- Nov 25, 2001
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And you thought Iraq was a cakewalk! Canada would fall like a house of cards ... 
CANADA: The Trillion-Barrel Tar Pit
Who needs "oil independence" - our friendly neighbor to the north is sitting on a black gold mine!
By Brendan I. Koerner
Fort McMurray, Alberta, is an unlikely destination for a congressional boondoggle, especially when cold snaps of 40 below make it dangerous to leave any patch of skin uncovered. But here I am in midwinter, 250 miles north of Edmonton, watching a flock of Washington politicians in subzero parkas cling to tour guides like a trail of oversize ducklings. With gas prices approaching $3 a gallon in some states, the US representatives are braving the frigid air not for adventure but to learn about a filthy sort of alchemy, one that turns sludgy, sticky earth into sweet crude oil.
Alberta sits atop the biggest petroleum deposit outside the Arabian peninsula - as many as 300 billion recoverable barrels and another trillion-plus barrels that could one day be within reach using new retrieval methods. (By contrast, the entire Middle East holds an estimated 685 billion barrels that are recoverable.) But there's a catch. Alberta's black gold isn't the stuff that geysered up from Jed Clampett's backyard. It's more like a mix of Silly Putty and coffee grounds - think of the tar patties that stick to the bottom of your sandals at the beach - and it's trapped beneath hundreds of feet of clay and rock.
This petroleum dreck is known in these parts as heavy oil, and wildcatters are determined to get it out of the ground and into a pipeline. If they succeed, the stereotypical oil zillionaire may be not an Arabian emir but a folksy Albertan fond of ending sentences in a question, eh? Like Jim Carter, president of Canada's largest oil company, Syncrude. A coal-mine foreman by trade, Carter talks as if he just got out of a cut-rate business seminar, spewing jargon like "going-forward basis" and "continuous-improvement mindset." He's the kind of guy who straps a snowplow on his John Deere mower and clears the streets just for fun. But he clawed his way out of the pits to a corner office, and now he has a plan to make Canada's oil reserves pay off.
Heavy oil isn't a new discovery. Native Americans have used it to caulk their canoes for centuries. Until recently, though, it's been the energy industry's stepchild - ugly, dirty, and hard to refine. But the political winds are favoring the heavy stuff, as "energy independence" - aka freedom from relying on Middle East oil - has become a war-on-terror buzz-phrase. Even President Bush has waxed optimistic about Alberta's "tar pits."
Better yet, recent improvements in mining and extraction techniques have cut heavy oil production costs nearly in half since the 1980s, to about $10 per barrel, with more innovation on the way. The petroleum industry is spending billions on new methods to get at the estimated 6 trillion barrels of heavy oil worldwide - nearly half the earth's entire oil reserve. Last year, Shell and ChevronTexaco jointly opened the $5.7 billion Athabasca Oil Sands Project in Alberta, which pumps out 155,000 barrels per day. Venezuela's Orinoco Belt yields 500,000 barrels daily, and that number should spike when a new ChevronTexaco plant goes online this year.
The trailblazer in heavy oil is Syncrude, a joint venture among eight US and Canadian energy companies, which has been harvesting greasy sand since 1978. Last year, the company shipped 77 million barrels of its trademark product, Syncrude Sweet Blend, mostly to US refineries. That's 14 percent of all Canadian oil sales, company executives boast - enough to produce 1.5 billion gallons of gasoline.
Chalk up the impressive output to Syncrude's efficiency. Carter and his team like to present themselves as roughnecks, but they run the company like bookish software engineers. Their oil mines - noisy and grimy and often reeking of sulfur - operate with the high tech prowess of a Taiwanese factory churning out LCDs.
The Caterpillar 797 dump truck is a true monster - 48 feet from tip to tail and 22 feet high, it creeps uphill with a 400-ton payload at 1 mile per hour. Syncrude owns 36 of the vehicles, which cost $5 million each. This herd of yellow pachyderms lumbers around the company's open-pit mines, shuttling oil sands from the digging shovels to a massive processing facility called a crusher. The inside of the crusher resembles the guts of the Nostromo, the doomed ore-hauling ship in Alien. Whale-sized pipes and narrow catwalks crisscross everywhere; steam billows from hoses that snake along the floor. Here the sands are pulverized, then sent to cyclofeeders to be mixed with hot water and pumped to gargantuan centrifuges where the oil-rich component, bitumen, is separated out. The bitumen is sent to giant cokers and roasted with hydrogen into Syncrude Sweet Blend.
It's a laborious process, to say the least - 2 tons of sand yields just one barrel of oil - but nowhere near as painstaking as it used to be. In the 1920s, Karl Clark, a University of Alberta chemist, discovered that steam could tease pitch out of sand. His breakthrough piqued Big Oil's interest, but no one could make the process cost-effective. In the 1950s, a few desperate hopefuls suggested detonating a subterranean nuclear bomb to blast the gunk to the surface. When Syncrude started, it relied on draglines, huge cranelike devices weighing more than 15 full 747s. Attached to these $100 million machines were enormous buckets; the draglines would scrape the buckets across the earth to scoop up huge chunks of sand - a tough process to coordinate come winter.
The murderous climate caused untold headaches. The conveyor belts that carried oil sands from dragline to processing plant were prone to cracking. Whenever the cokers got clogged with calcified soot, Syncrude had to shut down for a week and send in cleaners with sledgehammers - "the kind of job that makes you thankful you have an education," quips Mark Sherman, who now manages the company's cokers.
When an OPEC glut sent oil prices skidding to $10 a barrel in 1985, Syncrude was losing $5 to $10 on every barrel of synthetic crude it produced. Only savage staff cuts staved off complete ruin. Nearly a decade later, Syncrude began to get creative. In 1994, the executives opened an R&D lab in Edmonton and started spending $30 million a year to devise increasingly efficient extraction methods. They ditched the draglines for more agile trucks and shovels and replaced some of the conveyor belts with hydrotransport, a method in which crushed sand is mixed with hot water into a pipeline-ready slurry.
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