Politicians and industry experts seem to agree that the United States must end its dependency on foreign oil. Yet there appears to be little consensus on exactly how to reach that goal. Some have suggested we increase domestic oil production, but the growing demand for oil is simply too great. The US possesses only 3 percent of the world's oil reserves, but consumes 25 percent of the world's supply. As a nation we devour more than 20 million barrels of oil every day. That's four times the amount of Japan, the next leading consumer, which uses approximately 5 million barrels daily. Other government leaders have proposed that we simply reduce the amount of oil the US imports from the volatile Middle East. While our government does take advantage of exports from Canada and South America, the Middle East controls nearly 60 percent of the world's conventional oil reserves. Saudi Arabia, one the United States biggest suppliers, controls almost all of the world's excess production capacity, giving it the ability to limit and control price spikes. Even if the U.S. were to stop buying oil from the Middle East, instability and supply fluctuations would still have a huge effect on the United States through the global market. Because of this many people hope the US will end its dependency on oil altogether, turning instead to new technologies like hydrogen power, ethanol made from biomass, or diesel oil made from coal (coal being one of the United States' most plentiful natural resources). However such a substantial transition in energy use would require both significant technological advances and dramatic changes in the American way-of-life, neither of which are likely to happen in the near future.
Current gas prices, which in some states has risen to nearly $3 per gallon, compounded by instability in the Middle East has caused many to look to our Canadian neighbors for answers. Approximately 250 miles north of Edmonton, in the Province of Alberta, is the biggest petroleum deposit outside the Arabian peninsula - as many as 300 billion recoverable barrels and another trillion-plus barrels that could one day be within reach using new retrieval methods. (By comparison, the entire Middle East holds an estimated 685 billion barrels that are recoverable.) Many believe these deposits could be the answer to America's oil problem. However, the oil found in these deposits is not normal crude oil. It is a very viscous, tar-like substance often called heavy oil. Heavy oil is a type of crude oil that has a low hydrogen to carbon ratio, does not flow easily, and contains more impurities, sulfur, nitrogen, and heavy metals than regular crude oil. Which means it is more difficult to retrieve and requires a specialized refining process. The type of hydrocarbons that make up crude oil determine what products can be produced from it. While heavy oil does contain some light hydrocarbons that can be made into gasoline and jet fuel, it contains primarily heavier hydrocarbons. If many of the impurities in heavy oil are removed, its' properties can be made to resemble conventional crude oil, which is then referred to as "synthetic crude." However this process is both expensive and complex. The majority of Canadian deposits are made up of both heavy oil and oil sands. Oil sands are even more difficult to extract, 2 tons of sand yields just one barrel of oil. Much of the recoverable oil is classified as heavy oil, but the bulk of Canada's resources are made up of oil sands.
The production of conventional oil will eventually begin to decline, and the United States will have to find other alternatives. Despite the hurdles that must be overcome, many government officials are hoping Canada's heavy oil and oil sands will provide the solution. According to oil industry experts, if we were to extract 30 percent of Canada's oil deposits it would be enough to meet 100 percent of the United States oil needs (approximately 20 million barrels per day), for the next 100 years.
Heavy oil isn't a new discovery. It has been around for centuries, but the technology necessary to extract and refine it has only recently become available. Improvements in mining and extraction techniques over the last several years have cut heavy oil production costs in half. Until the mid-1990's the cost of producing a barrel of heavy oil cost upwards of $15, at a time the market price of oil was about $20, and OPEC countries could produce a barrel of about $5 or less. However in the last ten years oil companies have been able to the cut the cost of extracting heavy oil to about $9 per barrel. The petroleum industry is spending billions on new methods of extraction and refinement. Last year, Shell and ChevronTexaco jointly opened the $5.7 billion Oil Sands Project in Alberta, which pumps out 155,000 barrels per day. Syncrude, a joint venture among eight US and Canadian energy companies, exported 77 million barrels of heavy oil last year, mostly to US refineries. That is 14 percent of all Canadian oil sales, and enough oil to produce 1.5 billion gallons of gasoline. Syncrude has also opened a lab in Edmonton were it is spending $30 million a year to devise increasingly efficient extraction methods. Canada has also recently finalized plans to build a 1,200-kilometre, $2.5-billion pipeline from the Alberta oil sand deposits to the West Coast to ship oil by tanker to Asia.
There are still many obstacles to overcome in the development of Canada's heavy oil and oil sands deposits. A shortage of heavy oil refineries has limited the market, but despite challenges the Alberta Energy Utilities Board has predicted that both heavy oil and oil sands production will triple in the next ten years. These developments could prove to be crucial as the Middle East grows increasingly unstable.
Related Links: Oil Sands - Alberta Department of Energy