allows residents to enjoy the highest per capita income in Canada. Even low-end service jobs, like flipping burgers, waiting tables, or pumping gas, pay upward of $15 an hour.

"You can say all the bad things you want about this town," challenged Jesse Brether, a Ft. McMurray Oil Sands worker. "You know what? For fifty dollars an hour, I'll deal with it... I'm making over a hundred thousand dollars a year, and I'm twenty-two!"

Native Canadian groups who once thrived on the area's abundant natural resources are worried. While jobs have been created, and contracts have been awarded to native small businesses, the gains are overshadowed by reports of deformed fish and discolored meat in the wildlife. A local health board study found unusually high rates of cancers and other illness, although both the Alberta government and the oil companies dispute those claims.

Turning Oil Sand into usable energy is an arduous, resource intensive process. Oil sand is mined in giant pits, then the oil has to be separated from the sand. To do this, Oil Sand is washed with warm water, a process that uses large quantities of natural gas. Once the sand and the oil are separated, the oil must be further processed into a lighter form of crude that can be easily refined into gasoline, diesel and heating oil.

Critics claim that the extra step of "upgrading" the viscous, molasses-like oil into usable crude emits three times as much carbon dioxide as drilling for and transporting conventional oil. While the industry calls that number is inflated, Shell, one of the major operators in the area, puts that figure at around 200%.

And then there's the water. Taken from a local river and used to wash the oil from the sands the water is left to evaporate in huge, lined ponds. The ponds are required by law to prevent contaminated water from leaking back into the water table.

Assuming oil prices stay above $50 a barrel, Canada can optimistically increase its daily Oil Sands output from 1.5 million barrels per day today, to four or even five million barrels per day within a decade.

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