| Remarks by E. Lui to the Chemical and Materials Engineering Graduate Research Symposium, University of Alberta
| | Edmonton, Alberta | May 27, 2008
| Good afternoon. It’s a pleasure for me to be here and an honour to have been invited to talk with you today.
I’m also pleased to bring you greetings and best wishes on behalf of all my colleagues at Imperial Oil, many of whom are alumni of the University of Alberta. Imperial has had a close relationship with the U of A for many years, and we look forward to strengthening this relationship to take on the many opportunities ahead.
Canada’s oil industry and its great universities need to work with one another – cooperatively and positively – if the opportunities we face are to be realized and the obstacles we face are to be overcome. I know we can and I’m confident that we will.
I’ve been asked to talk with you today about meeting Canada’s needs for affordable energy in an environmentally responsible manner, especially with regard to the greatest area of opportunity available to us at this point in our history - the development of Canada’s vast oil sands resource. This subject is at the core of what I do at Imperial Oil. It is also how Imperial views its responsibilities to Canada and Canadians, Alberta and Albertans, and the local communities in which we operate our facilities and projects, whether in oil sands or other parts of our business.
As a company, we have always been committed to providing Canadians with reliable and affordable energy, contributing to healthy and growing national and regional economies, and protecting the environment. It is our firm belief that Canadians do not have to choose between energy security, economic well-being, and a clean environment. It is not an either-or, zero-sum proposition. Both are important, and all of us should expect to have both and nothing less.
Let me focus first on the energy and economic side of the equation. Energy is vital to all of us and to nearly everything we do – in our homes, at work and play, in our schools, hospitals, factories, farms and offices, on the road, at sea and in the air. It provides the heat, light and motive power we need and must have to survive and go about our daily lives. Providing even the basics of life – food, shelter, warmth and medical care – involves consuming energy.
It’s estimated that total world-wide demand for energy will increase by about 50 percent over the next quarter of a century, driven largely by population growth and industrial and economic growth in the developing world, which are trends that cannot and should not be reversed. Indeed, with close to 20 percent of the world’s population waking up every day to inadequate sanitation, insufficient safe drinking water and no more than primitive forms of electricity, we share a duty and have an obligation to meet these growing demands, and afford them with a better quality of life.
Today, most of the energy we consume, in Canada and around the world, comes from hydrocarbons, with crude oil being the dominant source of motive fuels in particular. That will likely continue for at least the next several decades. Alternative energy sources will play a role, but the sheer volume of demand will dictate a continuing need for hydrocarbons to meet the largest share of the world’s total energy needs.
That means a correspondingly rising demand for oil and gas which, given the depletion of existing fields, must come from increasingly remote and difficult areas and unconventional sources.
It’s not news that as this outlook unfolds, Canada is in a very strong position. Of all G‑7 nations, Canada is the only country with the potential to increase production of liquid hydrocarbons in the coming decades, not only to meet our own needs but to supply other markets.
The reason for our strength is of course our vast oil sands resources. Today, Canada’s oil sands reserves are estimated – at about 175 billion barrels – rank only second in the world behind Saudi Arabia, which stands at about 260 billion barrels.
Oil-sands development is estimated to require somewhere around $100 billion of investment between now and 2015. This will create jobs and economic benefits in every region of Canada, not just Alberta and the west.
None of this should be news to those who lives or does business in Alberta or has even a passing acquaintance with our affairs. I emphasize the importance of reliable and affordable energy, the opportunities and economic benefits offered by oil-sands development simply because they are often downplayed. Curtailing development of a resource that offers such benefits to Canada – and essential to meet the needs of an increasingly interdependent world – would come at a high price, both economically and socially.
At the same time, I want to emphasize with equal conviction that the environmental side of the equation is also hugely important. Those of us who are involved in oil sands development today – along with future generations – must find ways of pursuing our opportunities in ways that are environmentally responsible – minimizing the impacts of our operations on the landscape, ecological systems, air and water.
Environmental imperatives must be given equal weight with economic and energy-supply considerations. The communities, in which we operate, expect us not only to respond to environmental concerns but proactively addressing and managing them.
As I said earlier, we believe we can have reliable and affordable energy, a strong economy and a clean environment, and we’re committed to making that to happen.
I’m sure most of you are reasonably familiar with Imperial’s involvement in oil sands development, but let me give you a quick summary.
Imperial has been a pioneer in the development of Alberta’s oil sands since the early 1960s. We were an original member of the Syncrude consortium and remain the second-largest shareholder today, with a 25-percent interest. Syncrude is the largest surface-mining oil-sands operation on the planet, as well as Canada’s largest single source of crude oil.
We were also pioneers in the field of in-situ recovery, which as you know involves recovering bitumen from oil-bearing sand deposits as much as half a kilometer below the surface by steam injection
At Cold Lake, Imperial operates a wholly-owned facility that is the largest thermal in-situ recovery operation in the world. Pilot production facilities went into operation at Cold Lake in the mid-1960s, but it wasn’t until more than 20 years later, in 1985, that commercial-scale production began. Over the decades, Imperial invented and held patents on both cyclic steam stimulation and steam assisted gravity drainage processes, without which commercial-scale recovery would not have been possible. The operation has been expanded in a series of phases, and last year produced an average of 154,000 barrels of bitumen a day, or roughly five percent of Canada’s total crude oil production.
Today Imperial holds about 465,000 acres of oil-sands leases. Most of the acreage, however, is in the Athabasca area of Alberta. This includes the Kearl leases, northeast of Fort McMurray, on which we propose to develop, in a series of phases, a 300,000 barrel-a-day surface mining project along with partner ExxonMobil Canada.
In short, Imperial is a major player in oil sands development. We have been in the past, and we will be in the future.
Let me turn now to the core of my subject today. The role or importance of technology in oil sands development.
From the outset, the key to development of Alberta’s oil sands has always been technology – the envisaging, devising, testing, proving and commercializing new, more efficient and lower-cost methods of mining, extraction and upgrading of the oil sands. The oil sands is a massive resource – somewhere around 2 trillion barrels of oil in place. So the figure of 175 billion barrels that I quoted earlier is based on harvesting only about 10 percent of this massive resource using current available technologies.
At Imperial, we certainly don’t believe the current oil sands technologies are the best they can be. They can and will be improved.
Some like to say today that the era of ‘easy oil’ is over. The reality is that the oil and gas industry has always operated at the technological frontier. Developing and producing many of the world’s current supplies of oil and gas – be they from deep water locations off the coast of Africa, to frontier regions of Russia, and Canada’s oil sands – would not have been possible using technologies of years gone by.
So I firmly believe that technological breakthroughs leading to radically new extraction and upgrading processes will be achieved. They will be achieved because a lot of smart, and dedicated people are determined to achieve them, and because the money and resources they need to achieve them are being made available. And there’s no question that as part of this massive effort, the emerging new technologies and processes will result in a smaller environmental footprint.
Environmental benefits will be built into the new technologies because environmental considerations are right there in the research parameters laid down for the scientists and engineers engaged in the effort. Our research efforts are directed towards developing technologies that are more efficient, lower-cost and environmentally responsible.
I think one fact that is often downplayed in discussions on the environmental impacts of oil sands operations is that significant progress has already been made, and Imperial has certainly been a leader in that respect. Let me give you a few examples.
The three major areas of environmental concern are the water use in both mining and in‑situ recovery operations, greenhouse-gas intensity of oil sands operations, and the long-term impacts on land.
There’s no question that the processes used for in-situ recovery at Cold Lake are water-intensive. Large amounts of steam, up to 550,000 barrels a day, are injected into the underground deposits to soften the bitumen so that it will flow and can be pumped to the surface. But over the more than twenty years that Cold Lake has been in commercial production, those processes have been continuously improved, and their water intensity has been dramatically reduced.
In 1985, 4.5 barrels of fresh water were required to produce one barrel of bitumen. Today the requirement is roughly one-half of a barrel of water – a reduction of more than 80 percent.
We have developed technologies to reuse water produced along with the bitumen, more than 95 percent of which is recycled today. Since this water contains levels of minerals and other impurities that would foul the steam-generating boilers, the Cold Lake plant operates one of the world’s largest water-softening facilities to support recycling – technology that Imperial needed to develop to allow this to occur.
When recycled water is not sufficient to meet steam-generating requirements, we have installed facilities to use brackish water from deep saline aquifers that is not suitable for human consumption or agricultural use
The Syncrude surface-mining operation, like all other oil sands mining operations, also relies on water, specifically from the Athabasca River. Again, significant progress has been made over the years to use water more efficiently. Today Syncrude consumes 60 percent less water per barrel of oil produced than it did in the 1980s. Syncrude’s water requirement today translates into just 0.2 percent of the Athabasca’s average annual flow, or 1.3 percent of the lowest flow rate, which occurs in winter.
That is not to say that local community concerns over the use of water from the Athabasca for oil sands operations, given plans for further development, are not legitimate or real. They are, and Imperial and others in the industry recognize that. To help ensure that water-call requirements on the Athabasca are efficiently managed, Imperial has been a prime mover in a cooperative program involving the major oil sands companies operating or planning to operate in the Athabasca area. All the companies have committed to a plan aimed at maintaining acceptable flow rates in the river, as set out in a water management framework established by Alberta Environment and the federal Department of Fisheries and Oceans
The Kearl project plans also include a major commitment to progressive land reclamation, whereby land used earlier in the project life will be reclaimed when new areas are entered. That commitment also includes the intent to fully engage local stakeholders in reclamation planning so that, the lands reclaimed will have equivalent wildlife capabilities and will be accessible for traditional use by the local community.
The commitment at Kearl will be consistent with practices Imperial has long been following at Cold Lake, where we have an ongoing program of reclaiming land impacted by operations. Each year, trees and shrubs are planted to prepare the lands for future use. Since 1985 we have planted more than 650,000 trees and shrub seedlings indigenous to the area. Also, in 2006 we established a new monitoring program to survey and protect the more than 12,000 hectares of wetlands in the Cold Lake lease area, and in 2007 we began evaluating methods for reclaiming wetlands at former well sites.
Let me turn now to more future-oriented initiatives. Existing methods, processes and technologies can be incrementally improved, and they have been, very significantly, over the years. But over the long term incremental improvements may not be enough to meet our goal of increased production and better environmental performance. What we need, therefore, are fundamentally new, more efficient and cleaner ways of extracting and upgrading bitumen from the oil sands of Alberta – nothing less. We need technologies that radically lower water use, reduce or eliminate tailings ponds and significantly reduce energy consumption and emissions.
This challenge was the motivation behind the establishment of the Centre for Oil Sands Innovation (or COSI) here at the University of Alberta, to which Imperial is contributing $10 million over a five-year period that started in 2004. COSI is not about finding ways to improve existing processes. Its purpose is to foster and fund pure or fundamental research – in effect starting with a blank sheet of paper – that will lead to step changes in the technologies of oil sands extraction and upgrading. It recognizes that Canadian researchers are among the world leaders in this field, and equipped and capable to take on this challenge.
The COSI program is in the early stages, investigating a range of promising possibilities. One area is the potential use of nanotechnology – the precise design, construction and use of specialized molecules or nanoparticles – to create supersolvents for separating clay, sand and heavy metals from bitumen, or to fashion new catalysts for upgrading. The use of solvents to extract bitumen would dramatically reduce water consumption, while advanced catalysts could allow for lower-temperature upgrading with far less energy and thus far less emissions.
Exploratory research, properly coordinated and focused as well as adequately funded and resourced, can and will lead to breakthrough technologies we need. Historically it always has, in virtually every field of human endeavour from medicine to data processing and space exploration, and I believe it will prove to be true in oil sands development of the future, as well, just as it has in the past.
I hope that many of you here today have become inspired to accept the responsibility of providing Canada and the rest of the world with reliable and affordable energy supply, and take on the challenge of developing technologies to facilitate the cost effective and environmental responsible development of our vast oil sands resource.
This concludes my remarks. Thank you for your attention.
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