Canadian Oil Sands Fever

It seems as if everybody wants a piece of the oil sands in Alberta, Canada. Chevron has just upped their involvement by leasing 180,000 acres of land in northern Alberta, which contain an estimated 7.5 billion bbl of oil. There’s an estimated 1.7 trillion barrels of crude bitumen (the technical term for the fossil fuel extracted from the oil sands) in the oil sands, of which 19% will probably be recovered. There’s also word that China National Petroleum Corp. will be placing a multi-billion dollar bid (as in $20-billion to $30-billion, more than what CNOOC offered for Unocal last year) for an oil sands company this year.

And why not? As the VP of Oil Sands at Shell Canada puts it: “It’s the single largest hydrocarbon deposit on the Earth, and it’s next door to the biggest market for oil products, the United States.” Oh…but wait: “It’s crap oil…You’ve got to use a lot of energy and a lot of pots and pans to extract it from the sand, and you have low-quality oil. It’s a high cost business and a lot of capital and a lot of operating costs.” The Pembina Institute have published a very good report (.pdf) about the oil sands. Here are the natural gas costs alone to extract 1 bbl of synthetic crude oil from the oil sands (represented as natural gas energy input relative to energy of 1 bbl crude):

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