Shifting oil sands

…What has always prevented the oil sand development has been the cost. To produce oil here you need to put almost as much energy into the sands as you get out in the form of crude, making it one of the most energy-intensive and environmentally damaging sources of fuel. That the oil sands are being developed at all epitomises the remarkable crossroads at which the world stands in terms of energy production. Plenty of oil is still out there, but it is increasingly difficult and expensive to access. This reality, usually played down by the oil industry, coincides with the rise of the ‘peak oil’ movement. The concept of ‘peak oil’ is based around the theory of M King Hubbert, a geophysicist working in the 1950s who predicted – accurately – that US oil production would peak two decades later and then enter a rapid decline. The peak oil debate grew to prominence during the high oil prices of the 1970s, but in recent years a new generation of industry experts and geologists have added their voices.

‘The days when you could just open the taps in Saudi Arabia and boost production are over,’ Matthew Simmons, a Houston-based energy consultant, and a leading figure in the peak oil movement, says. ‘The amount of conventional oil we can actually recover is declining.’ Simmons explains that the rates of increase of worldwide oil production have dramatically slowed down in the past few years. Production now stands at around 80 million barrels per day. ‘There have been no major oilfield discoveries since the late 1960s,’ Simmons says, ‘and [oil companies] are desperate to find fuel sources.’

New projects include gas injection of existing fields, ultra-deep-sea exploration off the coasts of Mexico and Nigeria, the development of alternative fuels such as ethanol, and, of course, the stampede on Alberta’s oil sands. Ten years ago there were only two mines here, operated by small Canadian companies. But in the past few years, 15 more mines have sprung up. Between oil majors such as Shell, Conoco-Phillips and Total E&P, more than $30 billion has been spent so far. Over the next decade, an estimated $150 billion will be spent digging vast pits to access the sands, building steaming and refining plants to process the oil, and laying down hundreds of miles of pipelines. The oil companies are betting, in effect, that the world’s economy will remain dependent on oil for the foreseeable future – and that Fort McMurray holds at least part of the answer.

The Telegraph