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Oil sands and our future pensions

“Swesif”, Sweden’s Forum for Sustainable Investment, had invited me to a symposium on tar sands – an ethical pitfall?” The reason for the discussion on tar sands is that Norway’s Statoil is going to invest huge amounts into the tar sands and Swedish pension funds are investors in Statoil. My task was to describe the role of Canada’s tar sands in the global energy system and to discuss the significance of tar sands for global energy supply. Very roughly speaking, one can say that the oil that was formed millions of years ago can be divided into three fractions, “light and sweet”, “sour” and “heavy”. The volumes of each of the fractions that can be produced can be debated, but we have used approximately 1000 billion barrels and there is approximately 1000 billion barrels of the light and sweet and sour oil left to consume. The dregs, the heavy oil that includes Canada’s tar sands, is a further 1000 billion barrels. Canada has the world’s next largest “oil reserves” after Saudi Arabia (although some think that tar sands should not be classed as oil since they are more like bitumen).

Today, Canada produces 3.3 million barrels of oil per day, Mb/d, which is 4.1% of total world production. (As a comparison, Norway produces 2.56 Mb/d the same year.) The proportion of Canadian oil production made up by the tar sands is growing. In 2007 it constituted 44% of production or 1.5 Mb/d. Their goal is to double that or more. In our research report from 2006 we noted that a high production level would require nuclear energy for provision of boiling water. I shall return to this point.

Andrew Nikiforuk is a journalist and the author of the book “Tar Sands”. He described the contemporary tar sands industry and its effect on the environment. (Read his article "Canada's Hidhway to Hell".)It is difficult to appreciate the size of the area that is affected. The area in Alberta with tar sands is the same size as the state of Florida in the USA. Tar sands exist at different depths. Down to 75 meters one can mine them using open-cut methods. It is not just the cathedral in Uppsala that could be placed in the pits that are dug but the entire city of Uppsala. And they are not digging just one hole. Those that wish to see the reality can go to Google Earth and zoom in on Alberta. When they wash out the thick flowing oil from the sand it creates large lakes of waste water. Today these lakes cover an area of 130 square kilometers.

The other extraction method that can be used when the tar sands lie at greater depths is called “In situ”. They boil water to create steam and direct this down into the ground to make the heavy oil more fluid. Then they try to pump it up. The infrastructure around each drilling site destroys the environment and changes the animal life in the area.

It was pleasant to hear that Andrew considered that our research report on future mining of tar sands, "A Crash Program Scenario for the Canadian Oil Sands Industry", was very good and that our “truth” was difficult for the authorities. Our assertion that they needed nuclear energy to be able to continue production in future has now been confirmed by the fact that they are planning 5 nuclear power stations in order to increase oil production from the tar sands. For the first time in history they are planning to use nuclear energy to increase carbon dioxide emissions. When I approve of nuclear energy it is for reduction of CO2 emissions.

John O’Conner had worked as a family doctor for an Indian village nearby the area where tar sands are being mined. He became world famous when he reported on increased rates of cancer in the village. The authorities have tried in every way possible to tone down the risks but they have not succeeded. Now some companies have begun to negotiate on ameliorative measures. There is much to tell about this and I recommend that you do a search for John O’Conner and tar sands/oil sands.

The traditional occupation of people living in the area was hunting and the last to speak was a young lady that lives in a village of 500 people in the northwest part of the tar sands area. They are badly affected by the industrial wastes. The number of wild animals to hunt is declining and many have malignant tumours. The human population that live in the area are also affected by a higher frequency of tumours and the young lady’s mother had cancer.

The symposium had been organized for investors to learn more about oil sand and the other speakers at the symposium were supported by Green Peace. The obvious question is if it is right to support Statoil with investment money from KPA, the Swedish state pension funds, in this industry. For me it did not seem OK. Representatives for the found was present at the meeting, and Kerstin Grönwall, KPA environmental manager, has just made the following statement: "We feel that if Statoil cannot protect the environment, it should withdraw from Alberta -- this goes with our criteria for environmental investments."

Continued and increased mining of the tar sands are of greatest importance to the USA. Today Canada is the largest exporter of oil to the USA with 1.9 Mb/d. On the list of exporters to the USA one also finds Saudi Arabia with 1.5 Mb/d and Iraq with 0.6 Mb/d. The official policy from President Obama is that importation of oil from the Middle East must end. However, if one considers that production in Mexico (the next largest exporter to the USA) is declining then increased importation from Canada will be essential in the future. The America market will demand it.

Sweden will never draw any benefit from the tar sands in Canada. We can make money and the wealth of our pension funds can increase but there are other investments for the future that we must undertake. When I began to discuss Peak Oil in 2001 there were two people in Sweden that were most prominent in declaring that I did not understand anything. They were Marian Radetzki and Tommy Nordin, a professor in economy and the former managing director of the Swedish Petroleum Institute, who thought that I was crazy and one of the reasons they presented was the enormous resources that exist in Canada’s tar sands. The resources exist, but the question is whether we shall destroy an area the size of Florida to quench our thirst for oil. In reality, the tar sands will only moisten our throats.

Energy is needed for the survival of the planet but the question is if we are going to sacrifice particular areas so that others will benefit. For Alberta and the tar sands in Canada the question is quite justified. Compared with the planet’s 6.7 billion people, the 40,000 that live in the affected area is a small number.

Editorial Notes: Dr. Kjell Aleklett is president of ASPO-International and professor in Physics at the Department of Physics and Astronomy, Global Energy Systems Group (former Uppsala Hydrocarbon Depletion Study Group) at Uppsala University.

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