A Canadian company developing an oil sands mining and extraction project in Utah has announced a decision to "reduce the pace of field construction in order to maintain working capital flexibility," based on low oil prices.
Oil sands, also known as bituminous sands or "tar sands", are loose sand or partially
consolidated sandstone saturated with a viscous form of
petroleum called bitumen. US Oil Sands Inc. is a Calgary-based company that describes itself as "focused on oil sands exploration and production in Utah." Its wholly owned United States subsidiary US Oil Sands (Utah) Inc. has bitumen leases covering 32,005 acres of land in Utah’s Uinta Basin.
US Oil Sands' PR Spring Project area
consists of 5,930 contiguous acres near the East Tavaputs Plateau in
Utah. According to the company, construction of Phase 1 of the PR
Spring Project is approximately 85% complete with costs coming in below
budget. If completed, it would be the first U.S. oil sands mine to enter commercial production.
While the company has not yet entered production, US Oil Sands has described a proprietary extraction process using a citrus-based bio-solvent to extract bitumen from oil sands without the need for tailings ponds. The company pitched this technique as different from traditional Canadian oil sands production in Alberta, where wastewater management is a controversial environmental challenge. But the Utah proposal has drawn concern over impacts to groundwater flowing under the Book Cliffs
But the company said it conducted a detailed review of the project "in light of continued low oil prices and the closure of two key contractors’ Utah-based operations." Specifically, the press release stated, "The low price
environment has impacted the Project as two of the Company’s key
contractors have closed their operations in Utah and have caused delays
to the Project." Indeed, spot prices for West Texas Intermediate have ranged near $30 per barrel in recent days, with U.S. crude futures falling below $30 earlier this year for the first time since
2003. The press release also mentions that $10 million in previously-announced
royalty financing had not closed, causing the company to explore other
options including equity financing.
According to the press release, project work on the PR Spring Phase 1 project will continue at a reduced level, with an expected focus on "critical path items and areas that will lead to the most efficient
restart of full construction operations in the future. In spite of
delays and increased costs that will occur with restart of full
construction operations, the Company is still targeting completion
within the original US$60 million approved budget."
How will US Oil Sands survive the low oil price environment? How will economic, environmental, or other factors affect the fate of Utah oil sands mining?
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Showing posts with label tar sands. Show all posts
Showing posts with label tar sands. Show all posts
Canada's Energy East Pipeline Project
Friday, October 24, 2014
A subsidiary of Canadian energy company TransCanada has proposed a crude oil pipeline running 4,600 kilometers from Alberta and Saskatchewan to Saint John, New Brunswick. The proposed Energy East Pipeline Project would enable Western Canadian
crude oil to be shipped east across six Canadian provinces, expanding
economic opportunities for refining and export -- but like other major
pipeline projects, the Energy East project faces regulatory hurdles.
On March 4, 2014, Energy East Pipeline Ltd., a wholly owned subsidiary of TransCanada Oil Pipelines (Canada) Ltd., proposed the project which entails the conversion of about 3,000 kilometers of existing natural gas pipeline to an oil transportation pipeline, new pipelines in Alberta, Saskatchewan, Manitoba, Ontario, Québec and New Brunswick, and marine facilities that enable access to other markets by ship. If built, the $12 billion project could carry up to 1.1 million barrels of crude oil per day.
The major motivation behind the line is the relative surplus of Western Canadian crude oil, including fuel produced from the Alberta oil sands. While Alberta and Saskatchewan produce substantial oil, relatively little capacity to ship that crude to refineries means relatively low prices for producers. Meanwhile, refineries in Quebec and Atlantic Canada currently receive 86% of their crude oil from foreign sources. TransCanada pitches the Energy East project as giving these Eastern Canadian refiners access to "reliable, low-cost Western Canadian crude." The developer also points to positive economic development impacts, including about 10,000 jobs and an estimated $35 billion added to Canada’s gross domestic product over 40 years, as well as the relative safety of shipping oil by pipeline as opposed to by rail or truck. Notably, the project also allows TransCanada to make better use of its existing natural gas pipeline system, which has excess unused capacity.
Like the Keystone XL pipeline in the U.S., the Energy East project faces opposition from both local siting concerns and global worries about the environmental impacts of "tar sands" crude production. Some have also expressed concerns that the project would disrupt natural gas flows to Canadian consumers, although TransCanada has said that it has plans to build more lines to meet any increased demand.
Under Canadian law, interprovincial pipelines are federally regulated by Canada's National Energy Board (NEB). According to its website, TransCanada expects final regulatory approval in the fourth quarter of 2015, with the project commissioned and placed in service in 2018. How the regulatory process plays out will affect when -- and whether -- the Energy East pipeline project moves forward.
On March 4, 2014, Energy East Pipeline Ltd., a wholly owned subsidiary of TransCanada Oil Pipelines (Canada) Ltd., proposed the project which entails the conversion of about 3,000 kilometers of existing natural gas pipeline to an oil transportation pipeline, new pipelines in Alberta, Saskatchewan, Manitoba, Ontario, Québec and New Brunswick, and marine facilities that enable access to other markets by ship. If built, the $12 billion project could carry up to 1.1 million barrels of crude oil per day.
The major motivation behind the line is the relative surplus of Western Canadian crude oil, including fuel produced from the Alberta oil sands. While Alberta and Saskatchewan produce substantial oil, relatively little capacity to ship that crude to refineries means relatively low prices for producers. Meanwhile, refineries in Quebec and Atlantic Canada currently receive 86% of their crude oil from foreign sources. TransCanada pitches the Energy East project as giving these Eastern Canadian refiners access to "reliable, low-cost Western Canadian crude." The developer also points to positive economic development impacts, including about 10,000 jobs and an estimated $35 billion added to Canada’s gross domestic product over 40 years, as well as the relative safety of shipping oil by pipeline as opposed to by rail or truck. Notably, the project also allows TransCanada to make better use of its existing natural gas pipeline system, which has excess unused capacity.
Like the Keystone XL pipeline in the U.S., the Energy East project faces opposition from both local siting concerns and global worries about the environmental impacts of "tar sands" crude production. Some have also expressed concerns that the project would disrupt natural gas flows to Canadian consumers, although TransCanada has said that it has plans to build more lines to meet any increased demand.
Under Canadian law, interprovincial pipelines are federally regulated by Canada's National Energy Board (NEB). According to its website, TransCanada expects final regulatory approval in the fourth quarter of 2015, with the project commissioned and placed in service in 2018. How the regulatory process plays out will affect when -- and whether -- the Energy East pipeline project moves forward.
Keystone XL pipeline supplemental Environmental Impact Statement
Thursday, March 7, 2013
The proposed Keystone XL pipeline took a step forward this month, as the U.S. State Department released its evaluation of the project's potential environmental impacts. The draft Supplemental Environmental Impact Statement (EIS) released on March 1, 2013 documents the State Department's analysis of the pipeline's impacts to environmental resources based on the currently proposed route. The EIS is still preliminary, and is now subject to public comment. Moreover, even a final EIS would not reach any conclusion as to whether the pipeline serves the national public interest, and the project would still need a presidential permit to ship oil across the US-Canadian border. Nevertheless the draft EIS does suggest that any environmental impacts from the pipeline would be relatively minor.
The Keystone XL project is a proposed extension of an existing crude oil pipeline. The $7 billion project would run from the Canadian province of Alberta to Texas, delivering Canadian crude to refineries on the U.S. Gulf Coast. The oil shipped on the pipeline would likely include so-called synthetic crude derived from Canada's oil sands or "tar sands" resources.
The draft EIS (available from the State Department's website) makes a series of findings about the project's potential environmental impacts, ranging from direct impacts along the pipeline's route to indirect impacts like further development of the Alberta oil sands. As the State Department found in its earlier environmental review, the supplemental EIS found that the pipeline would not have significant impacts to any resources along the proposed project route.
Notably, the draft EIS found that Keystone XL would not be likely to substantially increase the rate of development of the oil sands, nor would it likely increase the volume of crude oil refined in the Gulf Coast. For example, the draft found that denial of the pipeline's presidential permit would not mean a reduction in oil production in Western Canada or from the Bakken formation; rather, oil producers would resort to other transportation modes such as pipelines to British Columbia or even rail shipment of crude. For similar reasons, the draft EIS found that the Keystone XL pipeline would not substantively change global greenhouse gas emissions.
Next steps for the Keystone XL project include a 45-day public comment period, after which the State Department will issue a final EIS. Later this year, the State Department is expected to issue a so-called national interest determination, considering factors including foreign policy, economics, environmental concerns, and national security. This determination will involve consultation with other agencies, including the U.S. Departments of Defense, Justice, Interior, Commerce, Transportation, Energy, Homeland Security and the Environmental Protection Agency. The final decision whether to allow the pipeline falls to President Obama.
The Keystone XL project is a proposed extension of an existing crude oil pipeline. The $7 billion project would run from the Canadian province of Alberta to Texas, delivering Canadian crude to refineries on the U.S. Gulf Coast. The oil shipped on the pipeline would likely include so-called synthetic crude derived from Canada's oil sands or "tar sands" resources.
The draft EIS (available from the State Department's website) makes a series of findings about the project's potential environmental impacts, ranging from direct impacts along the pipeline's route to indirect impacts like further development of the Alberta oil sands. As the State Department found in its earlier environmental review, the supplemental EIS found that the pipeline would not have significant impacts to any resources along the proposed project route.
Notably, the draft EIS found that Keystone XL would not be likely to substantially increase the rate of development of the oil sands, nor would it likely increase the volume of crude oil refined in the Gulf Coast. For example, the draft found that denial of the pipeline's presidential permit would not mean a reduction in oil production in Western Canada or from the Bakken formation; rather, oil producers would resort to other transportation modes such as pipelines to British Columbia or even rail shipment of crude. For similar reasons, the draft EIS found that the Keystone XL pipeline would not substantively change global greenhouse gas emissions.
Next steps for the Keystone XL project include a 45-day public comment period, after which the State Department will issue a final EIS. Later this year, the State Department is expected to issue a so-called national interest determination, considering factors including foreign policy, economics, environmental concerns, and national security. This determination will involve consultation with other agencies, including the U.S. Departments of Defense, Justice, Interior, Commerce, Transportation, Energy, Homeland Security and the Environmental Protection Agency. The final decision whether to allow the pipeline falls to President Obama.
Oil sands: an "unconventional" oil resource
Monday, January 28, 2013
New technologies enable the production of petroleum from unconventional oil resources such as "tar sands" and oil shale. While traditional oil wells have been drilled for over 2,000 years, unconventional resources offer the opportunity to develop new petroleum sources - and by extension, to shift the balance of power and economics away from traditional sources. At the same time, producing oil from oil sands may have environmental impacts that are different from traditional wells. What are tar sands or oil sands?
Oil sands, also known as bituminous sands, are loose sand or partially consolidated sandstone saturated with a dense and viscous form of petroleum technically referred to as bitumen. Oil sands are often called "tar sands" due to bitumen's sticky, dark nature. ("Tar" technically refers to a product made by distilling pitch from the wood and roots of pine trees, and was historically used to describe the sticky black residue left behind when distilling coal gas.)
Bitumen is so viscous that it cannot be pumped directly from the ground through traditional wells. Oil sand deposits are typically mined using open pits or strip mining. The mined material is mixed with water at an extraction plant, where the bitumen can be separated from the remaining minerals, sand, and water. The bitumen can then be transported for upgrading or conversion into synthetic crude oil.
Alternatively, bitumen can be extracted by heating the raw sands in place. In-situ production methods include injecting steam or solvents, or piping in oxygen and igniting some of the bitumen. These methods rely on the use of large amounts of water and energy.
According to the U.S. government's 2012 oil shale and tar sands programmatic environmental impact statement, about two tons of tar sands can produce one barrel of oil. Extraction and processing typically require several barrels of water for each barrel of oil produced. Some of this water can be recycled.
About three-quarters of the bitumen can be extracted from the raw material. Spent sand and other materials are typically returned to the mine after processing.
Producing oil from bitumen derived from tar sands can have significant environmental impacts. The mining and upgrading processes are energy-intensive and result in emissions of greenhouse gases and air pollutants. Mine sites are typically significantly disturbed, and impacts to water may be both local and throughout the downriver watershed. The association between the proposed Keystone XL pipeline and oil sand resources in Alberta, Canada led to environmental opposition to that pipeline.
Producing oil from oil sands may be controversial, but Canada possesses the world's largest known resources and is developing them rapidly. Canada points to environmental regulations and controls, as well as economic development benefits. Developing oil sand resources creates jobs and economic growth, and mine sites are typically in rural areas eager for opportunity. If the U.S. does not approve the Keystone XL pipeline, Canadian producers may push for an alternative route to refineries or export terminals in British Columbia, obviating the need for U.S. approval.
Economically, synthetic crude oil produced from oil sands bitumen can be cost-effective if the price of oil produced from traditional wells is high. On the other hand, if oil from wells or other unconventional resources like oil shales can be produced cheaply, oil sands may not be economically competitive. The significant capital investment required to produce bitumen from oil sands means that producers must often make long-term investments that risk losing money in some years. Producers may also face the risk of tighter environmental standards, the cost of compliance, and any penalties for noncompliance.
Oil sands, also known as bituminous sands, are loose sand or partially consolidated sandstone saturated with a dense and viscous form of petroleum technically referred to as bitumen. Oil sands are often called "tar sands" due to bitumen's sticky, dark nature. ("Tar" technically refers to a product made by distilling pitch from the wood and roots of pine trees, and was historically used to describe the sticky black residue left behind when distilling coal gas.)
Bitumen is so viscous that it cannot be pumped directly from the ground through traditional wells. Oil sand deposits are typically mined using open pits or strip mining. The mined material is mixed with water at an extraction plant, where the bitumen can be separated from the remaining minerals, sand, and water. The bitumen can then be transported for upgrading or conversion into synthetic crude oil.
Alternatively, bitumen can be extracted by heating the raw sands in place. In-situ production methods include injecting steam or solvents, or piping in oxygen and igniting some of the bitumen. These methods rely on the use of large amounts of water and energy.
According to the U.S. government's 2012 oil shale and tar sands programmatic environmental impact statement, about two tons of tar sands can produce one barrel of oil. Extraction and processing typically require several barrels of water for each barrel of oil produced. Some of this water can be recycled.
About three-quarters of the bitumen can be extracted from the raw material. Spent sand and other materials are typically returned to the mine after processing.
Producing oil from bitumen derived from tar sands can have significant environmental impacts. The mining and upgrading processes are energy-intensive and result in emissions of greenhouse gases and air pollutants. Mine sites are typically significantly disturbed, and impacts to water may be both local and throughout the downriver watershed. The association between the proposed Keystone XL pipeline and oil sand resources in Alberta, Canada led to environmental opposition to that pipeline.
Producing oil from oil sands may be controversial, but Canada possesses the world's largest known resources and is developing them rapidly. Canada points to environmental regulations and controls, as well as economic development benefits. Developing oil sand resources creates jobs and economic growth, and mine sites are typically in rural areas eager for opportunity. If the U.S. does not approve the Keystone XL pipeline, Canadian producers may push for an alternative route to refineries or export terminals in British Columbia, obviating the need for U.S. approval.
Economically, synthetic crude oil produced from oil sands bitumen can be cost-effective if the price of oil produced from traditional wells is high. On the other hand, if oil from wells or other unconventional resources like oil shales can be produced cheaply, oil sands may not be economically competitive. The significant capital investment required to produce bitumen from oil sands means that producers must often make long-term investments that risk losing money in some years. Producers may also face the risk of tighter environmental standards, the cost of compliance, and any penalties for noncompliance.
Keystone XL pipeline explained
Thursday, October 27, 2011
The proposed Keystone XL oil pipeline is drawing significant public attention. What is the Keystone XL project, and why is it controversial?
What is Keystone XL?
The Keystone XL project is a proposed extension of an existing crude oil pipeline. The $7 billion project would run from the Canadian province of Alberta to Texas, cutting across Saskatchewan, Montana, South Dakota, Nebraska, Kansas, and Oklahoma along the way. TransCanada Corporation proposes Keystone XL to expand its existing Keystone pipeline network, a former natural gas pipeline repurposed to ship crude oil south to meet U.S. demand.
What is the controversy?
The U.S. is a major consumer of oil and petroleum-derived products.
All major linear infrastructure projects tend to draw interest. Significant projects, whether a pipeline for natural gas or oil, electric transmission line, or highway, often affect interests across a wide geographic range. Relatively local siting concerns, like finding the best route for a given project and minimizing its direct environmental impacts, are common when planning any major infrastructure development.
In Keystone XL's case, project opponents point to additional concerns about the project's broader environmental impacts. Some decry the proposal as increasing dependence on foreign oil, and believe the U.S. already has sufficient Canadian oil import capacity. Others note that the oil to be shipped south over Keystone XL will be largely derived from Alberta's "tar sands" or "oil sands", and that extraction and production of crude oil from these sources involves greater greenhouse gas emissions or other environmental impacts.
What is happening now?
Concerns over the Keystone XL project are manifesting in multiple forms. Protests have led to more than 1,000 arrests, including high-profile protestors like actress Darryl Hannah and NASA scientist James Hansen. States affected by the pipeline proposal are moving cautiously; next week the Nebraska Legislature will meet at the request of Governor Dave Heineman to address concerns over Keystone XL.
To develop the project, TransCanada must secure a presidential permit to import oil across the national border. While that permitting process initially appeared to be on track, 14 members of Congress have asked for a delay to allow an investigation into how the State Department performed its environmental review of the project.
The fate of the Keystone XL project depends on a number of factors, including whether it can secure a presidential permit as well as how states react. Part of the project's financing hinges on contracts to deliver crude oil as soon as 2014, and TransCanada is reportedly concerned that delay would jeopardize that financing structure.
What is Keystone XL?
The Keystone XL project is a proposed extension of an existing crude oil pipeline. The $7 billion project would run from the Canadian province of Alberta to Texas, cutting across Saskatchewan, Montana, South Dakota, Nebraska, Kansas, and Oklahoma along the way. TransCanada Corporation proposes Keystone XL to expand its existing Keystone pipeline network, a former natural gas pipeline repurposed to ship crude oil south to meet U.S. demand.
What is the controversy?
The U.S. is a major consumer of oil and petroleum-derived products.
All major linear infrastructure projects tend to draw interest. Significant projects, whether a pipeline for natural gas or oil, electric transmission line, or highway, often affect interests across a wide geographic range. Relatively local siting concerns, like finding the best route for a given project and minimizing its direct environmental impacts, are common when planning any major infrastructure development.
In Keystone XL's case, project opponents point to additional concerns about the project's broader environmental impacts. Some decry the proposal as increasing dependence on foreign oil, and believe the U.S. already has sufficient Canadian oil import capacity. Others note that the oil to be shipped south over Keystone XL will be largely derived from Alberta's "tar sands" or "oil sands", and that extraction and production of crude oil from these sources involves greater greenhouse gas emissions or other environmental impacts.
What is happening now?
Concerns over the Keystone XL project are manifesting in multiple forms. Protests have led to more than 1,000 arrests, including high-profile protestors like actress Darryl Hannah and NASA scientist James Hansen. States affected by the pipeline proposal are moving cautiously; next week the Nebraska Legislature will meet at the request of Governor Dave Heineman to address concerns over Keystone XL.
To develop the project, TransCanada must secure a presidential permit to import oil across the national border. While that permitting process initially appeared to be on track, 14 members of Congress have asked for a delay to allow an investigation into how the State Department performed its environmental review of the project.
The fate of the Keystone XL project depends on a number of factors, including whether it can secure a presidential permit as well as how states react. Part of the project's financing hinges on contracts to deliver crude oil as soon as 2014, and TransCanada is reportedly concerned that delay would jeopardize that financing structure.
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