Skip to Content

Alberta’s Oil Sands Heat Up

Thanks to its deposits of buried ­bitumen, Canada is one of the world’s fastest-growing oil producers. New extraction technologies are opening up even more of the vast resource—prompting fresh environmental concerns.
October 25, 2011

For many, images of Canada’s boreal forest torn apart by sprawling operations that clear the land and strip off the top layer of earth have come to symbolize the environmental evils of petroleum in the 21st century. The so-called surface mines, which uncover rock-hard deposits of sand and clay rich in the heavy, sticky mixture of hydrocarbons called bitumen, now account for a substantial portion of Canada’s oil exports, including much of the petroleum going to the United States. But the face of the industry exploiting northern Canada’s oil sands is changing—and possibly becoming even more troubling.

Head south or west from Fort McMurray, the Alberta boomtown hosting many of the strip mines and tailings ponds that have made the province’s oil industry infamous, and the mines give way to tidier industrial sites amid boggy greenish-brown muskeg and stands of white spruce, jack pine, and aspen. These forest-ringed facilities have traded shovels and enormous trucks for an extraction process that drills down hundreds of meters into solid ribbons of bitumen and, using vast quantities of steam, melts the tarry petroleum in place. Liquefied bitumen then oozes out through a system of parallel pipes. Such “in situ” extraction operations now account for nearly half the current output of northern Alberta’s oil business, and that figure will only increase. Alberta’s 1.8 trillion barrels of bitumen may be the world’s largest single accumulation of hydrocarbons, but four-fifths of this resource lies deeper than strip-mining can reach.

In situ extraction is expensive—on average, it’s not profitable if world oil prices are below $60 per barrel. But with today’s prices consistently well above that, the practice is booming. The oil sands will generate over 1.5 million barrels of oil per day this year, according to the Canadian Association of Petroleum Producers, a Calgary-based group. That accounts for more than half the oil that Canada pipes to the United States (Canada is its neighbor’s single biggest source of imported oil). By 2025, oil-sands production is projected to more than double, to 3.7 million barrels per day, and in situ operations will deliver nearly two-thirds of that boost.

The catch is that while the drilling might seem on the surface to be less destructive to the environment than strip-mining, in many ways the newer technology is far more damaging. Even though the drilling sites don’t ravage the landscape the way the mines do, they use vast amounts of energy and consequently produce lots of carbon dioxide. Using steam to flush out bitumen accounts for 2.7 percent of Canada’s total greenhouse-gas emissions, or an estimated 19 megatons of carbon dioxide last year—equal to the annual tailpipe emissions of 3.7 million cars. It creates more than twice the production emissions of conventional oil-sands mining. Independent experts say that by the time the bitumen is refined and delivered to gas stations across the United States, it has already accounted for two or three times as much greenhouse gas per gallon of fuel as gasoline refined from conventional crude.

Most worrisome, the drilling operations in the oil sands are just one example of the increased production of “unconventional” oil, formerly hard-to-exploit sources that recent technological advances have made economically viable. Such resources in the Americas alone include huge amounts of bitumen-like oil in Venezuela, deep undersea oil reserves off the coast of Brazil, and “tight oil” held in shale deposits throughout the United States and Canada. The geological resources and technologies used to produce unconventional oil vary greatly, but they all require extraction processes that are energy intensive and environmentally destructive. Oil sands are the principal reason why Canada’s annual greenhouse-gas emissions, which the government promised to cut to 558 megatons by next year, now exceed 710 megatons and are projected to reach 785 megatons by 2020.

The reality is, however, that the world has quickly become reliant on unconventional oil, including the oil sands, as global energy demand has continued to grow faster than supply. And the Canadian economy, particularly in Alberta, has become heavily dependent on the growth of the oil-sands industry. Investments from Canadian firms and global oil giants totaled $13 billion in 2010 and grew to $16 billion this year. The oil sands have made Alberta the hottest place in Canada for jobs, investment, and growth, helping the country avoid many of the economic woes afflicting the United States and much of Europe.

The oil sands mean hundreds of millions of dollars in taxes and royalties, and job creation from Newfoundland to Vancouver. So many Newfoundlanders have come to Alberta to work in Fort McMurray that it amounts to “Newfoundland’s third-largest city,” says Murray Smith, a former Alberta energy minister. Such economic heft makes it a given that Canada is going to keep exploiting this resource, he says: “We’re next door to a customer that has 250 million vehicles driving three trillion miles a year. You can be sure that as long as that demand is there, there will be product to sell. We’ll produce the oil sands.”

Vast resources: An aerial view shows the surface mining near Fort McMurray in the foreground, while refining and tailings ponds abutting the Athabasca River are visible in the background.
Age of Steam

Christina Lake, a rapidly expanding in situ extraction operation 120 kilometers south of Fort McMurray, is truly remote. Though clear-cutting, natural-gas production, and gravel mines have etched the forests, mule deer and moose still outnumber humans. Christina Lake’s closest neighbor is the hamlet of Conklin, population 300, and to the south is the Cold Lake Military Air Range, a vast no-man’s-land reserved for aerial combat exercises and tactical-weapons tests. The sense of isolation is evaporating, however, as thousands of workers install and run billions of dollars’ worth of equipment at Christina Lake and more than a dozen other sites in Alberta.


Enlarge Charts

Much of the world’s oil, including the vast reserves of “conventional” oil in places such as Saudi Arabia and the Gulf of Mexico, is a mixture of hydrocarbons that gushes up from the ground and flows easily at room temperature. The Canadian oil sands, on the other hand, are tarry deposits in which the hydrocarbons coat the sand and clay. Once removed from the ground, the oil has the viscosity of cold molasses. Extracting it must, in essence, reverse natural forces that created the bitumen beginning millions of years ago, when the rise of the Rocky Mountains pushed fast-flowing light petroleum into adjoining layers of buried sand.

For nearly a century, entrepreneurs have struggled to separate the solidified deposits from the sand and make them into liquid hydrocarbons again. Fort McMurray’s mines opened in the 1960s and early 1970s and limped along with government support until oil prices began rising in the late 1990s, encouraging investors. Alberta’s in situ sites are the product of a government-financed research project initiated in 1974 to lift the oil-sands industry beyond strip-mining. By the late 1990s, the provincial project had settled on a technology: steam-assisted gravity drainage, or SAGD. Cenovus, the Calgary-based company that operates Christina Lake, created the first commercial SAGD site in 1999 and began pilot tests at Christina Lake three years later.

While more sophisticated than strip-mining, in which bitumen less than 75 meters below ground is simply dug up after the top layer of earth is removed, SAGD is still largely a brute-force method of sucking up deeply buried bitumen. At Christina Lake, pairs of perforated wells sink 375 meters deep, reaching a layer of bitumen 25 to 30 meters thick. There, the wells flatten out to run 800 meters horizontally through the lower third of the deposit, one well five meters above the other. Steam is forced through the top wells at 250 °C to heat and eventually melt the bitumen, which drains away from the sand, clay, and other minerals. The bottom “production” wells then suck a mix of water and melted bitumen to the surface, where the water is separated from the bitumen and recycled. Finally, the bitumen is blended with a hydrocarbon diluent to make it thin enough for pipelines before being handed off to an adjacent oil terminal and beginning its journey to refineries in the United States.

Above ground, Christina Lake is a buzz of activity. The site ships more than 16,000 barrels of bitumen per day. In August, Cenovus completed an expansion that cost approximately $900 million in Canadian dollars and increased capacity to 58,000 barrels per day. Now the site is in the throes of two equivalent expansions that have swelled its staff to nearly 2,000 people who work, eat, and sleep on site for seven to 10 days at a stretch. There is plenty more growth to come, says Drew Zieglgansberger, the senior vice president responsible for Christina Lake. ­Zieglgansberger expects that by 2019 the site will be generating over 250,000 barrels of bitumen per day—enough, he says, to gas up all the cars in Illinois. He says it should sustain that pace for 30 years.

The site itself is more like a medium-sized chemical plant than a mining facility. Towering over it are five 32-meter-tall steam generators; four more are under construction. These mammoth furnaces burn natural gas and blast out 250 million BTUs of steam per hour. In all, says Zieglgansberger, they put out the heat equivalent of 50,000 backyard grills. (With every hour of combustion and heat from Christina Lake’s steam generators comes 75 metric tons of carbon dioxide emissions—roughly 45 kilograms of carbon dioxide for every barrel of bitumen.)

The bad news for Alberta’s oil-sands industry is that Christina Lake is a best-case scenario for SAGD today. Zieglgansberger needs to steam just two barrels of water to produce a barrel of bitumen, making it Alberta’s most efficient in situ operation. His competitors (and most future SAGD operations) must target thinner bitumen deposits, some streaked with rock and water that divert injected heat. As a result, the average barrel of bitumen produced via SAGD last year required just under three barrels of steam, according to Alberta’s Energy Resource Conservation Board. That’s why, once shipping and refining are taken into account, Alberta’s in situ production process creates far more greenhouse-gas emissions than making fuel from conventional crude.

Those figures are nothing but scandalous to John Nenniger, the founder and CEO of N-Solv, a Calgary-based startup exploring technologies for exploiting oil sands. Nenniger says that the industry has improved little since the first SAGD field pilot in the late 1980s: “That very first test had a steam-to-oil ratio of 2.38. Since then the steam-oil ratios have actually deteriorated. There’s been no progress at all.”

Gas guzzlers: Massive steam generators at Christina Lake burn natural gas to produce vast amounts of steam, which is injected into 375-meter-­deep wells to heat the tarry oil and allow it to be sucked up to the surface.

It’s not as if no one is trying. Large oil companies, including Shell, Suncor Energy, and Exxon subsidiary Imperial Oil, as well as entrepreneurial startups such as N-Solv and Laricina, are field-testing a growing number of in situ techniques. Some are pumping air deep underground and igniting some bitumen in hopes of melting the rest more efficiently. Others see potential in using electricity to heat deeply buried bitumen.

Cenovus is testing a method that uses a combination of steam and a solvent, butane, to help loosen up the bitumen. Pad A02 looks like any other at Christina Lake, except that it has just one pair of wells supported by some extra hardware: three 50-foot-long storage tanks for the butane and equipment to blend it with the 250 °C steam that roars in by pipe from the steam generators. Adding that equipment boosts the cost of building a new site by almost a third, but it’s worth it, says Harbir Chhina, Cenovus’s executive vice president for oil sands. Chhina says adding butane delivers 10 to 15 percent more bitumen from the same resource and does so roughly 30 percent faster.

The effects of that improvement on energy use, profits, and greenhouse-gas pollution are to get a first commercial-scale test at Narrows Lake, an in situ project immediately northwest of Christina Lake where Cenovus hopes to be producing 130,000 barrels of bitumen per day by 2016. (Approval for Narrows Lake is expected by next summer; Alberta has never rejected an oil-sands application.) Chhina’s prediction: Narrows Lake’s steam-to-oil ratio will be around 1.7, 15 percent lower than it would be without the solvent. He says the technology could decrease greenhouse-gas emissions by as much as 30 percent at most SAGD sites.

Meanwhile, Nenniger is gearing up for tests of a solvent-only process that was invented in the 1970s by his father, who was vice president for process engineering at Hatch, Canada’s second-largest engineering firm and N-Solv’s majority shareholder. From a makeshift work space in Hatch’s Calgary offices, Nenniger plots the technology’s comeback: a $60 million pilot test is under way at Suncor Energy’s Dover site northwest of Fort McMurray, the same place where the SAGD process was originally tested.

Nenniger estimates that eliminating the use of steam and lowering temperatures will save $9 on each barrel of bitumen. What’s more, the solvent process can extract the best-quality bitumen, leaving more of the heaviest asphalt-like materials in the ground. That should make N-Solv’s bitumen easier to refine, fetching producers an extra $15 for every barrel they ship. Nenniger also pro­jects that the process will use 80 to 90 percent less energy per barrel of bitumen than SAGD, reducing carbon emissions accordingly.

N-Solv plans to drill observational wells at its pilot facility this winter, and injection and production wells should follow in the summer. Warm solvent could begin flowing as early as the fall of 2012, delivering production results by the following summer. Nenniger projects commercial-scale application in as little as five years. “Proving we’re better than SAGD on a head-to-head basis will open up the entire oil-sands market,” he says.

The question for oil-sands innovators is whether the financial risk of developing new types of in situ technologies will pay off. Cenovus needs a global oil price of just $45 to $50 per barrel to turn a profit on its Christina Lake investments; with prices now above $75 per barrel, it is making good money. In an era of cheap natural gas and pricey oil, Canada’s bitumen producers will need an extra push before they commit billions of dollars to alternatives to mining and SAGD. Nenniger believes that corporate decision makers have little incentive to change under current economic conditions, where energy costs are low and tax-deductible, and carbon emissions are free. “You have a system that doesn’t create market pull,” he says.

Quicker extraction: An experimental version of in situ extraction adds a solvent to the steam to make the bitumen recovery faster and more efficient.

Says Heather MacLean, a professor of engineering and public policy at the University of Toronto, “There has to be some type of a policy push … to really motivate the most efficient production and reduction of greenhouse gases and other environmental impacts.” What is needed, she says, is a price on carbon. Two years ago, Alberta introduced a carbon tax of $15 per ton, but that covers only a portion of industrial emissions, and even oil executives dismiss its impact on investments. “It’s in the tens of cents per barrel,” says Zieglgansberger.

A bigger Problem

This summer, leading climate-change activists made the Alberta oil sands a household name with two weeks of protests in front of the White House. The action targeted the proposed Keystone XL pipeline, which would deliver half a million barrels of petroleum per day to refiners on the U.S. Gulf Coast through a 36-inch pipeline running 2,673 kilometers from Alberta to Port Arthur, Texas. More than 1,000 protesters, including NASA climate scientist James Hansen, were arrested. President Obama is scheduled to make a final decision on the pipeline this winter.

Ken Caldeira, one of 20 leading climate scientists who issued an open letter to the president opposing Keystone XL, argues that stopping it would increase the cost of marketing Alberta’s bitumen and thus provide a de facto carbon pricing signal to producers. “We collectively are offering a free subsidy to the fossil-fuel industry by allowing them to dump their waste in the atmosphere,” says ­Caldeira, who is an atmospheric scientist at the Carnegie Institution of Washington in Stanford, California. “We should remove that subsidy.”

Caldeira says the ultimate problem he sees with oil-sands investments is that they threaten to reinforce dependence on petroleum, and petroleum combustion in vehicles generates over a fifth of global carbon dioxide emissions. Improving the extraction process for oil sands will only make that dependence deeper. With current methods, the Alberta government estimates, 169 billion barrels of bitumen in the oil sands can be produced economically—less than a tenth of the buried resource. More efficient technologies will yield that much more oil to be burned in the world’s cars and trucks. “If we want to evolve to a low-carbon energy system, we shouldn’t be building additional fossil-fuel infrastructure,” Caldeira says.

Stopping the Keystone XL pipeline could have unintended consequences, however. If President Obama blocks the project, producers will still sell their bitumen, sending it in rail tankers or through proposed pipelines to Canada’s Pacific ports. Meanwhile, slowed bitumen production in Canada would probably prompt producers elsewhere to meet the enduring demand for fuel by exploiting resources such as oil shale, hard-to-control deep-sea wells, or even coal. Discouraging oil-sands production is not likely to stanch the global flow of petroleum, says Adam Brandt, a professor in Stanford University’s Department of Energy Resources Engineering: “The market forces are just overwhelming.” MacLean agrees. “Countries importing large volumes of oil today are not going to stop doing that tomorrow,” she says. “They’re not all moving to electric vehicles in the next decade. So having a policy of no further fossil-fuel infrastructure doesn’t really seem realistic to me.”

A number of experts say that reducing overall oil demand is ultimately the only way to lessen the environmental impact of Alberta’s oil-sands industry, and a widely respected 2009 meta-analysis of life-cycle studies by MacLean and fellow life-cycle analysts Alex Charpentier and Joule Bergerson at the University of Calgary would seem to back them up. According to the analysis, driving a car for one kilometer produces 320 to 350 grams of carbon dioxide pollution if the gasoline is derived from in situ plants. If the gasoline is refined from conventional crude, the same ride produces less pollution—250 to 280 grams of carbon dioxide. But the combustion of the petroleum itself, regardless of how the fuel was produced, accounts for 212 of those grams either way.

The bottom line, says Brandt: “If we’re really upset about the oil sands, we need to get serious about our oil habit.”

Peter Fairley is a freelance writer based in Victoria, British Columbia. His feature “Will Electric Vehicles Finally Succeed?” appeared in the January/February issue of Technology Review.

Keep Reading

Most Popular

10 Breakthrough Technologies 2024

Every year, we look for promising technologies poised to have a real impact on the world. Here are the advances that we think matter most right now.

Scientists are finding signals of long covid in blood. They could lead to new treatments.

Faults in a certain part of the immune system might be at the root of some long covid cases, new research suggests.

AI for everything: 10 Breakthrough Technologies 2024

Generative AI tools like ChatGPT reached mass adoption in record time, and reset the course of an entire industry.

What’s next for AI in 2024

Our writers look at the four hot trends to watch out for this year

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at with a list of newsletters you’d like to receive.