V.
Business English
Canada's oil sands
a blessing and a burden
von Ed Crooks
As demand for oil surges in Asia, companies are raising the stakes in their oil sands investments.
The scene of the exploitation of the developed world's biggest oil resource is like some dystopian fantasy.
Vast pits are carved out of the forest, where machines toil day and
night taking hundred-tonne bites out of the earth. Mist rises from
sluggish lakes of polluted water and great columns of steam rise into
the air. The process of turning Canada into an energy superpower is an awe-inspiring, but disturbing, sight.
In recent months there has been a renewed surge of interest in the oil sands by international companies. But campaigners are raising the alarm about the environmental damage being caused.
The resource potential of the oil sands is enormous; with 174bn
barrels thought to be recoverable using existing technology, the known
reserves are exceeded only by Saudi Arabia. The companies operating
there have investment plans that imply a rapid increase in the rate at
which that potential is realised. From about 1.2m barrels a day today,
the industry reckons production could reach 4m b/d by 2020, potentially
making Canada the world's fourth-biggest oil producer, surpassed only
by Saudi Arabia, Russia and the US.
As Brian Hall of IHS, a consultancy, puts it, the oil sands are "America's energy security blanket''.
For international companies, too, the oil sands are powerfully
attractive. Saudi Arabia is closed for oil production, Iran and Iraq
are very difficult, Russia and Venezuela are tightening the screws on
international companies. By comparison, Canada is a dream.
The problem is cost of extraction.
The oil is in the form of bitumen, which is solid at normal
temperatures, and mixed with sand and clay. So it needs to be heated
with hot water or steam to separate it out, either underground, or
after being mined by mechanical diggers and carried to an extraction
plant in the world's biggest dump trucks.
After that, the heavy oil extracted needs to be processed, in
an upgrader, before it can be sold on the crude oil market. Shell
Canada says costs of the whole process work out at about C$25
(EUR17.34) a barrel. The costs of new developments have been soaring,
largely because of shortages of labour and steel.
But as demand for oil surges in Asia, and fresh sources of
supply seem increasingly hard to find, expectations have increased that
the price will stay high, encouraging companies to raise the stakes in
their oil sands investments. Recently, Statoil of Norway agreed to pay
$2bn for North American Oil Sands Corporation. And Total began the
process of securing approval to build an upgrading plant near Edmonton, Alberta, to process its oil sands, as part of a C$10bn-C$15bn investment programme.
"Even after all the cost increases, we have not seen any
companies scrapping their investment projects," says Pauline Dingwall
of Wood Mackenzie, the analysis firm.
© 2007 Financial Times Deutschland
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