Air Water Land September 2012

Energy’s New Environment

september 2012

Strategic

Advantage How regulation could help the oilsands reduce America’s CO2 emissions without damaging its economy

An environmental supplement to

+ Improving SAGD produced water treatment — technology solutions for an entire industry

+ Could thousands of kilometres of fencing save

northern Alberta caribou populations?

Illustrations by Jenna O’Flaherty

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Strategic

advantage How regulation could help the oilsands reduce America’s CO2 emissions without damaging the economy

By Peter McKenzie-Brown

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somewhat surprising policy paper about the oilsands industry slipped under the radar when it was released this June.

Prepared by two Rice University academics— economist Dagobert Brito and chemist Robert Curl—the paper urges the U.S. government to make it policy to import more Canadian crude, arguing the practice would reduce long-term greenhouse gas emissions, benefit the American economy and trade deficit, and promote energy security.

Rather than being a villain, the oilsands could become part of a rescue team.

“Canadian oilsands and the recent discovery of how to exploit the massive deposits of natural gas locked in shale make it possible for the United States to reduce its dependence on fuels from outside North America without increasing CO2 emissions,” write the authors, who are part of the nonpartisan Baker Institute for Public Policy at Rice. “We propose that the U.S. government develop policies that redirect our carbon usage, and thus our CO2 emissions, away from the electricity generation sector toward transportation fuels by facilitating the development of Canadian oilsands, and offset the resulting additional carbon emissions by shifting the conversion of electrical generation from coal to gas.”

Both Brito and Curl express deep concern about the impact of carbon emissions on the environment, especially climate change. Their concern

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was to find ways to reduce carbon emissions without damaging the American economy. As they looked around the energy world, they saw that the United States was in a unique position to take steps that would reduce emissions.

Natural gas prices have collapsed and new technologies have enabled producers to harvest mass amounts of gas from shale. One likely outcome is lower-cost gas in the near term. Given that environment, they believe the first step the United States should take is to shut down coal-fired generating facilities, fuelling them instead with natural gas.

“The good thing about using regulation to require electrical generating facilities to switch to natural gas is that while these prices prevail, it’s economic to do so,” says Curl. “There is no transfer of funds to government. The regulation basically would be that you can only produce so much carbon per megawatt of electricity generated.”

Curl and Brito write that concern about additional CO2 emissions from Canadian oilsands production is misplaced.

“The strategic advantage of access to this resource far outweighs the extra CO2 from its production, as this CO2 can be more economically offset elsewhere in the economy.”

They argue that jobs would be created to support the increased flow of Canadian crude. In addition, according to their scenario, the

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United States would have more access to a secure energy source and the opportunity to burn off its abundant natural gas reserves instead of dirty coal.

“If [the United States] put these regulations into effect now, while the price of natural gas is low, they won’t disrupt the powergeneration industry,” says Curl. Asked about the impact the policies would have on the coal industry, he says, “I hate to put an entire industry out of business, and I wish that coal were clean, but it’s not.” Brito adds, “We had to stay inside our area of expertise. Coal mining is simply not one of them. In our paper we couldn’t deal with those issues.”

More than 40 per cent of electricity generation in the United States comes from coal-fired plants, and power utilities buy more than 90 per cent of the country’s coal production. Converting electricity generation to natural gas is therefore not exactly a message the powerful coal lobbies in Washington want to hear. Just ask media relations vice-president for the American Coalition for Clean Coal Electricity, Lisa Camooso Miller. She worries that converting to other fuels would increase the price of electricity, disproportionately affecting the poor. She also does not want to see jobs lost.

“We’re committed to ensuring that the future is a clean one, which is why the U.S. power industry invested more than $100 billion in

clean-coal technology, reducing emissions by 90 per cent in the last 30 years,” says Miller. “Investments in clean coal technology will provide for the continued use of affordable and abundant coal as an energy source for America…. It’s important for this country to have a balanced energy portfolio.”

However, clean-coal technologies essentially refer to advancements in reducing sulphur dioxide, nitrogen oxides, mercury and particulate matter discharges. They do not reduce carbon emissions.

“Two things drove this paper,” Brito says. “One of them was the energy security of the United States. Having Canada right next to us is like having Saudi Arabia next door, except that it’s a Saudi Arabia which respects human rights.” The other was their concern about CO 2 emissions and how that will affect the global environment. “When we looked at the numbers for different nations producing CO 2, it was very clear that the Chinese were just running away with it. If the Chinese go to the same level of per-capita CO 2 generation that we have in the United States, that alone will increase global CO 2 emissions by 50 per cent.”

Briefly put, the two men are thinking globally and acting locally.

Convinced that carbon emissions must not get out of control, they developed ideas that would influence emissions in the United States, the world’s secondlargest emitter. That sounds like a good place to start. airwaterland.ca | III

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The tail that wags the

Improving produced-water treatment means technology solutions for an entire industry / By Melanie Collison

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lean water is liquid gold in an industry whose every process uses it. One Edmonton researcher with international experience goes so far as to say that not only is cleaning water the most pressing problem for the burgeoning oilsands industry, but water produced by Alberta’s in situ oilsands operations is also the toughest there is to clean.

“What we do in Alberta allows us to be pretty good leaders in the rest of the world because ours is among the heaviest and most complex oils,” says Subir Bhattacharjee, associate holder of the Natural Sciences and Engineering Research Council of Canada (NSERC) industrial research chair in water-quality management for oilsands extraction, and professor of mechanical engineering at the University of Alberta. Funding for NSERC chairs includes matching support from industrial partners.

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“[Steam assisted gravity drainage] SAGD waste water contains 600 times the soluble organic matter that’s present in mine tailings water,” because of the intense heat in an in situ steam chamber, Bhattacharjee says.

Questions of “reliability, energy consumption, greenhouse gas [GHG]–related implications that make SAGD look to the rest of the world as GHG-intensive—all are linked to water. If [research breakthroughs can] reduce the amount of water disposed of by 30 per cent, this would reduce the amount of new water you need to withdraw by 30 per cent, improve the reliability of the plant and reduce the burning of natural gas by almost 30 per cent over the year, therefore reducing the greenhouse gas footprint. Water is the tail that wags the dog.”

Bhattacharjee observes that most oilsands research has been focused on downhole difficulties like chemistry and

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corrosion, but water is coming to the fore because production is expanding rapidly.

One current wave of research is seeking the optimal balance between water cleaning and energy cost. Alberta Innovates–Energy and Environment Solutions (AI–EES) has been leading an analysis of promising technology combinations, based on a study involving concerned operators.

Another research wave is pushing the establishment of the Water Technology Development Centre, where members of the Oil Sands Leadership Initiative can conduct continual practical testing on water streams from actual in situ projects.

The industry’s large-scale problem may come to be solved very small scale.

In his NSERC work, Bhattacharjee is exploring the properties of produced water at a molecular level. His laboratory has been analyzing which classes of molecules cause problems like fouling and designing chemistry-based processes to remove classes selectively. The aim is to achieve relatively quick improvement in plant reliability.

“In oilsands, we find thousands of compounds, libraries of molecules, and you can only speculate about their nature,” Bhattacharjee says. “Two classes are hydrophobic and hydrophilic. Within each of these classes of compounds are several classifications, acids, basic compounds and neutrals. Water-hating compounds are primary reasons for fouling. They remain solubilized because of the high temperatures and highly alkaline condition of the water.”

An immediate thought would be to add acid to separate them out, but “that would introduce corrosion and other types of problems, including making and hauling large quantities of acid from a large distance,” Bhattacharjee says.

Because both making acid and hauling it would be energy-intensive, it’s simply not a feasible solution.

Changing plant chemistry via a coagulant or flocculent therefore became the research path of choice. Confidentiality agreements prevent his discussing the exact chemistry, Bhattacharjee says, but “we share [our results] very quickly with industry partners who are funding our research, and they get incremental improvements within one to five years.”

Efficiency gains are to follow in the medium term from improvements to equipment and configurations of equipment Bhattacharjee’s laboratory is experimenting with.

“Can there be improved alternatives to processes currently used? If you combine two processes, can you get one plus one to equal more than two? We’re using centrifugal forces in conjunction with dispersed gas flotation.

The problems [in the existing process] are you need very big tanks, and the process is not optimal for the heavy oil we have in Alberta, which also has clay in it.”

The long-term goal is to incorporate global expertise to achieve better plant design through holistic thinking. “We try to provide fundamental insights about what would be the best approaches to doing that,” Bhattacharjee says.

In the meantime, he treads carefully, wary of unintended consequences. “New solutions can be short-sighted. Every technology we use has a footprint; we are using more than is allocated for each of us. This is one of the reasons putting new technologies [into society] should be done with a lot of thought.

“When we get invested in a technology, we should continuously keep an active effort on improving what we have and reducing the footprint of that technology and process until it’s time-tested, better than what we have today, and uses a smaller footprint. Hastily going to a new technology often has a bad impact on society.”

“[Questions of] reliability, energy consumption, greenhouse gas [GHG]–related implications that make SAGD look to the rest of the world as GHG-intensive—all are linked to water.”

— Subir Bhattacharjee, associate holder of the Natural Sciences and Engineering Research Council of Canada (NSERC) industrial research chair in water-quality management for oilsands extraction, University of Alberta

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A gated community for caribou

By Melanie Collison

Could thousands of kilometres of fencing in northern Alberta save a dwindling herd?

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nclear on the concept of wildlife and looking for fences at Waterton Lakes National Park, the story goes that a visitor once asked, “Where do they put the animals at night?”

The day may come when that’s not so funny to bystanders.

The oilsands industry has spent millions of dollars on caribou protection, yet like the 25-cent coin it has graced since 1937, Canada’s caribou population has continued to shrink.

One solution being seriously investigated by the Oil Sands Leadership Initiative (OSLI) is to build a fence around a sweep of land in northern Alberta that could run thousands of square kilometres. The goal is to buy time for the caribou while their habitat is restored, including stewarding vegetation that favours caribou, not deer, along seismic lines and around well pads.

The fence would need to be 10 feet high to stop deer, which are proliferating in northeastern Alberta, as all over North America.

Also, it would have to be built of small links to keep out coyotes and wolves. Wolves travel fast along seismic lines and pipelines, and, fattened on venison, they’ve reached double the threshold caribou can withstand.

“Caribou are secondary game for wolves,” says University of Alberta biologist Stan Boutin, who has spent 20 frustrating years watching the

caribou dwindle, “but anything that increases the encounter rate will be negative for caribou.”

Boutin says a fence is technically feasible—there’s interest and there’s potential for success—but the big hurdle will be getting buy-in from First Nations and trappers and settling the debate over allowing industry inside.

Government and Boutin’s academic colleagues were skeptical when he floated his fence idea, he says, but industry was intrigued because companies yearn to take material action.

“They’re caught between a rock and a hard place. They want to maintain their social licence to operate. A reduction in activities is not on the table, but they’re willing to move activities. They are spending a lot of cash—$100 million a year—on mitigation activities that are amounting to nothing. They want it solved.”

OSLI’s land stewardship working group hosted a workshop in May in Banff to look into building a fence hundreds of kilometres long, clearing out the predators and keeping them out.

Spokesman Jeremy Reid wasn’t available for an interview, but OSLI information about the Caribou Protection and Recovery Workshop quotes him saying, “Fenced safe zones are a contentious issue and considered a fairly extreme management decision, which is why airwaterland.ca | VII

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OSLI gathered together about 30 caribou, wildlife conservation and government experts to discuss the best suite of management tools to protect caribou.”

Besides restoring habitat opened up by industry—and further harmed by public enjoying the access—OSLI has hired a company to look into non-invasive high-tech ways to count the caribou.

Firm numbers would complement OSLI member Statoil Canada’s research over the past three winters using dogs to find scat from caribou, moose and wolf for analysis. The samples yielded information about habitat attributes and diet, DNA-based measures of population abundance and hormone-based measures of psychological, reproductive and nutritional health.

There are an estimated 90–150 caribou in the oilsands region. Adult deaths are exceeding the number of calves reaching adulthood.

Caribou are a small player in the greater scheme, but they have “a strong constituency,” says Pembina Institute policy director Simon Dyer.

More than 14,000 people commented last winter on the federal government’s caribou plan, and 32,000 signed a petition. “[Caribou] are the canary in the coal mine, a sensitive species that provides an early warning of the cumulative effects of the oilsands.

We’re lucky the boreal forest is relatively intact for most species,” Dyer says, adding that there is still time to protect the biodiversity of the region if the right discussions occur.

Boutin agrees. “Caribou don’t play a big role from the broad ecosystem standpoint, but people value that we should try to protect them.

Charismatic megafauna will always carry way more weight than a butterfly or beetle that’s more endangered.”

If industry and government come together to build a gated community for caribou, it certainly won’t be the first time a regeneration park has been established for a threatened species.

Alberta has a century-long history of setting aside land to protect and regenerate vanishing populations of large mammals. Most preserves have closed because they were wildly successful and their residents ate themselves out of herd and home and were either culled or dispersed into the landscape.

Currently, Canada’s only completely fenced national park is the 194-square-kilometre Elk Island, east of Edmonton. It’s for plains and wood bison, but is also home to at least 230 species of birds, including the trumpeter swan.

Elk Island’s predecessor was Buffalo National Park, created near Wainwright in east-central Alberta in 1909 for 700 bison shipped by train from Montana, plus pronghorn, elk and moose. The park closed in 1940 after producing 40,000 bison, 3,000 elk and 300 moose. In 1947, its 583 square kilometres became the bulk of Canadian Forces Base Wainwright.

Canadian Forces Base Suffield north of Medicine Hat, Alta., has a similar story. Canyon Antelope Reserve, set aside in 1915, became Wawaskesy National Park until 1938, was farmed briefly, then became military land. The preserve is once again a protected national wildlife area within the base.

In the early 1900s, there were also parks in the far southeast of Alberta and southwestern Saskatchewan that helped pronghorn rebound.

In recent times, Banff National Park has had enormous success protecting wildlife with 84 kilometres of fencing along the Trans-Canada Highway coupled with overpasses and underpasses, and southwestern Yukon has achieved six times the survival rate of calves in their first year by fencing off the females and calves.

Dyer cautions that fencing off public lands isn’t going to sit well with a Canadian public that treasures its idea of wilderness, nor with the users of the forest, especially if oilsands activity were continuing inside the fence, as OSLI says it would.

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“We have some opportunities here if we’re creative about where we put our efforts rather than saying the sky is falling. It’s just not realistic to [preserve all herds at any cost] given the enormous value of the resources these caribou stand on.”

— Stan Boutin, biologist, University of Alberta “The fence is well-meaning, but is a distraction,” he says. “The consultation [and entire process of planning and building it] would be a huge suck on personnel and financial resources that should go to habitat protection as a first priority.”

Avoid the poor optics, he says, and instead identify legislatively protected areas that are off-limits to industry. The multi-stakeholder Alberta Caribou Committee wants six industry-free areas established, each thousands of square kilometres.

“There are solutions. In northeastern Alberta, the resources aren’t spread evenly,” Dyer says. “Ninety-two per cent of the bitumen occurs on 50 per cent of the landscape,” so the province should plan carefully, buy back some leases and dedicate half the land to conservation. He praises Ontario’s forestry industry for negotiating with critics and agreeing to leave sensitive caribou habitat uncut while harvesting other lands more intensely.

Boutin confirms that “more than 30 per cent of public lands could be protected while maintaining access to more than 97 per cent of the value of the region’s resources.”

He adds, “We have some opportunities here if we’re creative about where we put our efforts rather than saying the sky is falling. It’s just not realistic [to preserve all herds at any cost] given the enormous value of the resources these caribou stand on.

“The majority of the conservation dollar is going to come from industry.”

OSLI is publishing its workshop report at osli.ca.