America's future oil supply depends on technology at this Canadian oil sands site

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When Business Insider decided to follow up a series of stories I wrote about Williston, North Dakota by sending me to the Alberta oil sands, I had no idea what I was getting myself into.

All I knew about the oil sands was that they were one big beautiful mess that would either lift the U.S. from its dependence on Arab oil, or bury the world in a layer of greenhouse gas from which it would never recover. Maybe both.

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America's future oil supply depends on technology at this Canadian oil sands site Back to video

Among the many things I didn’t know is that Canada is sitting on the second biggest oil deposit in the world after Saudi Arabia and it is shaping the face of the entire Canadian economy.

The oil enjoyed during the 20th century was pulled up from big underground pools. Drills went down, tapped into the pool, and the oil came bubbling up. With demand on the rise and traditional deposits like this already drilled, however, oil companies are digging into “unconventional” deposits. This is the crude mixed in with shale and sand that until now has been economically and physically out of reach. That’s where the Alberta oil sands come in.

There are two ways to separate the Alberta oil from the sand it’s glued to. The way it’s been done since the ’60s is to basically strip mine huge swathes of land, separate the crude, and dump the waste off to the side. It’s as ugly as it is spectacular to behold, it turns out, but that’s not what’s causing this new boom.

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The new oil sands explosion is somewhat similar to the fracking boom here in the states and doesn’t involve open mines at all. In the new process, actually called drilling not mining, holes are bored, pipes are run, and through various miracles of technology oil that was never expected to be pulled sees the light of day.

It has turned the oil sands into a place where the U.S. can get oil for the next 50 years without breaking a sweat.

The drilling sites are oil sand-mining’s “hotter, younger sibling”— the more environmentally friendly way to pull oil from the sands — it paints a much prettier picture for visiting journalists, so that is where my official oil sands tour began. (The next post will be on my unofficial mine tour, which was pretty spectacular.)

Cenovus Energy’s Christina Lake in-situ facility is about 235 miles north of Edmonton and on May 1, the company’s King Air 350 flew me up the capital city, through a snowstorm, for a tour of the place.

A bus picked us up at the landing strip, and pounded over washboard dirt roads to deliver us to the site.

There are no towns or cities anywhere nearby, just a stubby pine forest that hugs the roads and stretches into the distance. The brush clings to the earth through a layer of muskeg, the peaty mess that passes for soil in this part of the world.

Alberta suffered one of its largest forest fires ever last year, leaving stretches of road lined with the skeletal remains of pine trees no more than 25-feet-tall. Sporadic signs warn of the many black bears that still call the woods home.

As we approached the site, about 45 minutes from the air strip, it was impossible to miss the curfew signs prohibiting alcohol, drugs, and any activity outside the compound. No one can be seen walking around or jogging. But people are happy to work here at an average rate of about $1,000 a day.

Packed with 2,400 employees on a nine-day-in, five-day-out rotation, Christina Lake employees have been drilling for oil since 2000.

In 2010, drilling pulled less than half the oil from the Alberta sands. Experts expect that to change to 80/20 in favor of drilling as operations head into the future.

It’s a growth schedule that will take Christina Lake from the 58,000 barrels it produces today, to the 278,000 barrels a day company officials plan to be pulling from the ground by 2019.

Oil sand drilling basically works like this: Twin vertical holes are bored down 800 feet, where they turn sharply horizontal and continue a 1,200 foot path parallel to the surface.

The shaft closest to the the surface delivers high-pressure steam that warms the surrounding bitumen enough to get it seeping into the vacant shaft below. When that line fills with oil, it’s drawn to the surface where it gets separated from the remaining earth and water.

Now it gets a bit technical: Once the bitumen is clean of debris, a hydrocarbon diluent like naptha or condensate is mixed in to get it flowing. This diluted bitumen is called “dilbit” and its highly sulfuric stickiness is said to increase friction inside pipelines, raising temperatures, which could lead to spills. This is one of the main sticking points that opponents of the Keystone point to in their arguments against the project.

Whether the Keystone Pipeline gets built or not, oil sands companies aren’t too concerned. They expect that another line will get built taking their oil somewhere. Whether it’s TransCanada’s proposed Gateway line to the east, the re-routed Keystone to the south, or Enbridge Inc’s hoped for Northern Gateway line that would carry the dilbit west to Kitimat, British Columbia, the world will get the oil it wants from the sands.

What does concern oil companies, executives, Canadian residents, and environmentalists alike is water.

In 2011 oil sands extraction used 170 million cubic meters of water, or about enough to satisfy New York City’s water demands for more than a month. In-situ drilling returns one barrel of oil for every two-and-a-half barrels of water used in getting it from the ground, and shaving that ratio down is a premier desire of everyone involved.

Heating the water up and keeping the steam as hot as possible is also a concern. As Cenovus Operations & Production Director Greg Fagnan said, “Any loss of steam is a loss on the bottom line.”

Even aside from its water use, in-situ mining is not without its critics. Heating the steam requires large amounts of natural gas to be burned, and the pipelines can get in the way of migrating caribou and other wildlife.

Fagnan points out that the energy required for oil sands drilling, open mining, and traditional drilling in the Middle East all produce about the same amount of emissions, and that the company often lifts its pipelines from the forest floor to allow caribou a clear path.

It’s not a perfect system, but then neither is petroleum based energy.