The Canadian oil sands have significant potential and are, by far, one of the best options for meeting growing world oil demand. However, further development of this large resource faces a number of challenges. Perhaps the most damaging is the image of oil sands as a source of “dirty oil.” This is not a trivial problem and must be taken seriously.
One of the main reasons environmentalists have this view is that extracting this oil emits more greenhouse gas (GHG) per barrel produced, than conventional oil extraction. Although the initial reputation of dirty oil arose in large part from issues related to surface mining (i.e., stripping the landscape during mining and temporarily leaving a big hole) and storing waste water in tailings ponds, concerns about increased GHG emissions have further tarnished the industry’s image.
Climate change is one of the biggest challenges of the 21st century and is shaping the context for the oil sands industry. There is a great deal of global debate about the right balance between energy development and environmental stewardship. This crucial debate deserves the facts. But when it comes to GHG emissions from oil sands, some of the facts and figures are either inaccurate or misunderstood. It is true that production from oil sands generates more GHG emissions than conventional oil production, but emissions are actually much lower than the public has been led to believe when a well-to-wheels (WTW) analysis is used. Many experts recommend a “WTW” or “full lifecycle” approach when comparing GHG emissions to other typical oil supplies. The WTW analysis for estimating GHG emissions of various oil sources involves looking at more than oil production processes. In general, production of oil accounts for only 5 to 17 percent of total GHG emissions,1 with the remainder coming from other processes like transporting oil to market, refining, and end-use by consumers (i.e., vehicle combustion).
Although the oil sands industry currently accounts for approximately 0.1 percent of global emissions (or 6.5 percent of Canada’s total GHG emissions in 2010), emissions from oil sands are going to increase in the future as production increases. While carbon dioxide (CO2) intensity per barrel produced from oil sands has decreased in the last couple of decades, absolute GHG emissions are increasing.
Like any other oil production method, oil sands production generates CO2 emissions, both from mining and in-situ operations. The primary source of CO2 emissions for mining operations is the use of energy for various activities, i.e., the energy required to move the earth, to break it into smaller pieces, and to heat water used in the extraction process. The primary source of CO2 emissions for in-situ operations is the combustion of natural gas to generate the steam required for cyclic steam simulation (CSS) and steam assisted gravity drainage (SAGD) drilling methods. GHG emissions also result from various processes used in upgrading to upgrade bitumen into SCO.
Because oil sands are considered to be a high carbon intensity fuel, GHG emissions from the production of raw bitumen and SCO are higher than emissions from conventional oil production. This is a widely agreed upon fact. There is disagreement, however, about exactly how much higher those emissions are. Some studies report that GHG emissions from the production of heavy oil and bitumen are significantly higher than GHG emissions from the production of conventional oil, while other studies report that the difference is not much greater.
A WTW or lifecycle assessment is a commonly used method to determine the carbon intensity of any fuel. WTW is gaining a great deal of importance today, as the regulation of GHG emissions evolves and policymakers want to consider the full lifecycle emissions of a fuel before they make energy-related decisions. WTW evaluates GHG emissions, starting from when oil is produced through to its final stage, such as combustion in vehicles. WTW includes well-to-tank (WTT) emissions and tank-to-wheels (TTW) emissions.
Several groups have studied both WTT and WTW emissions for oil sands and oil production from other sources (e.g., crude oil used by refiners in the U.S. and European Union). These studies have generally produced similar findings, although some studies show greater differences in emissions between oil sands and other sources of oil. Figures 1 and 2 show WTT and WTW emissions for 13 different types of crude oils and blends including oil sands. These two figures should be compared, as they show how different interpretations can be derived from the same data. Comparing the WTT and WTW data, it is clear that different sources of oil produce different WTT emissions, and this is the main reason environmentalists refer to oil sands as a “dirty oil.”
However, Figure 2 shows that combustion emissions (TTW) remain the same for nearly every type of crude oil used to produce gasoline and diesel fuel. This is because the quality of gasoline and diesel fuel used in vehicles is basically the same, regardless of its source. Therefore, it does not matter if gasoline or diesel fuel is derived from Saudi light crude, Californian heavy oil, WTI crude, Venezuelan heavy crude, or Canadian oil sands. The TTW emissions will be the same for each. The variability in lifecycle emissions among petroleum fuel occurs in the WTT portion of the cycle, before the fuel reaches the vehicle. Therefore, considering total emissions (WTW emissions), there’s not much difference between oil sands emissions and those from other oil sources.
Much of the debate surrounding oil sands emissions is focused on the WTT portion of the cycle, which makes up only 20 to 30 percent of total GHG emissions. Emissions for the WTT portion of the cycle differ among crudes because of the varying energy requirements for production, upgrading, refining, transportation, and distribution. IHS CERA conducted a meta-analysis of the results of 11 studies done so far. A meta-analysis combines and analyzes the results of multiple studies, with the goal of providing more accurate data than a single study. According to IHS CERA’s report, when GHG emissions are analyzed on a WTW basis, the emissions released during the combustion of refined products such as gasoline and diesel fuel make up 70 to 80 percent of total emissions, and WTT emissions make up only 20 to 30 percent of total emissions.2
According to IHS CERA (Cambridge Energy Research Associates), emissions from refined products produced from bitumen are only 5 to 15 percent higher than the average crude oil used in the U.S3 and 10 to 20 percent higher than the average crude used in Europe.4 These values do not represent all possible emissions from the production of bitumen, but instead represent average values used for comparison with other crude oil sources. And although oil sands-derived crude oils are more carbon intensive than the average crude oil consumed in the U.S., other carbon intensive crude oils are produced, refined in, or imported into the U.S.
However, when the Natural Resources Defense Council (NRDC) conducted a similar study in 2008 and 2010, the results of their study showed that the emissions from oil produced from bitumen are 8 to 37 percent higher in comparison with the U.S. average petroleum baseline.5 According to European Union’s (EU) proposed Fuel Quality Directive, oil sands-derived fuel emits 22 percent higher GHG emissions compared to conventional crude oil. But results of the latest study released by Jacobs Consultancy in March 2012 concluded that the WTW carbon intensities of gasoline and diesel from Alberta crude oils are within 12 percent of the carbon intensity of gasoline and diesel from typical crude oils refined in typical European refineries.6
The results of each study vary, some greatly. Which study do you believe? Which study results should be used for policy-related decisions? The reasons for these varying results depend on myriad factors, such as different analysis methods, different data sources, different lifecycle boundaries, and different assumptions.
An analysis of GHG emissions from petroleum fuels shows that the level of GHG emissions depends on the source of the oil and the production practices used. Some of these studies also did not take into account the GHG emissions from the by-products produced while making these fuels. For example, the extent of flaring during hydrocarbon production can result in a significant source of GHG emissions from conventional crude. Nigeria and Iraq are among the top sources of imported crude to the U.S., and initial estimates indicate that current gas flaring in Nigeria equates to burning as much as 12 to 18 percent of the produced crude on an energy-equivalent basis.7 Another factor not accounted for in some studies is the amount of water produced in conjunction with the production of oil. In the U.S., on average, there are ten barrels of water produced for every barrel of oil produced. In Canada, the water to oil ratio is closer to 11:1. High water production increases the energy needed to lift the oil-water-gas mixture from the reservoir and to treat the mixture, as well as to treat the water before either reinjecting it or disposing of it.8
The lifecycle analysis is an evolving discipline that must deal with a number of uncertainties, making it a challenging basis for policy. WTW analysis to set fuel policy requires good input data and sound methodology. Estimates of WTT GHG emissions from a single fuel can vary by more than 10 percent on a WTW basis. This variance is larger than the GHG emissions reductions required by some policies.
The answer to this question depends on who you are talking to. As we have seen before, it is possible to arrive at two different conclusions from the same data. This is certainly the case when considering the significance of GHG emissions from oil sands.
Critics of oil sands focus their argument on emissions generated during the production process (WTT). Figure 1 illustrates that each barrel of oil from SAGD production can release up to three times (300 percent more) the amount of CO2 than conventional oil extraction (West Intermediate Texas) on a WTT basis. When emissions from in-situ (i.e., SAGD) and mining are compared, it suggests that the in-situ method creates higher GHG emissions than mining does. In Figure 1, mining is demonstrated to release 125 kilograms (without upgrading) and 135 kilograms (with upgrading) of CO2 emissions per barrel of oil on a WTT basis. In-situ production produces 160 kilograms (without upgrading) and 170 kilograms (with upgrading) of CO2 emissions per barrel of oil on a WTT basis. Currently both mining and in-situ oil sands development methods are used to support production growth, but, according to Energy Resources Conservation Board (ERCB), in-situ oil sands production is expected to overtake mining by 2015.
Thus, the difference between WTT emissions for conventional oil and oil sands production could be as large as 100 kg CO2 per barrel (worst case scenario). If oil sands production expands to 5 million barrels per day, this could generate a difference of 500 million kg CO2 per day, or the equivalent of 180 million tons of CO2 emissions per year.
Statistics also show that GHG emissions from the oil sands industry have been steadily increasing for the past two decades. Since 1990, cumulative GHG emissions have almost tripled from oil sands production. In 1990, GHG emissions from oil sands production were 17 million tons. In 2010, it increased to 46 million tons.9 To put numbers in perspective, in 2010, Canada’s total GHG emissions were 692 million tons.
The roughly 1.6 million barrels per day of current oil sands production is thus responsible for about 46 million tons of CO2 emissions each year. Currently, oil sands production is responsible for 0.1 percent of total global GHG emissions. While it is true that production of oil from oil sands may double or triple over the next 25 years, and total CO2 emissions have grown consistently with increased production over recent years, proponents note that oil sands operators have consistently reduced per barrel GHG emissions. In addition, proponents also argue that oil sands growth will have no meaningful effect on the global amount of GHG emissions, as the majority of the emissions occur when the fuel is combusted in the vehicle. Therefore, when examining the WTW emissions per barrel of gasoline, oil sands emissions are only 5 to 15 percent higher (Figure 2) than conventional oil, not 300 percent.
According to Canadian Energy Research Institute (CERI), GHG emissions from oil sands will increase from 46 million tons in 2010 to 128 million tons in 2035, assuming a realistic scenario of 4.9 million barrels per day of oil production. While this three-fold increase sounds very substantial, it represents less than 0.25 percent of total global emissions. It is also unclear whether global emissions would be substantially different if oil sands products were removed from the market. This is because other sources of liquid fuel will be required to replace oil sands products, and the impact of this substitution on GHG would depend entirely on the type and future quality of this liquid fuel, which is uncertain.
In conclusion, it is clear that different interpretations of the same data and information can create diverse opinions. However, whether you oppose oil sands development or support it, the risk to this industry is very obvious. If regulatory and policy measures become actionable, as seems likely if ambitious goals for reducing climate change are to be met, the pressure to reduce emissions from oil sands will significantly increase.
1. IHS Cambridge Energy Research Associates.
2. IHS Cambridge Energy Research Associates, “Growth in the Canadian Oil Sands: Finding the New Balance,” 2009.
4. IHS Cambridge Energy Research Associates, “Oil Sands, Greenhouse Gases, and European Oil Supply, Getting the Numbers Right,” April 2011.
5. Natural Resources Defense Council, “GHG Emission Factors for High Carbon Intensity Crude Oils,” Sept. 2010, 3.
6. “EU Pathway Study: Life Cycle Assessment of Crude Oils in a European Context,” Jacobs Consultancy, March 2012, 29.
7. “Lifecycle assessment Comparison of North American Crude and Imported Crudes,” Jacobs Consultancy, July 2009, 4.
8. Ibid, 3-19.
9. Alberta Environment and Sustainable Resource Development: Report on 2010 Greenhouse Gas Emissions, Alberta Environment, June 2012.
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