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Black Gold: Oil Companies Seek Profits From Canadian Source: Potentially Volatile Prices, Environmental Concerns Pose Problems for Smooth Extraction
Sunday, October 11, 2009 9:51 AM


(Source: The Times)trackingBy Bowdeya Tweh, The Times, Munster, Ind.

Oct. 11--In the next several years, more raw heavy crude oil will course through the pipelines that serve as the lifeblood of BP Whiting Refinery's $3.8 billion modernization project, begun in 2008 and set for completion in 2012.

While the oil is flowing from Canada's Alberta province, environmental and trade groups are ramping up battles focused on whether a less damaging, more environmentally friendly source is available.

The Energy Resources Conservation Board of Alberta, an independent government agency, estimated its oil sands are the second-largest source of the world's proven crude oil reserves -- 173 billion barrels -- next to Saudi Arabia. The board said as of January, there were 91 active oil sands projects. The oil is located beneath an area one-and-a-half times the size of Indiana in the province's northeastern region.

Cindy Schild, refining-issues manager for the American Petroleum Institute, a trade group, said companies have been processing heavier types of crude oil for about a decade. She said it's getting more publicity now, because several companies -- including Motiva, ConocoPhillips, Marathon and BP -- are making investments to increase their capacity for processing these types of fuels.

In August, PetroChina Co. Limited, China's state-owned oil and gas producer and distributor, bought a 60-percent stake in two oil sands projects from an Alberta-based firm for more than $1.7 billion.

"When you look at the amount of oil, we could double what we are currently importing from Canada by 2035," Schild said. "If that's the case, it plays a big role. You do have other economies that are growing, and they're looking to secure their own energy supplies."

By expanding refinery and pipeline infrastructure, there could be increased energy security and fewer oil-supply disruptions after catastrophes such as Hurricanes Katrina and Rita, Schild said.

Haydn Murray, professor emeritus of geology at Indiana University, said the oil originally was in liquid form, but over time, it congealed into a thick, tar-like material that surrounded grains of quartz sand. The sand is surrounded by layers of water and clay, according to petroleum trade group API. To extract the oil from the deposits called bitumen, Murray said the material has to have other heavy minerals and high-sulfur organic compounds removed from it.

The Alberta government agency said extraction projects involve surface mining -- similar to coal operations -- and in-situ recovery. In-situ refers to the process of pumping steam underground through a horizontal well to liquefy the bitumen, which then is pumped to the surface.




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