Wednesday, February 06, 2008

Heres a little tidbit just for Garnel.

Oil Sands Are Shifting in Alberta
Guy Chazan, Wall Street Journal (5 February 2008)
CALGARY, Alberta -- After years of headlong growth, Canada's oil sands have hit a speed bump.

Escalating costs, labor shortages, tax increases and the threat of tighter climate-change laws are clouding the prospects of one of the world's biggest sources of oil. And while multinationals can cope with the tougher operating environment, smaller companies are struggling.

"About a dozen of the smaller oil-sands players are coming to me saying we can't make this work," says Brian Maynard, vice president of the Canadian Association of Petroleum Producers, an industry group. "Their economic model is no longer viable."

A mixture of sand, water, clay and bitumen, Canada's oil sands lie under an area of boreal forest larger than Florida. Alberta estimates that the province has 174 billion barrels of recoverable bitumen, making Canada's oil reserves second only to those of Saudi Arabia.

But the oil is extremely costly to extract. Most future production will require high-pressure steam to be injected into the ground to separate the gooey bitumen from the sand it clings to, and vast amounts of natural gas must be burned to produce the steam. Multi-billion-dollar upgraders are needed to convert the bitumen into synthetic crude oil.

The turning-point came around four years ago, when crude began its rally and oil sands became economic. Thousands flocked to Alberta to seek their fortune. Fort McMurray, the hub of the oil rush, was dubbed "Fort McMoney."

[This article is behind a paywall at the moment - I'll link it if it shows up somewhere else.]

1 comment:

Garnel Ironheart said...

Here's looking at you kid.

Listen, I never said the tar sands were an easy extraction, however at 90$ a barrel, it is economical for large companies to extract oil from them. The main point, which doesn't get enough mention in the article, is the part about tax increases. That's the big kick. Right now the high price of oil just makes the tar sands worth it. The recent tax increase by the Alberta government changed all that.