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.
As new information technologies became available in the '90s, Syncrude moved to further streamline its operations. Today, miles of fiber-optic cable snake between the company's ore crushers, shovels, and pipes. Operations are supervised from the heated comfort of computerized control centers, where truck dispatchers use GPS to ensure that the Caterpillars proceed like clockwork. A homegrown computer program keeps tabs on each $35,000 13-foot-tall truck tire, as cold tires are prone to cracks. X-ray sensors on the hydrotransport pipes scan for leaks, and ultrasonic transmitters verify that the crushers are never quite empty, lest their metal teeth mash against each other and cause damage.
Carter doesn't think Syncrude's costs are low enough yet. For starters, the company spends more than $100 million a year on natural gas to heat the facilities and fuel the hydrotransport system. Then there's the cost of maintaining the monster trucks. Carter says replacing the trucks with mobile crushers – currently in development at the Edmonton center – could save $1.50 per barrel.
Cutting expenses is always good, but the real payoff for Syncrude will come if its R&D lab can find a way to get at the trillion barrels of oil that currently lie so far below ground that they are beyond the industry's grasp. All the heavy oil companies are experimenting with new methods that will allow them to go deeper. One possible solution comes in the form of a process known as steam-assisted gravity drainage. In SAG-D, steam is forced through a well into the subterranean oil sands, melting them and separating the bitumen. The oily parts then seep into a second well and rise to the surface. At least a dozen SAG-D projects are under way, the most successful of which, operated by Imperial Oil, is producing 116,000 barrels per day. The problem is that creating the steam requires a lot of energy. A less energy-intensive alternative: vapor-assisted petroleum extraction, a technology that injects gaseous hydrocarbons into the earth. When the heavy oil surfaces, the hydrocarbons are stripped off and recycled. One company, Canada's Petrobank, is experimenting with an air injection method that blasts out the bitumen with compressed air. There's also been some renewed interest in nuclear energy – not in the form of a bomb, but as a way to generate necessary steam.
No one's suggesting that Alberta's version of beach tar will wean us off Middle East oil anytime soon. After all, it took Syncrude two decades to bring production costs down to $10 per barrel. And that's still more than triple the cost of producing Saudi Arabian crude, which is so light that it requires much less refining. "Some of it is so good, you can put it right in your car," says Michael Economides, a chemical engineer at the University of Houston and a consultant to the Russian oil giant Yukos. By contrast, Economides says the heavy oil that Syncrude mines is "shit."
On my last day in Fort McMurray, I bum a ride with Eric Newell, who recently retired as Syncrude's CEO. He's particularly excited about the congressional visit. He recalls a 1996 trip to Washington, DC; he'd been invited to the Canadian embassy to preach the virtues of heavy oil. The audience of US senators, Goldman Sachs bankers, and assorted other bigwigs seemed more interested in their meals than his speech.
What a difference a war makes. These days, Congress is considering a $3 per-barrel tax credit to companies that import heavy oil from north of the border. So forget those scraps over prescription drug prices and trade policy – Canada has never looked like such a pal. The friendly relationship is a none-too-subtle part of Jim Carter's Syncrude pitch: "Our American neighbors know what Canada's like. It's a good, stable country."
And chock-full of tar patties.
The biggest petroleum reserve outside Arabia lies beneath Canada in the form of heavy oil. Here's how Syncrude is priming the pump.
Syncrude shovels excavate thousands of tons of soil and clay, creating a 150-foot pit for mining the oil sands below.
Oil sand is piled high into monster Caterpillar trucks, capable of carrying 400 tons at a time.
The trucks dump their payload into crushers, which grind it down to fine oil-coated grains.
The sand is transferred via conveyor to a cyclofeeder, where it's mixed with hot water to produce a slurry. The slurry flows to the extraction facility, where large centrifuges separate out the oil-rich bitumen.
Bitumen flows to cokers, where it's heated to remove impurities such as sulfur and nitrogen, leaving only usable crude oil.
The crude is sold to off-site refineries, which produce gasoline.
Contributing editor Brendan I. Koerner (brendan@wiredmag.com) also writes about earthquake science in this issue.
Inside a Syncrude mine: Oil sand is hauled out of the pit via Caterpillar 797 dump truck. Jonathan Manzo
At 22 feet tall, the dump truck towers over individual workers. Jonathan Manzo
Photo by Jonathan Manzo A welder makes spot repairs to one of four cyclofeeder tumblers that churn oil sand into a slurry.
A worker hoses down the extraction plant, which funnels oil-rich bitumen to a series of centrifuges. Jonathan Manzo
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