Massive Canadian oil sands deposit may offer new hope for US fuel security

Canada to U.S. crude oil project causing lots of controversy


Outside of the Strategic Petroleum Reserve, America has no energy security plan. The next best thing may lie 500 miles north of the U.S.-Canada border in a remote area of Alberta.

Here, in an area roughly the size of Florida, lies the largest single deposit of petroleum anywhere in the world. Current estimates of recoverable oil are at 170 billion barrels. Future advances in technology could push that figure as high as 300 billion barrels – bigger than oil titans Saudi Arabia and Venezuela.

And this oil doesn’t come from nations with a history of sketchy relations with the United States. Canada is among the most stable democracies in the world. Not a shot has been fired in anger toward the United States in 200 years.

“This really does represent energy security when you talk about North America,” Shell Canada’s Stephanie Sterling said. “We are a friendly neighbor to the U.S., so what a terrific energy source to be able to provide to our neighbors.”

And unlike other foreign sources of oil to the U.S. that arrive in supertankers from volatile regions of the world, all that’s required to get the oil to American refineries is a simple pipe.

“We are looking at all pipeline infrastructure as a positive move," Sterling said. "And I am hoping that when the Americans go through their regulatory process they will also feel that way about pipeline infrastructure.”

Yet earlier this year, the White House rejected a proposal to build a pipeline from the oil sands to the Gulf coast. Keystone XL would carry 800,000 barrels of Canadian oil every day to Louisiana and Texas refineries that are struggling to retain market share and jobs. The Canadian petroleum industry insists the construction of Keystone and expansion of oil sands production will be good for the economies of both nations.

“For every two jobs created in the oil sands, one job’s created in the U.S.,” says Travis Davies of the Canadian Association of Petroleum Producers. “You’re talking about close to a half a million jobs in America over the next 25 years because of oil sands development. Right now we’ve got thousands of suppliers in the U.S. in every state of the union.”

You need only visit one of the enormous oil sands mines to see what Davies is talking about. Huge electric shovels built in Wisconsin claw away at the tarry sands. Gigantic trucks made in Illinois with wheels 14 feet high, made in South Carolina, haul loads weighing 400 tons. In each is enough oil to fuel the average car for 175,000 miles.

The open pit mines are efficient. Eighty percent of the oil in the sand is recovered. That compares to about 65 percent in a traditional well. But they are a huge scar on what was pristine wilderness. There is as much environmental opposition to oil sands development in Canada as there is to Keystone pipeline construction in the United States.

Oil companies in Alberta have attempted to address that opposition with massive reclamation projects. At what was once an open pit mine, Syncrude employee Cheryl Robb took Fox News on a nature walk. “This used to be a big hole in the ground,” Robb said as we walked along a dock on a quiet duck pond.

The area around us is lush with trees and other vegetation native to the boreal forest. She points to a dirt road a few hundred yards away. It was the border between virgin forest and the oil sands mine. Now you can’t tell the difference.

“We’ve proven that we know how to put it back together,” Robb says. “And we’re very proud of the land that we’ve put back. When we leave this area, it’s our goal that you would never know we were here.”

The oil companies are meticulous about preserving the components for reclamation when they open a mine. The top layer of fertile topsoil – “muskeg” is carefully scraped off and saved. All the seeds are collected – even berries - and sent to a nursery to be cultivated and stored.

When the mine is played out, all the sand washed of the oil-like bitumen it contained, is put back in the hole. The layer of muskeg is replaced – wetlands created and native species replanted. Syncrude plans to plant a million trees and bushes in the next year. It’s 2012 budget for environmental projects? One billion dollars.

The cycle from wilderness to mine, then back again is a long one – 30 to 40 years. But the province of Alberta feels it is a fair trade-off for the economic benefit of resource development.

But mining is only part of the equation here. The bulk of the oil is far too deep - as much as 1,500 feet in some areas – to be reached with shovels.

Devon, a U.S.-based energy company, is using next-generation technology to get at the oil.

Cal Watson of Devon's thermal operations group showed a double row of wells that have been drilled on a three-acre pad cut out of the forest.

“They go down 1,500 feet, then go out a half a mile,” he said. One well is the collection pipe. The other injects superheated steam into the oil sand. The steam liquefies the bitumen, which flows into the collection well. A nearby production plant – built to the highest standards of energy efficiency – processes the oil for sale – and reconditions the condensed water so it can be reused to make steam.

Watson is proud of the reduced impact to the environment of what’s called “in-situ” extraction. “In a small footprint, really about three to four football fields in size, we can produce 35,000 barrels a day," he said.

Fully 80 percent of the oil sands can only be exploited with such methods. And the leaps in technology will see a dramatic increase in production. About 1.6 million barrels of oil are currently produced each day. Within eight years, Canada hopes to more than double that.

That’s a lot of oil that would be available to the United States from a secure, reliable source. Much of it already is going to the U.S. through other pipelines, though Keystone would establish a direct connection to the Gulf Coast refineries.

Will the Keystone pipeline be built? Davies, of the Canadian Association of Petroleum Producers, thinks it’s a no-brainer.

“We’ve got this relationship”, he says. “A dollar spent in North America stays in North America. If we want to have energy security here on this continent, Canada’s the place to source the oil.”

John Roberts joined Fox News Channel (FNC) in January 2011 as a senior national correspondent and is based in the Atlanta bureau.