With offshore US oil and gas production threatened by regulatory changes and rising insurance rates, both industry officials and policymakers are looking to Canada’s Athabasca oil sands as a potentially rich source of fossil energy. However, environmental concerns, lack of infrastructure and political opposition stand in the way of broad US adoption of this “risky” energy source. As part of Garten Rothkopf’s series on the “new age of risky energy” Alastair Sweeny, author of “Black Bonanza” discusses the prospect of the Athabasca oil sands becoming a major source in the US's energy future.

While the United States is engaged in a debate over the future of domestic offshore oil and shale gas production, its neighbor to the north has aggressively pushed ahead to develop one of the largest resources of unconventional fossil fuels the world has ever seen: bitumenous tar sands.  There is tremendous investment going into the tar sands, partially to hedge bets in the case that offshore drilling in the US is scaled back and shale gas development is slowed, but there is still serious debate over the long-term prospects for its role in America’s energy future.  The bitumenous sands are not without their own set of environmental concerns, particularly in terms of the impact on water supplies.  Concerns among regulators and key members of the US Congress about costs, impact on CO2 emissions, and other environmental considerations are only growing.  As part of Garten Rothkopf’s series on the “new age of risky energy,” today’s GR Energy and Climate Brief examines whether Canada’s trillion barrel alternative is destined to become a major keystone of North America’s energy future.

The Scale of the Athabasca

The size of the Athabasca Sands bitumen deposit is colossal; if it were a single conventional oil discovery, it would be the largest in history.  Originally, developers thought that only ten percent of the Athabasca could be tapped by surface mining and extraction, an industrial process that temporarily scars the landscape and requires large settling ponds after the bitumen is steamed off the sand, followed by reclamation of the original surface.  Many experts feared that developers could never tap the remaining ninety percent lying deep underground.  That changed significantly when former Exxon chemist Roger Butler started perfecting an invention he called Steam Assisted Gravity Drainage, or “SAGD.”  SAGD takes advantage of horizontal drilling, the same technology BP is using to knock out the Macondo spill with relief wells, and that drillers are now using to tap the continent's immense reserves of shale gas.

See full article here.