Friday, May 21, 2010

Tar sands as the oil source of the future

The huge environmental disaster surrounding the leakages from BP's off-shore drilling platform Deepwater Horizon in the Gulf of Mexico has again focussed attention on alternative sources like the oil (or tar) sands that lie underneath the sub-arctic forests of western Canada. Buoyed by the "sweet spot" of reasonably high plateau that oil prices have reached in recent years and declining or stagnant production, hitherto expensive oil sources like Canadian tar sands have suddenly become attractive.

Canada has 178 billion barrels of proven oil reserves, higher than all except Saudi Arabia, annd virtually all of it is under tar sands. The United States produces about five million barrels of oil a day and imports 10 million more, of which Canada accounts for about 1.9 million barrels (and roughly half of it from oil sands).

The Times reports that though it is far safer to extract oil from underneath the tarry rocks (in comparison to the deepwater oil rigs), such exploration poses other environmental challenges, like toxic sludge ponds, greenhouse gas emissions and the destruction of boreal forests. Most of the biggest production sites are huge mine pits, accompanied by ponds of toxic waste; extraction from under tar sands produces far more greenhouse gases than conventional drilling; the process requires three barrels of water for every barrel of oil produced because the dirt must be washed out (already tailing pools cover 50 square miles of land abutting the Athabasca River); and the mines are also carving gashes in the world’s largest intact forest, which serves as a vital absorber of carbon dioxide and a stopover point for millions of migrating birds. However, while acknowledging the dirtiness of the current extraction process, supporters point to the emergence of more efficient and environment friendly extraction technologies.

The uncertain geo-politics of Middle Eastern oil coupled with the deep concerns about off-shore exploration due to the recent BP incident, has already made Canadian tar oil politically attractive in the US. Further, the heavy oil from Venezuela and Mexico are increasingly becoming more expensive to refine and therefore costlier.

The massive tar sands reserves is another blow against the oft-repeated "peak oil" hypothesis which claims that oil exploration has reached its highest point and can only decline from now. It is also yet another reminder of the fact that as technology advances and the economics of exploration becomes favorable (as existing sources get depleted), hitherto unviable sources start becoming attractive. The tar sands may only be following the recent example of natural gas where breakthroughs in extracting gas trapped underneath hardy shale-rock formations that have given a big boost to its exploration.

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