Saturday, August 06, 2005

The Fate Of Canada's Tar Sands

I keep pondering the fate of Canada's tar sands. I do not wonder if they will save North America from a debilitating energy crisis. Nothing can avert that. But can they be mined and refined profitably in any way? The process of heating all that sand just to get heavy, high sulfur, sludgy oil, and then trying to make gasoline out of the oil, seems like a losing proposition.

I know that Syncrude does make nice gasoline out of tar sands now, and that they like to say that they can make a profit if the the price of crude oil is anywhere above $30/barrel. Syncrude naturally like investors to think it is that simple. Syncrude likes the hundreds of billions of investment dollars being thrown at tar sand projects these days. But can they make gasoline if natural gas goes to $14 faster than oil goes to $120? I doubt it. Not profitably, anyway. Natural gas is both highly volitile in price and prone to very sudden depletions. North America will run out of it soon.

But maybe this will happen: tar sand will be processed into dirty, high sulfur, and very expensive deisel oil. It will be produced in big iron tanks with crude, polluting, low cost technology, such as burning wood. Why would anyone buy such fuel? Because there will not be any gasoline on the market. Any gas that the US does manage to import, at huge expense, will go to military and goverment elites. Jet fuel will be the rarest of all commodities.

All transportation fuels will be expensive, so only the most economical forms of transport will be used. There will be a functional rail system again. To cross an ocean, people will travel by ship.

3 comments:

John Murney said...

It will take a heap of energy to extract oil from the tarsands. Nuclear energy is being considered for the site, but that would be disastrous.

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eugene plawiuk said...

Hi came across your site because google linked articles on blogs about Syncrude. A point here, Tar Sands development is about bitumen, not gas.
Gas extraction as occurs in regular oil fields is absent in Tar Sands development.
Alberta's gas reserves are declining and we are now looking at coal bed methane gas production. Which is a long way off in the future, ten years at least.
Tar Sands oil development is also a decade off and without payback to the citizens of the province in Taxes and royalties for 25 years.
Check out my blogger.com blog; Le Revue Gauche where I blogged about Alberta's Tar Sands Gamble
also my other blog
Red Between the Lines-Oil Crisis
We share a common interest in Peak Oil