This is an excerpt from EERE Network News, a weekly electronic newsletter.

March 08, 2006

Chevron Investment Highlights Development of Alberta Oil Sands

Chevron Corporation announced on March 2nd that it has acquired leases on 75,000 acres in northern Alberta that are expected to contain 7.5 billion barrels of heavy oil. The acquisition marks a growing trend for oil companies investigating "alternative" sources of oil, such as the oil sands in Canada. Oil sands are a thick underground layer of sand embedded in heavy, tarry oil (called bitumen), located below Alberta's boreal forest. Steam is used to wash the bitumen from the sand, after which the heavy oil must undergo significant processing at an "upgrader" facility. The oil sand can be extracted by strip mining, or for deeper deposits, an in situ process can pump steam into the ground and extract the bitumen. Chevron is already active in oil sands development in Alberta through a 20 percent ownership of the Athabasca Oil Sands Project, which began operation in 2003 and currently produces about 155,000 barrels of oil per day. See the Chevron press release.

According to the Alberta government, the Canadian oil sands have proven oil reserves of more than 174 billion barrels, second only to Saudi Arabia. The oil sands are in three locations with a total area greater than the state of Florida; existing oil sands operations are visible from space. A report published in May 2004 by Canada's National Energy Board found that 2.5 to 4 barrels of water are needed to produce one barrel of bitumen, though the industry is investigating ways to conserve water. For mined oil sands, 500 cubic feet of natural gas are burned to produce one barrel of bitumen, while the in situ process requires 1,000 cubic feet of natural gas. As a result, Canada's Pembina Institute, an environmental policy research and education organization, has warned that growing oil sands development could result in significant growth in Canada's greenhouse gas emissions in coming years. See the Alberta Government Web site; the summary of the National Energy Board report; the Pembina Institute's press release and photos of the oil sands projects; and for the view from space, see the Google Maps Web site (note: once this page loads, you may need to refresh the page for it to display properly).