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Alberta's 'Dirty Oil': Drillers, Opponents Square Off

Anne Thompson, Chief Environmental Affairs Correspondent, NBC News
Monday, 15 Apr 2013 | 10:12 AM ET
A Caterpillar Inc. mining truck carries a load at Syncrude Canada Ltd.'s oil sands North Mine in Fort McMurray, Alberta, Canada.
Jimmy Jeong | Bloomberg | Getty Images
A Caterpillar Inc. mining truck carries a load at Syncrude Canada Ltd.'s oil sands North Mine in Fort McMurray, Alberta, Canada.

At a public hearing this week in Nebraska, there's sure to be plenty of talk about the environmental impact of the proposed Keystone XL pipeline that will bring oil from Hardisty, Alberta through Montana, South Dakota and Nebraska to Steele City and then on to Gulf Coast refineries.

But the real environmental debate begins hundreds of miles north where the oil comes from, in Fort McMurray, Alberta—the unofficial capital of oil sands country.

At the end of March, I visited the oil sands operations. What sticks in my mind weeks later is the vastness…the vastness of the Alberta forest beneath which lies most of Canada's oil reserves—the third largest in the world—and vastness of the oil mining operations surrounding Fort McMurray whether it's Syncrude, Suncor or Shell. They are big industrial operations in an even bigger forest.

(Read More: Canadian Oil Sands Will Become Top US Crude Source)

Oil here is not the liquid black gold you think of in Texas or Oklahoma or the Gulf of Mexico. It is a tar like substance called bitumen. It is excavated by mining or steam assisted drilling, where it is literally melted a quarter mile beneath the earth.

This oil is so heavy it must be upgraded or diluted before it can transported. The whole operation is a carbon intensive process sending more global warming gases into the atmosphere. How much depends on your point of view. The oil industry downplays the impact, opponents claim it is up to 37 percent more carbon intensive over the lifecycle of a barrel of crude from oil sands.

The State Department, in its review of Keystone, said the oil from this area produces 17 percent more greenhouse gasses than conventional crude. Those emissions are the heart of the environmental debate in Alberta, and a big reason why opponents call this "dirty oil."

The oil sands industry here plans to more than double its production by 2030. Shell vice president Tom Purves explained, "We have a massive resource here that's oil from a country that's very stable, it's a democratic country. We're able to transport this oil on pipelines safely to the U.S. and other parts of the world, other parts of North America. And I think we'll be using fossil fuels for a long time—this will be an important part of it."

Opponents said this is not about stopping development. They realize this is a natural resource crucial to Alberta and Canada's future. It's about the pace, the scale and how it adds to Canada's carbon footprint. They worry approval of the Keystone pipeline will turbo-charge growth.

(Read More: America's Crude Reality - CNBC Special Report)

Eriel Deranger of the Athabasca Chipeywan First Nation understands the booming industry brings modern conveniences. It also brings, Deranger said, modern problems threatening the forest and wildlife that are still part of the First Nations culture and have been for centuries.

"But there has to be a balance, and respect for humans—fundamental human rights and the rights to human subsistence and survivals. What we're seeing is that balance is out of whack here in Alberta. I think we're seeing development take precedence over the preservation of peoples and people's basic right to human survival," she explained.

At the Pembina Institute, an environmental think tank, the focus is about carbon dioxide. If things continue the way they are, Jennifer Grant, Pembina's Oil Sands director, said Canada will not meet its goals to reduce greenhouse gas emissions.

"Right now between 2005 and 2020, we're expecting 67 million tons of reductions from other sectors in Canada's economy. During that same time frame we're expected to see 72 million tons oil sands greenhouse gas emissions growth."

Aware of the concerns in Canada and in the U.S. about climate change, the industry is quick to point out its reduced carbon emissions intensity by 26 percent from 1990 to 2009, even as overall emissions growth because of increase in production. Shell hopes to have the ability to capture some of the carbon emissions at one of its upgraders by 2015.

Cenovus, which drills for oil, uses natural gas to make steam. Al Reid, vice president of Cenovus' Christina Lake operation said reducing the amount of natural gas it burns shrinks the carbon footprint and helps the bottom line. But he admitted there's only so much they can do. "...with today's technology, we will not get emissions down to zero. Can we continue to decrease them? I think that's very possible and that's something that we work on every single day and over time there may be a technology that allows us to do that but we don't have that technology today."

There's no question the debate in the U.S. over Keystone is having an impact in Canada. This month, Alberta's government floated the idea of raising its price on carbon to force the industry to do more to reduce emissions.

Will that be enough to convince President Obama to approve a pipeline that carries oil with a bigger carbon footprint? It's not just the environment. There are issues of energy security and economic impact.

The State Department said the extension would provide 3,900 construction jobs over a 1- to 2-year period and another 38,200 positions associated with the construction over the same time frame. Once built it said the pipeline would create 35 permanent jobs and 15 temporary ones.

It is multi-faceted issue that will dominate discussion for months to come.

By NBC's Anne Thompson; Follow her on Twitter: @annenbcnews