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Alberta Crude Oil

Turner Valley Buy Alberta Oil Billboard
Turner Valley Buy Alberta Oil Billboard
Turner Valley Oil (Commissioner) Coltman, Don (Photographer) Steffens Colmer (Photographer), Public domain, via Wikimedia Commons

Alberta crude oil make a significant contribution to climate change, which harms us here at home. I’m going to talk more about our greenhouse gas (GHG) emissions, but to set the stage for that post, let’s talk about an Alberta emissions champ — crude oil.

Our oil comes in many varieties, including bitumen, heavy oil, light oil, and condensate. Our province also produces a considerable quantity of natural gas. Natural gas and crude oil exist on a continuum, and they often come out of the ground together. Crude oil is at the heavy end of this continuum, while natural gas is at the light end. Condensate, which is also called pentanes plus, is somewhere in the middle. I include condensate here because my most important data sources, the Alberta Energy Regulator, the Canada Energy Regulator, and the U.S. Energy Information Administration, all include it in their tally of oil and equivalent hydrocarbons.

Pentanes plus consists mostly of pentanes (five carbon chain) and higher carbon number hydrocarbons. This grade is extracted from raw natural gas at gas-processing plants, but it also comes out of the ground in a form called field condensate, which consists of pentanes and heavier hydrocarbons that are dissolved with natural gas or solution gas. By “field,” we mean that it is separated from the stream before delivery to a gas processing plant. Condensate, or pentanes plus, is used chiefly as a diluent for bitumen. It’s the dil in dilbit, which is the industry term for diluted bitumen.

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When we say that crude oil and bitumen are at the heavy end of this continuum, we mean they’re more complex than gas. They consist of longer, more complex molecules. They also often contain impurities, such as sulphur and heavy metals. You’ve probably heard for years that bitumen is a “dirty” fuel. It’s the complex molecules and impurities that make it that way, because they increase the energy inputs required to refine this feedstock.

Light grades of crude oil can be refined into other products relatively easily. Alberta’s heavy oil consists of molecules that need to be broken down into smaller and lighter components before being refined. This process is called cracking.

The oil sands account for 97 per cent of Canada’s proven oil reserves, primarily in the form of bitumen. In a typical year, more than 80 per cent of Alberta’s oil production comes from bitumen. This information comes from Canada Energy Regulator production scenarios. I’ll explore these scenarios in greater detail in future posts.

Production and Extraction

Conventional production methods allow us to extract light oil by pumping it out of the earth. In contrast, bitumen and heavy oil, a denser, more viscous form of crude, often require the use of unconventional production techniques, such as mining and in situ production.

Albian Sands Mine
jasonwoodhead23, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons

Mined bitumen comes from relatively shallow bitumen deposits — typically around 50 metres deep. These deposits can be accessed from the earth’s surface by open-pit mining. The mines are all located north of Fort McMurray along the Athabasca River. Examples include the Imperial Oil Kearl mine, the CNRL Muskeg River and Jackpine mines, the Suncor Energy Millennium, Steepbank, and Fort Hills mines, and the Syncrude Mildred Lake and Aurora North mines. About 20 per cent of Alberta’s bitumen comes from minable sources.

In situ bitumen deposits lie deep below the earth’s surface — typically 200 metres or more below grade. Two technologies are commonly used for in situ bitumen extraction — either steam-assisted gravity drainage (SAGD) or cyclic steam stimulation (CSS). In situ production requires less water in recovery, but more energy, which makes such deposits particularly GHG-intensive, because the primary energy employed is usually natural gas. In situ facilities are concentrated in central and northern Alberta.

Cenovus oil sands facility at Christina Lake
Energy Future Fellows visit Cenovus SAGD oil sands facility at Christina Lake, Alberta on June 16, 2017. Todd Korol/Public Policy Forum. (CC BY-ND 2.0)

There are too many in situ facilities to list here, but prominent examples include the Cenovus Energy Christina Lake, Foster Creek, and Sunrise facilities, CNRL Primrose and Jackfish facilities, and Suncor Energy Firebag and MacKay River facilities. About 80 per cent of Alberta’s bitumen comes from in situ sources, and the in situ share will increase, because facilities are the fastest-growing sources of Alberta bitumen production.

Processing and Upgrading

About one-third of Alberta’s bitumen is upgraded before delivery to markets. Upgrading is a process that transforms bitumen into light, sweet synthetic crude oil (SCO) through fractionation and chemical treatment. This process removes virtually all of the sulphur and heavy metals from the bitumen, making it easier and cheaper to process. SCO is often refined into gasoline. 

The remaining two-thirds of Alberta’s bitumen is diluted with natural gas condensates or pentanes plus before delivery via pipeline. This oil is thick and dense, with large amounts of sulphur and heavy metals. As such, it is relatively cheap for a refinery to purchase, but more expensive to process. It is typically refined in high-conversion refineries, which are concentrated in the U.S. Midwest and along the Gulf Coast.

These refineries prefer the heavy and sour feedstocks, which produce better yields and higher profit margins. They typically refine these feedstocks into heavier fractions, such as diesel, jet fuel, heating oil, and marine oil, which they sell in the same regions.

The Pine Bend Refinery in Rosemount, Minnesota was a pioneer in processing Alberta oil. Acquired by Koch Industries in 1959, the refinery had a coking unit that allowed it to process Alberta’s heavy oil and bitumen, which were considered inferior at the time. The company referred to Alberta’s oil as “garbage crudes” in legal filings. This amusing detail comes to us from Geoff Dembicki’s recent book, The Petroleum Papers.

In spite of its derogatory name, bitumen is highly profitable as a feedstock. The Pine Bend Refinery still operates today as Flint Hills Resources, a wholly owned subsidiary. It is so profitable that Koch Industries has long referred to it as the company’s “cash cow.”

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Alberta Crude Oil in Context

When we talk about Alberta crude oil, there are some important things we should all know.

The first is that we produce lots of it — enough to play a significant role in the forcing of the earth’s climate. We also have lots more of it below the earth’s surface, waiting for production by the methods I outlined above. Unless we curtail our production, we’ll continue to play an outsize role in heating the earth.

The second is that even though we export about 80 per cent of our oil, the GHG emissions harm our own environment here at home. Sure, most of the pollution remains in the U.S. Midwest and Gulf Coast, where our crude oil is refined and sold. That toxic stew of carbon monoxide, nitrogen oxide, sulphur oxides, benzene, particulate matter, and lead harms mostly the people who live in those areas.

It’s also true that the carbon dioxide and methane emissions from refining and combustion count against the jurisdictions where they occur. That’s the lion’s share of the total — usually around 70 to 80 per cent of the life cycle emissions. This rule of greenhouse gas accounting is why many people say that our emissions don’t matter because we only produce 1.5 per cent of the world’s total emissions. That statement is accurate, but misleading. What matters is the life cycle emissions.

Those life cycle emissions don’t harm only the United States. They harm us too. The CO2 from our oil remains in the atmosphere for up to 1,000 years, forcing climate change and causing extreme weather around the world — including in our own country and province. Think of the major climate disasters that have struck Canada over the last several years. The Lytton fire, the Abbotsford flood, the Ontario derecho wind storm that knocked out power for two weeks — our crude oil contributed to those catastrophes. While you’re at it, consider the major recent Alberta disasters. The wildfires in Slave Lake and Fort McMurray, the floods in southern Alberta, the hailstorms in Airdrie and Calgary — our fuel contributed to those events too.

People say that bitumen and heavy oil are especially “dirty” oil because they require such extensive energy inputs during production and refining. This is especially important for Alberta because almost all of our production comes from bitumen. But the truth is, all oil is dirty in the sense that it produces lots of CO2 (and other pollutants) at every point in its life cycle, from production to end-stage combustion. That’s what I’ll talk about in my next post — the life cycle emissions of Alberta crude oil.

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