TechnologicalandEnvironmentalDevelopmentsinCanada’sPetroleumIndustrySince1990

HistoricalAssessmentUpdate

November,2010

Presentedto:AnnaAdamekCurator,NaturalResourcesandDesign

CanadaScienceandTechnologyMuseum

ByRyanKatz‐Rosene

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TableofContents

Introduction........................................................................................................................................... 4

PartI:AnUpdateonCanada’sPetroleumResources............................................................... 8Table1:ProvenPetroleumReservesinCanada................................................................................................8

PetroleumReservesinCanada .................................................................................................................. 8Figure1:MapofPetroleumResourcesinCanada ............................................................................................9Table2:PetroleumProductionComparisoninCanada,1990&2008................................................. 10Table3:CanadianPetroleumProductionTrendsSince1990(m3) ...................................................... 10

PetroleumProductionTrendsinCanadaandbyProvince ............................................................11BritishColumbia ...............................................................................................................................................................................11Alberta...................................................................................................................................................................................................12Saskatchewan ....................................................................................................................................................................................12Manitoba .............................................................................................................................................................................................. 12Ontario ..................................................................................................................................................................................................13Quebec ...................................................................................................................................................................................................13NewBrunswickandPrinceEdwardIsland........................................................................................................................... 13NovaScotia ......................................................................................................................................................................................... 13NewfoundlandandLabrador......................................................................................................................................................14Nunavut ................................................................................................................................................................................................ 14NorthwestTerritories.....................................................................................................................................................................14Yukon .....................................................................................................................................................................................................14

Figure2:CanadianOilSands&ConventionalOilProduction .................................................................. 15CanadianPetroleumForecast ..................................................................................................................15Figure3:CanadianNaturalGasProductionForecast .................................................................................. 16

PartII:TechnologicalDevelopmentintheOnshorePetroleumIndustry ......................17TechnologicalDevelopmentinOnshorePetroleumExploration ................................................17

GraphicModelingandVisualization........................................................................................................................................17TechnologicalDevelopmentinOnshorePetroleumExtraction ...................................................19

DirectionalDrilling..........................................................................................................................................................................20Figure4:DirectionalDrilling .................................................................................................................................. 21Figure5:TheFirstMultilateralWell ................................................................................................................... 22DrillMotoringTechnology ........................................................................................................................................................... 23HydraulicFracturing ......................................................................................................................................................................24

Figure6:HydraulicFracturing............................................................................................................................... 25Saskatchewan’sBakkenOilField ..............................................................................................................................................25ANoteonUnconventionalNaturalGas:CoalBedMethane,ShaleGas,andTightGas.....................................26

TechnologicalDevelopmentinOnshorePetroleumTransportation .........................................27AdvancesinPipelineTechnology...............................................................................................................................................27

Figure7:‘Smart’PigTravellingThroughaPipeline ..................................................................................... 28

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SmartPigs............................................................................................................................................................................................ 28Figure8:ControllingPigsRemotely .................................................................................................................... 29SmartPigsandCathodicProtection ........................................................................................................................................29

TechnologicalDevelopmentinPetroleumProcessingandRefining ..........................................30PartIII:TechnologicalDevelopmentinOffshorePetroleum..............................................33

ABriefHistoryofOffshorePetroleumDevelopmentinCanada ..................................................................................33OffshoreOilandGasProjectsinCanadaToday ..................................................................................................................34OffshoreRegulationsinCanada.................................................................................................................................................36TheFutureofOffshoreDrillinginCanada ............................................................................................................................ 37

TechnologicalDevelopmentinOffshorePetroleumExploration ................................................37UnderwaterSeismic ........................................................................................................................................................................37

Figure9:EarlyMarineSeismic............................................................................................................................... 38OceanBottomCables(OBC) ........................................................................................................................................................39Multi­AzimuthSeismic ...................................................................................................................................................................39

Figure10:OceanBottomCablesusingMulti‐AzimuthSeismicTechnology...................................... 40ImprovedComputingCapacity...................................................................................................................................................40

TechnologicalDevelopmentinOffshorePetroleumExtraction...................................................41Figure11:TypesofOffshoreDrillingPlatforms............................................................................................. 41CanadianExample:HiberniaPlatform...................................................................................................................................42UnderwaterRobotics ......................................................................................................................................................................42

TechnologicalDevelopmentinOffshorePetroleumTransportation .........................................43LiquefiedNaturalGas.....................................................................................................................................................................43

Figure12:ProposedCanadianLNGImportandExportProjects............................................................ 44Figure13:ComponentsofaGenericLNGReceivingTerminal ................................................................ 45CanadianExample:KitimatExportLNGTerminal ...........................................................................................................45

PartIV:Canada’sPetroleumIndustryandtheEnvironment..............................................47ClimateChange..................................................................................................................................................................................47

Figure14:Toe‐to‐HeelAirInjection.................................................................................................................... 48Toe­to­HeelAirInjection............................................................................................................................................................... 48CarbonCaptureandStorage.......................................................................................................................................................49

Figure15:CarbonCaptureandStorage ............................................................................................................. 50ACritiqueofIntensityBasedEnvironmentalTechnologies........................................................................................... 50UsingNaturalGastoProduceOil–AWasteofEnergy...................................................................................................51AirPollution........................................................................................................................................................................................51PipelinePoliticsandtheEnvironment ....................................................................................................................................52WaterContamination.....................................................................................................................................................................52OffshoreDrillingSafety:ReliefWells .......................................................................................................................................53

Bibliography ........................................................................................................................................55

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TechnologicalandEnvironmentalDevelopmentsinCanada’sPetroleumIndustrySince1990

HistoricalAssessmentUpdate

ByRyanKatz‐RoseneNovember,2010

IntroductionThis report examines developments in Canada’s petroleum industry since 1990, withparticularattentiontotechnologyandtheenvironment.Theresearchservesasanupdateto two historical assessments written for the Canada Science and Technology Museum(formerly the National Museum of Science and Technology) in 1992 – ChristopherAndreae’sAHistoryofthePetroleumIndustryinCanadato1947,andRobertMcIntosh’sThePetroleumIndustryinCanadasince1947.1At a technical level, petroleum refers solely to crude oil – coming from the Latinwords‘petra’ (rock) and ‘oleum’ (oil). However, in contemporary English and in the Canadianfossilfuelindustry‘petroleum’isusedtorefertoahostofhydrocarbonformsrangingfromnaturalgas tobitumen.2This report thususes thebroader interpretationof theword, inlinewiththecountry’sleadinghydrocarbontradesorganization–theCanadianAssociationofPetroleumProducers(CAPP).Canada’spetroleumindustryhasundergonemajortransformationsinthelasttwodecades,particularlyastherecognitionofAlberta’sbituminoussandsasaviablesourceofcrudeoilgaveCanadathenumbertwospotontheworldstagewhenitcomestocrudeoilreserves.Indeed, the story of Canada’s petroleum industry today is verymuch about the turn tounconventional sources of crude oil and natural gas.3 This is highlighted by the fact that1SeeAndreae,Christopher,AHistoryofthePetroleumIndustryinCanadato1947,(Ottawa:NationalMuseumofScienceandTechnology,1992)andMcIntosh,Robert,ThePetroleumIndustryinCanadasince1947,(Ottawa:NationalMuseumofScienceandTechnology,1992).2IntheAmericanHeritageDictionaryoftheEnglishLanguage‘petroleum’isdefinedas“Athick,flammable,yellow‐to‐blackmixtureofgaseous,liquid,andsolidhydrocarbonsthatoccursnaturallybeneaththeearth'ssurface,canbeseparatedintofractionsincludingnaturalgas,gasoline,naphtha,kerosene,fuelandlubricatingoils,paraffinwax,andasphaltandisusedasrawmaterialforawidevarietyofderivativeproducts.”SeeTheAmericanHeritageDictionaryoftheEnglishLanguage,Petroleum,(HoughtonMifflinCompany,2004),http://dictionary.reference.com/browse/petroleum.3Unfortunatelythereisnoconsensusonwhatconstitutes‘conventional’and‘unconventional’oilandgas.Industrygroups(suchastheCanadianAssociationofPetroleumProducers)usetheterm‘conventionaloil’torefertooilforwhich“productioncaninitiallybeachievedatcommercialrateswithoutalteringthenaturalviscousstateoftheoil,”whereasgovernmentagencies(suchasStatisticsCanada)usetheterm‘conventional’torefertohydrocarbonsthatarerecovered“usingstandardproductionmethods.”InthisreportIusethegovernment’sterminologyinreferringtotheproductionprocessesratherthanthestateofthehydrocarbonasitisremovedfromunderground,withthecaveatthatoffshoreproductionqualifiesasa‘standardmethod’of

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Canada’sremainingreservesofconventionaloilstandatapproximately830millioncubicmeters(m3),andprovenreservesofconventionalgasstandat57.9trillioncubicfeet(Tcf).4This means that at current rates of production Canada only has 15 years left worth ofconventional oil and 8.5 years left of conventional natural gas! The daunting nature ofdwindlingconventionalsupplyhascausedindustrytolookatalternativesourcesofoilandgas, which has translated into the implementation of new extraction technologies (fordifficult‐accessdepositssuchasoffshoreoilandgas)aswellasattemptstoyieldoilandgasfromunconventionalsources(suchasbituminoussands,oilshale,shalegas,tightgas,andcoalbedmethane).ItwouldseemthatthemainfocusofCanada’spetroleumindustrytodayisthebituminoussands,5 given that the resourceaccounts fornearly96%ofCanada’sprovenoil reserves.Due to the incredible growth in Alberta in recent years, conventional petroleumdevelopments in other parts of Canada have been largely overshadowed. Nevertheless,conventionalcrudeandcondensatesstillmakeuponethirdofCanada’scrudeproduction.Assuch,itisimportanttocontinuemonitoringconventionaldevelopments,exploringhowthe fossil fuel industry pursues exploration and extraction and how it implements newtechnologies,environmentalmeasuresandsafetyprocedures.Withthisinmind,thisreportintentionallyavoidsdetailedanalysisofAlberta’sbituminoussands(atopicworthyof itsown study) while briefly considering proposed developments in oil shale and otherunconventionaloilresources.Apreliminaryexaminationofthetechnologiesemployedtoreclaim land inAlberta’s bituminous sands, aswell as the environmental implications ofthese technologies, can be found in Katz‐Rosene’s Land Reclamation and Alberta’sBituminousSands:EnvironmentalConsiderations.6Aswithcrudeoil,theseveredeclineinconventionalsourcesofnaturalgashasalsobroughtabout a shift towards unconventional production, as the Canadian petroleum industryscrambles tomeet theexpectedgrowth indemand. InAlberta, forexample,anestimated500 Tcf of unconventional natural gas is expected to be found in coal beds. While thedevelopmentofCoalBedMethane(CBM)haslargelyremainedatthelevelofexperimentaldrillingandexploration,somecommercialCBMoperationshavealreadybeenestablished(with the first project coming on stream in 2002). In fact, as of 2007, therewere 9,339

extraction.SeeCanadianAssociationofPetroleumProducers,StatisticalHandbookforCanada'sUpstreamPetroleumIndustry,(Calgary:CanadianAssociationofPetroleumProducers,2010).SeealsoStatisticsCanada,EnergyStatisticsHandbook,(Ottawa:StatisticsCanada,2009).4ThefigurefornaturalgasisfromtheU.S.EnergyInformationAdministrationin2009.However,theGovernmentofAlbertaclaimsthatithas87Tcfofconventionalnaturalgasinreserve(whichwouldmeantheprovincehasjustover19yearsleftofnaturalgasleft).U.SEnergyInformationAdministration,Canada:NaturalGas,July2009,http://www.eia.doe.gov/cabs/canada/NaturalGas.html.5Thisisarguablythemostaccurateandneutraltermfortheresource,whichisoftenreferredtoaseither‘oilsands’or‘tarsands’(nameswhichhaveincreasinglypoliticalconnotations).6RyanKatz‐Rosene,LandReclamationandAlberta’sBituminousSands:EnvironmentalConsiderations,(Ottawa:CanadaScienceandTechnologyMuseum,2010).

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active CBM production wells in Alberta.7 Across the industry there are major efforts todevelopnewtechnologiesfornaturalgasextraction–inadditiontoCBM,technologiesarebeingtestedfortheextractionofnaturalgasfromdense,lowpermeabilityreservoirs(tightgas)aswellasfromshaleformations(shalegas).ThetopicofunconventionalnaturalgasdevelopmentinCanadaisthusequallyworthyofitsownfull‐lengthstudy,andassuchthefocusof this reportdoesnot afford it theopportunity todelvegreatly into thedetailsofnewdevelopmentsinunconventionalnaturalgastechnologies.Rather,whatthisreportdoesattempttodoissketchoutsomeoftherecentdevelopmentsintechnologiesusedintheconventionalpetroleumindustryinCanada,withfocusonbothonshoreandoffshoresources. Inaddition, thereport takesaclose lookatenvironmentalproblems associated with petroleum production in Canada and some of the efforts thathavebeentakentomitigate theseproblems. In today’sworld there is increasingconcernaboutclimatechange,environmentaldegradation,anddwindlingsuppliesofhydrocarbonresources.Inthissense,thefossilfuelandenergyindustrieshavecomeunderpressureto‘green‐up’productionprocesses.RecentindustrydisastersinCanadaandabroadhaverefocusedCanadians’attentionontheextremedangersposedbycrudeoilextractionprojectsuponregionalecosystems,humanhealth and safety. For instance, inMarch 2009 a helicopter ferryingworkers to a rig offNewfoundland’s coast crashed in theAtlanticOcean, highlighting someof the dangerousworkingconditionsassociatedwithoffshoreplatforms.8Similarly,arecentoilspill in theGulfofMexicoresultingfromtheexplosionofDeepwaterHorizon(anoffshoredrillingrigowned by BP) has been dubbed the worst environmental disaster in American history.Mostrecently,anoilspill inMichigancausedbyacorrodedpipelineownedandoperatedbyCalgary‐basedEnbridgeleaked3.1millionlitresofoilintotheKalamazooRiver.9Theseaccidentshaveshowntheworldthatsmallmistakesinfossilfuelproductionprocessescanhave enormous impacts with negative consequences upon wildlife habitats and localcommunities, also affecting the economy and potentially causing loss of human life.10 Inthislight,thestoryoftechnologicaladvance,environmentalprogramming,andregulationinCanada’spetroleumindustryshouldbeofgreatinteresttotheCanadianpublic.The report is divided into four parts. Part One attempts to produce a clearer picture ofCanada’spetroleumindustryasitstandstoday.Itholisticallyexplorestheindustryfroma

7AlbertaEnergy,CoalbedMethaneFAQs,June7,2010,http://www.energy.alberta.ca/NaturalGas/750.asp.8SeeCBCNews,"NoSignalsfromLocatorBeaconsinCrashedHelicopter:Officials,"CBC.ca,March12,2009.9CBCNews,"MichiganOilSpillContained:Enbridge,"CBC.ca,July30,2010.10TheBPdisasterofApril20th,2010,hasthusfarleakedmorethan20milliongallonsofoilintotheGulfofMexico(andcontinuestoleakthousandsofbarrelsofcrudeeachday),affectingover110kilometersofcoastlineaswellasthehabitatsandcommunitiesthatsubsistuponcoastalecosystems.Theoriginalexplosionalsoresultedinthedeathsof11rigworkers.ExtensivecoverageoftheBPoilspillisavailablefromFinancialTimes,InDepth:BPOilSpill,http://www.ft.com/indepth/bp‐oil‐spill.

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geographicalandhistoricalperspective(focusingonindustrydevelopmentssince1990).Indoingso,thedeclineinconventionalproductionacrossthecountryisframedinrelationtoattemptstoprocureunconventionalsourcesofcrudeoilfromAlberta,aswellasattemptstoincreaseoffshoreoilandunconventionalnaturalgascapacity.PartTwofurtherexplorestechnologies andenvironmental concerns regarding conventional oil productionon land.BuildingupontheworkofRobertMcIntosh(1992),thissectionofthereportdiscussesnewdevelopments in petroleum exploration, extraction, refining, and transportation. PartThree considers offshoredrillingprojects off Canadian coasts, also through the lenses oftechnologiesusedinthevariousphasesofproduction.Thelattersectionfocusesprimarilyon existing and proposed petroleum projects in the Atlantic and Arctic Oceans (as amoratorium on drilling off the West Coast has put a freeze on projects near BritishColumbia’s Pacific shores). Finally, Part Four explores some of the most pressingenvironmental issues related to the Canadian petroleum industry, and notes the role oftechnologyinreducingthesector’secologicalimpacts.In many cases, the findings of this study show how the basic concepts of petroleumextraction–as firstdeveloped in themid‐19thCentury11– remain thesame,despitenewtechnological developments. For themostpart, new technologieshelp to increaseyields,accessibilityandthescaleofdevelopment,ratherthanrevolutionizetheveryprinciplesofpetroleum geology. Similarly, new advancements, procedures and research intoenvironmental impacts have helped to limit the intensity of ecological damage resultingfrompetroleumexploration,extraction,transportationandprocessing.However,therearefinitelimitstohow‘green’thepetroleumindustrycanbecome,duetotheverynatureofitscoreproject–theremovalofhydrocarbonsfrommillion‐yearolddepositsforthepurposesof short‐term commercial consumption. In this sense the per barrel footprint of thepetroleum industry may be improving, while the overall footprint may in fact cause anincreasingamountofecologicaldamage.

11SeeChristopherAndreae,AHistoryofthePetroleumIndustryinCanadato1947,(Ottawa:NationalMuseumofScienceandTechnology,1992).

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PartI:AnUpdateonCanada’sPetroleumResourcesThissectionhighlightsrecentdevelopmentsinpetroleumproductionandreserveswithinthe seven hydrocarbon regions in Canada – the Western Canada Sedimentary Basin,AtlanticMargin,ArcticCratonic,ArcticMargin,PacificMargin, IntermontaneandEasternCratonic(seeFigure1:MapofPetroleumResourcesinCanada).Inshort,itexplainsrecenttrends inproduction inallprovincesandterritoriesofCanadaandoffersabrief forecastregarding expected trends in Canada’s petroleum industry within the next twenty‐fiveyears.Assuggestedabove,thekeytrendhasbeenadeclineinproductionofconventionalsourcesofoilandgasandgrowinginterestinunconventionalsources.

Table1:ProvenPetroleumReservesinCanada12

CrudeOil 28.3billionm3ConventionalCrudeOil13 830millionm3(3%)

NaturalGas14 1.64trillionm3

PetroleumReservesinCanadaCanadacurrentlyholds178billionbarrelsofprovenoilreserves,15placingitsecondonlytoSaudi Arabia on the global scale. However, the province of Alberta holds approximately96%oftheCanadiantotal(at171.8billionbarrels),andinturn,99%ofAlberta’sreservescome in the formofunconventionalheavypetroleumknownasbitumen.16Since the firstlarge‐scale commercialproductionofbitumenbeganwith theopeningofGreatCanadianOilSandsin1967,therehasbeenexponentialgrowthintheproductionofbitumen,anditsconversionintoSyntheticCrudeOil(SCO).However,otherdepositsofconventionaloilstillprovide the Canadian industry with many billions of barrels from which to draw, eventhoughconventionalsourcesonlyaccount for3%ofremainingoilreserves.17 Intermsof

12Allfiguresareapproximate.StatisticsareavailablefromCentralIntelligenceAgency,Canada,May27,2010.Central Intelligence Agency, Canada, May 27, 2010, https://www.cia.gov/library/publications/the‐world‐factbook/geos/ca.html;SeealsoCanadianAssociationofPetroleumProducers,StatisticalHandbook…2010.13ThisisahighestimateextrapolatedfromtheCanadianAssociationofPetroleumProducers.However,StatisticsCanadaclaimedin2007thatremainingconventionalpetroleumreservesonlystoodat797.2millioncubicmeters.StatisticsCanada,EnergyStatistics…,2009,66.14ThisfigureissupportedbyStatisticsCanadaandtheCIAWorldFactbook.Nevertheless,theCanadianAssociationforUnconventionalNaturalGasclaimedin2010thatremainingreservesofconventionalnaturalgasinCanadastoodat692Tcf,whichisequivalentto19.6trillioncubicmeters–12timesasmuchasthemoreconservativeestimates.SeeM.F.Dawson,CrossCanadaCheck­Up:UnconventionalGas,EmergingOpportunitiesandStatusofActivity,(CanadianSocietyforUnconventionalGas,2010).15Thisisequivalentto28.3billioncubicmeters.16 See U.S. Energy Information Administration, "Canada: Oil," U.S. Energy Information Administration:IndependentStatisticsandAnalysis,July2009,http://www.eia.doe.gov/cabs/canada/Oil.html.SeealsoEnergyResourcesConservationBoard,ST98­2009:Alberta'sEnergyReserves2008andSupply/DemandOutlook2009­2018,(Calgary:EnergyResourcesConservationBoard,2009).

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natural gas, Canada is said to only hold 57.9 trillion cubic feet (Tcf)18 in remainingconventional reserves, placing it 22nd in global country rankings. Nevertheless, newtechnologiesinnaturalgasextraction,describedbelow,maysignificantlyincreaseCanada’sprovengasreserves.

Figure1:MapofPetroleumResourcesinCanada19

Figure1showsthegeographical locationofexistingpoolsofcrudeoilandnaturalgas inCanada, amongst the country’s seven hydrocarbon regions (in various colors). Areas inblackdenotepools of conventional oil,which canbe found inmultiple fields throughoutAlberta and Southern Saskatchewan, in theBeaufort Seanear theNorthwestTerritories’MackenzieRiverDelta,offNewfoundland’sCoast,andinsmalldepositsinBritishColumbia,Manitoba,andSoutheasternOntario.Areasinlightbrowndenotenaturalgasfields,whichare found in numerous locations throughout Canada’s Arctic, off the Atlantic Coast, in17Thereareapproximately5.2billionbarrelsofconventionaloilleftinCanada.18Thisisequivalentto1.64trillioncubicmeters.19Source:NaturalResourcesCanada,CrudeOilandNaturalGasResources,http://atlas.nrcan.gc.ca/site/english/maps/economic/energy/oilgas/1(accessedJune10,2010).

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Quebec’s St. Lawrence Seaway, and in enormous quantities inAlberta. Bitumendepositsareidentifiedwithdarkbrown.

Table2:PetroleumProductionComparisoninCanada,1990&200820

1990TotalCanadianCrudeOilProduction 96.7millionm32008TotalCanadianCrudeOilProduction 158.7millionm3

1990ConventionalLightCrudeOilProduction 51.9millionm32008ConventionalLightCrudeOilProduction 54.2millionm3

1990NaturalGasProduction 123.6billionm32008NaturalGasProduction 195.9billionm3

Table3:CanadianPetroleumProductionTrendsSince1990(m3)21

ConventionalCrudeOil

SyntheticCrudeOil&Bitumen

ConventionalandSynthetic

NaturalGas

1990 69,997,999 19,947,000 89,944,999 123,610,602,0001991 69,396,958 20,234,000 89,630,958 132,537,842,0001992 71,931,831 21,140,000 93,071,831 146,129,714,0001993 75,265,357 21,808,000 97,073,357 159,206,966,0001994 78,365,707 23,000,000 101,365,707 170,877,230,0001995 79,994,430 24,818,000 104,812,430 179,833,250,0001996 81,577,177 25,822,000 107,399,177 185,825,669,0001997 82,028,453 30,604,000 112,632,453 189,096,706,0001998 82,777,488 34,235,000 117,012,488 194,009,191,0001999 78,121,236 32,938,000 111,059,236 198,961,399,0002000 81,007,212 35,389,000 116,396,212 205,834,797,0002001 80,012,923 38,193,000 118,205,923 208,565,053,0002002 83,989,753 43,159,000 127,148,753 208,251,964,0002003 84,988,447 50,063,000 135,051,447 202,260,608,0002004 82,006,193 57,811,000 139,817,193 205,283,832,0002005 79,107,068 57,550,000 136,657,068 206,447,196,0002006 77,942,040 65,364,000 143,306,040 208,264,030,0002007 80,561,672 69,573,000 150,134,672 203,460,539,0002008 78,493,640 70,031,000 148,524,640 195,945,469,000

20ExtrapolatedfromCAPP’scrudeoilandequivalentproductioncapacityfiguresinCanadianAssociationofPetroleumProducers,StatisticalHandbook…,2010,106.‘TotalCanadianCrudeOil’includesallformsofcrudeoilandequivalent,includingconventionalandunconventionalsources,syntheticcrudeoil,andcondensates.21FiguresfromCanadianAssociationofPetroleumProducers,StatisticalHandbook…,2010,85‐99.Hereconventionalincludesbothlightandheavyformsofconventionaloil.However,thetotalsexcludecondensatessuchaspentanes,etc(thustotalsdonotquitematchthoseinTable2).

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PetroleumProductionTrendsinCanadaandbyProvinceAlthoughCanada is said to haveplayed an important role in thedevelopment of oil andnatural gas production in the late 19th and early 20th Centuries,22 it was not until afterWorldWarTwothatthepetroleumindustryinCanadareallytookoff.WiththediscoveryofoilinLeduc,Albertain1947,Canadawasputonthemapasaself‐sufficientpetroleumproducer.Upto1947,Canadahadproducedjustover17millioncubicmetersofcrudeoil.By1955,thecountrywasalreadyproducingover20millioncubicmetersofoilperyear.TheamountofoilproducedinCanadawouldsteadilyriseeachyearuntil1973(coincidingwith the OPEC oil crisis), when Canada produced a record 101 million cubic meters,incidentallythemostconventionaloileverproducedinCanada.Sincethen,conventionaloilproduction in Canada has tended to decline over all, and by 2008 only some 78millioncubicmetersofconventionaloilandequivalentwereproduced.23Nevertheless,thedeclineinconventionaloilproductionhasbeenoffsetbyincreasesinunconventionalproductionofbitumen and Synthetic Crude Oil (SCO). Alberta’s bituminous sands now add some 70million cubicmeters of unconventional oil to Canada’s annual production numbers, andthatfigureisexpectedtogrowfortheforeseeablefuture.NaturalgasproductionalsogrewsteadilyafterWorldWarTwoandreachedatemporaryhigh in1973.The followingdecadewas aplateau in gasproduction,with annual quotashovering between 85 billion and 96 billion cubicmeters. From the late 1980s until theearly 21st Century, natural gas production continued to grow year after year, fueled byincreasing demand. Gas production appears to have peaked in 2001, with 208.6 billionbarrels of natural gas produced that year, and declining thereafter. Given expectedincreasesindemandfornaturalgasfromtheCanadianpublic,fromAmericanmarkets,andin particular from the Canadian manufacturing sector, Canada will either have to beginimportingmuchmorenaturalgasfromothernationstosatiatedemand.AsBenKenney,anenergy commentator forThe Oil Drum, has observed, natural gas is a key resource as itheatsmore thanhalfofallCanadianhomes in thewinter, and fuels6%of theelectricitysector, particularlyduringpeakdemand.YetKenneyworries about the60%ofCanada’sproducednaturalgas that isexported to theUnitedStatesand the4.4%ofCanadiangasthatisusedtoextractbitumenfrominsituwellsinAlberta(especiallyastheEIAexpectsthebituminoussandstobethemainsourceofincreasingdemandforCanadiangas).24Justlikeoil,itisthusexpectedthattheCanadianpetroleumindustrywillturntounconventionalsourcesofgastocounteractdecliningsupplies.

BritishColumbiaBritishColumbiaisthesecondlargestproducerofnaturalgasinthecountry,contributing3.2 billion cubic feet per day. Existing deposits of natural gas contain some 16.5 trillioncubicfeetofgas.ReservesarelocatedintheNortheasterncorneroftheprovince,alongthe

22SeeAndreae,AHistory…,1992.23ThisfiguredoesnotincludeSyntheticCrudeOilorbitumenfromAlberta.24BenKenney,PredictionsforCanada'sNaturalGasProduction,June4,2008,http://www.theoildrum.com/node/4073.

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Alberta border, with key deposits in the Ladyfern, Greater Sierra, Monkman, and HornRiverfields.Smallerpocketsofcrudeoilexistinthesameregion,wheresome104millionbarrels of conventional crude and 60 million barrels of condensate remain in reserve.WhileovertenexplorationwellsweredrilledoffBritishColumbia’sshoresinthe1960s,alloffshoreactivitycametoanendin1972whenamoratoriumwasdeclaredonWestCoastdrilling.25 In addition, the Canadian Society for Unconventional Gas (CSUG) claims thatnearly 2000 trillion cubic feet of natural gas can be derived in British Columbia fromunconventionaldepositsintightsands,shales,andcoalbeds.26

AlbertaAlbertaisCanada’shydrocarbonprovince,producinglargeamountsofconventionaloilandnaturalgas.Ofcourse,thelargestdepositofunconventionaloilisalsofoundinAlberta,inthe form of three massive bituminous deposits, which now contribute nearly half ofCanada’s total oil and equivalent supply. In addition to the bituminous sands located inNortheasternAlberta,variouscrudeoilfieldsofconsiderablesizearescatteredthroughoutthe province. These conventional sources contribute over 500,000 barrels per day, orapproximately18.4%oftheCanadiantotalcrudeoilandequivalentoutput.Inadditiontoheavierformsofpetroleum,Albertaisalsoextremelyrichinnaturalgasdeposits,withover100,000gaswells inoperation,yieldingapproximately12.4billioncubic feetofgaseachday in2008.27TheCSUGasserts thatanadditional1500 trillioncubic feetofgasmaybeobtainablethroughunconventionaldrillingincoalbedsandshalesinAlberta,andpossiblyevenmorefromtightgas.

SaskatchewanSaskatchewan is second to Alberta in terms of crude oil production. It has four largedepositsofconventionaloil,withheavierdeposits(andsomebituminousdeposits)alongtheborderwithAlberta. Ithas1.2billionbarrelsofoil inreserveandproduced439,868barrelsperdayin2008,throughsome26,000oilwells.MostnaturalgasintheprovinceislocatedalongtheAlbertaborder,holding3.1 trillioncubic feet inreserve.Approximately5.6%ofCanada’snaturalgasisproducedintheprovince.28

ManitobaManitobaholds just over 1%of Canada’s oil reserves,with 57.4million barrels.Holdingapproximately2700oilwells, theprovinceyielded23,470barrelsperdayofoil in2008.Theprovincehasnoknownnaturalgasreserves.29

25CenterforEnergy,EnergyFacts&Statistics,http://www.centreforenergy.com/FactsStats/.26CanadianSocietyforUnconventionalGas,Canada,http://www.csug.ca/.27CenterforEnergy,EnergyFacts…28Ibid.29Ibid.

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OntarioOntario holds 9.9 million barrels of oil in reserves located in the southern part of theprovince,betweenLakeErieandLakeHuron.Theprovinceproduces some1650barrelsperdayofoil from1189wells.Numerous smallpocketsofnatural gasdot theprovince,fromwhichsome26millioncubicfeetofgasareproducedperday.Ontario’snaturalgasreservesstandat693billioncubicfeet,withanadditionalpotentialof225billioncubicfeetfromshaledepositsintheSoutherntipoftheprovince.30

QuebecNewtechnologiesinnaturalgasdevelopmenthavemadetwomassivenaturalgasreserveseconomically viable in Quebec. The Utica shale in southern Quebec (bordering northernNewYork)holdstremendousquantitiesofgas,asdoestheGaspéPeninsula.Thusfaronlyexploratorywellshavebeendrilled.However,estimatesputQuebec’srecoverablereservesat18trillioncubicfeetofgas.Theprovincehasnocrudeoildeposits.

NewBrunswickandPrinceEdwardIslandThese twoMaritimeProvincesno longerhavecrudeoildeposits.However,bothdohavesmall reserves of conventional natural gas. The McCully gas field near Sussex, NewBrunswick, put the province back on the petroleummap in 2003, holding 137.6 billioncubicfeetofnaturalgas,andproducing23millioncubicfeetperday.Inturn,some22wellsownedbyCorridorResourcesexploittightgasfromtheMcCullydeposit,andthecompanybelieves that more than one trillion cubic feet of tight gas can be found there. NewBrunswick’scrudeoildeposits randry in1988.PrinceEdward Islandcurrentlydoesnotproduce any hydrocarbons, but is expected to hold some 215 billion cubic feet ofrecoverablegasfromcoalbeddeposits.31

NovaScotiaInNovaScotia,theoffshoreSablenaturalgasdepositcontainssome500billioncubicfeetofgas,andyields426millioncubicfeetperday.Anewoffshoredeposit–theDeepPanuke– ispresentlybeingdevelopedandisexpectedtoholdsome900billioncubic feetofgas,withadailyyieldof200millioncubicfeetonceproductioncomesonstream.CSUGbelievesthatadditionalyieldsofunconventionalgas,particularly fromcoalseams inCumberland,Stellarton and Syndey, offermore than 1.5 trillion cubic feet of additional gas reserves.NovaScotiaalsosharesjurisdictionwiththeUnitedStatesovertheGeorgesBank–alargeoffshore continental shelf in the Western North Atlantic between Cape Cod and theSouthern tip of the province.While some drilling for gas and oil was conducted on theAmericansideofthebankintheearly1980sbyExxon,Mobil,ShellandConoco,concernsaboutecologicaldamage to this important fisherycaused theCanadianandNovaScotian

30SeeCenterforEnergy,EnergyFacts…andCanadianSocietyforUnconventionalGas,Canada.31Ibid.

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governments,(andeventuallytheAmericangovernment)toplaceamoratoriumonfuturedrilling.32InMay2010themoratoriumwasextendedto2015.

NewfoundlandandLabradorAlthough ithasnonaturalgasdepositscurrentlyunderdevelopment,NewfoundlandandLabradorhold largequantitiesofcrudeoil fromoffshore fields.Reservesholdmorethan1.5billionbarrelsofoil, intheJeanneD’Arcbasin. In2009,theHibernia,TerraNovaandWhite Rose projects (operated by a conglomerate of companies including Exxon‐MobilChevron,Suncor,Husky,Statoil,andMurphyOil)contributednearly100millionbarrelsofoiltoCanadianproduction.TheHebron/BenNevisproject(alsointheJeanneD’Arcbasinandoperatedbythesamecorporations)isexpectedtoyield730millionbarrelsofoil,andmayevencontainsomenaturalgas(estimatedat429billioncubicfeet).33

NunavutNunavut’s crude oil deposits are located primarily around Cameron Island and EllefRingnes island, within the Bent Horn and Balaena oil fields (respectively). Estimates ofrecoverable oil stand between 322 million barrels and 2.6 billion barrels. Nearby gasdepositsatDrakePointonMelvilleIslandareexpectedtoholdupto58.3trillioncubicfeetofrecoverablenaturalgas.34

NorthwestTerritoriesThere could be up to 6.2 billion barrels of recoverable crude oil in the NorthwestTerritoriesfrombothinlandandoffshoresources.TheNormanWellsandCameronHillsoilfieldsare the twocurrent sourcesofoilproduction,bringing in15,549barrelsofoilperday.Multiple natural gas fields in theMackenzie Delta and offshore in the Beaufort Seacouldeventually increasetheterritory’srecoverablegasreservesto71trillioncubicfeet.Three gas fields (Ikhil operatedbyAltaGas,NormanWells operatedby ImperialOil, andCameronHills operated byParamount) cumulatively produced18.4million cubic feet ofgas per day in 2009. If new technologies for exploiting natural gas hydrates succeed(natural gas in a solid form known as ‘clathrate’), then the Northwest Territories mayeventuallyprovidemanythousandsoftrillionsofcubicfeetofgas,particularlyfromdeepoffshoredepositsintheAtlanticMarginandthePacificMargin.35

YukonWhile no oil production has taken place in the Yukon, estimated inland recoverablereservesstandatupto790millionbarrels.Inaddition,some4.5billionbarrelsofoilareexpectedtobeextractableoffshore,intheBeaufortSea.Intermsofnaturalgas,twowellsintheKotaneeleegasfieldyieldupto5.9millioncubicfeetofgasperday.Theterritory’s

32FisheriesandOceansMaritimesRegion,ThePossibleEnvironmentalImpactsofPetroleumExplorationActivitiesontheGeorgesBankEcosystem,(GovernmentofCanada,1998).33CenterforEnergy,EnergyFacts…34Ibid.35SeeCenterforEnergy,EnergyFacts…andCanadianSocietyforUnconventionalGas,Canada.

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inland gas reserves stand at approximately 17 trillion cubic feet,while the Beaufort Seamayholdupto40trillioncubicfeetmore.36

Figure2:CanadianOilSands&ConventionalOilProduction37

CanadianPetroleumForecastCanadiancrudeoilproduction isexpected togrow tremendouslyover thenext15years.Themajorityofthisgrowthisexpectedinthebituminoussands,wherenewinsituprojectsand bitumen mines are expected to exponentially increase the production of SyntheticCrude Oil. The production of conventional oil (and equivalent), is expected to steadilydecline,despitesomeyearsofforecastedgrowthfromoilfieldsinAtlanticCanada(whichpresently accounts for approximately 13%of Canada’s total crude production). Figure 3showstheCanadianAssociationofPetroleumProducer’s(CAPP)expectedgrowthforecastincrudeoilproduction,demonstratinghowthedeclineinconventionalsourcesisgoingtobe offset by increases in production in Alberta’s bituminous sands. CAPP notes thatconventionalcrudeproductionisexpectedtodeclinefromarateofonemillionbarrelsperdayin2008to589000barrelsperdayin2025.38

36Ibid.37Source:CanadianAssociationofPetroleumProducers,CrudeOil:Forecast,MarketsandPipelineExpansion,(Calgary:CanadianAssociationofPetroleumProducers,2009):i.38Ibid.,5.

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Figure3:CanadianNaturalGasProductionForecast39

Intermsofnaturalgas,thenextdecadeofproductionisuncertainasconventionalsuppliesdwindle andproducers of unconventional gas areunsure if economics and technologicaldevelopmentwillenablethemtomoveforward.Themainconcernstemsfromthedeclineinnaturalgasproduction fromtheWesternCanadaSedimentaryBasin (WCSB),which isCanada’smainnaturalgasproducingregion.AsNaturalResourcesCanadanotes,“by2013,newproductionfromBCshalewillbegintoreversethedecliningWCSBtrend,andby2018,the Mackenzie Gas Project will add an additional 0.7 Bcf/d to Canadian production.”40Figure3 shows theexpected trends innatural gasproductionuntil 2020,demonstratinghowexpertsarenotentirelycertainaboutwhatthenearfutureholdsinstore.

39ReproducedfromNaturalResourcesCanada,NaturalGas…,2010.40NaturalResourcesCanada,NaturalGasAnnualMarketReviewandOutlook:Outlookto2020,February15,2010,http://www.nrcan.gc.ca/eneene/sources/natnat/revrev‐2020‐eng.php.

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PartII:TechnologicalDevelopmentintheOnshorePetroleumIndustryThis part of the report offers an exposé of recent technologies employed within theindustry to explore, extract, process and transport onshore petroleum. Canada’s inlandconventionaloil comes fromAlberta,BritishColumbia, Saskatchewan,Manitoba,Ontario,and the Northwest Territories. Together, these provinces produce just over 64% of thecountry’sconventionalsupply(theremaindercomingfromoffshoresources).41Inaddition,some580,000kmofpipelinescarrycrudeoilandnaturalgas fromproducingregions toportsandmarkets.42Thissectionthusdiscussesrecentdevelopmentsintheindustry,withaparticularfocusonconventionalpetroleum.TechnologicalDevelopmentinOnshorePetroleumExplorationThe search for underground petroleum resources has always followed the same basicgeological principles: Geologists and geophysicists use various clues to determinewherepetroleum resources are likely to be, and thendrill test (or ‘wildcat’)wells to verify thepotentialfind.Overthedecades,geologistsandgeophysicistshaveconsistentlyworkedatprovidingmorepreciseandaccurateinformationaboutwheretheexactdepositslie.Thusthemain area of technological development in the area of exploration today has largelycome in the form of improved calculation capabilities and visualization programming,largelythroughnewcomputertechnologies.

GraphicModelingandVisualizationWhenmodernpetroleumexplorationfirstbeganinthelate19thCenturywiththedrillingofexploratory wells by Edwin L. Drake, geologists would use surface clues (such as oilseepages, surface mineral presence, craters, etc.) to help inform the likelihood ofhydrocarbon presence underground. In the late 19th Century, technologies such as themagnetometer, gravimeter, and seismograph were developed to help geologists get aclearer ‘picture’ of what formations looked like underground, ushering in the modernpetroleum exploration era.43 Now, however, oil companies are improving their graphicmodeling of underground formationsbyusing supercomputers to get a precise imageofwherehydrocarbondepositslie,aswellastheirexactsurroundings.Itiscommontodayformajor petroleum developers to have three‐dimensional (3D) visualization technology,designedbycompaniessuchastheU.S.basedMercuryComputerSystemsandNorwegianfirmKongsbergOil&GasTechnologies.AsJohnW.Schoenexplainedin2004:

Today,withaclickofamouseyoucantravelhalfwayaroundtheworldandexploremassivegeologicformations,grabablockofrock20kilometersonaside,andthenzoomintoseewhat itholds.The journey isplayedoutonanIMAX‐likecomputer

41CompiledfromdataavailableinNationalEnergyBoard,EstimatedProductionofCanadianCrudeOilandEquivalent,http://www.neb.gc.ca/clf‐nsi/rnrgynfmtn/sttstc/crdlndptrlmprdct/stmtdprdctn‐eng.html.(accessedJune8,2010).42CanadianEnergyPipelineAssociation,FastFacts,http://www.cepa.com/(accessedJune8,2010).43SeeMcIntosh,ThePetroleumIndustry…,1992,16‐23.

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screen powered by a battery of high‐end computers and graphics software thatwouldmakeyouraveragevideogamerdrool.44

Inthe last fiveyears, the industryfocushasbeenonimprovingthecapacityof individualcomputers to access the complex data sets and to calculate algorithms in such 3Dvisualizationprograms.MichaelM.Heck,technicaldirectorofMercuryComputerSystems’VisualizationSciencesGroup,assertsthatimprovementsin‘parallelcomputing’technologywillenablesmallercomputers (andeventuallyeven laptops) toaccesscomplexdata thatuntilrecentlyrequiredlarge,stationarysupercomputers.Writingin2006,henotedthat…

Today, visualizing large E&P [exploration and production] data sets no longerrequiresasupercomputerorevenasupercluster.Advancesinbothhardwareandsoftwarearecomingtogethertoenable largerdatasets,moreautomatedanalysis,andmoreeffectivepresentationofthedataonsingleworkstations…Wemustmakedata management, computation and rendering work together smoothly andefficiently. Inthiswaywewillcontinuetodeliveron3Dvisualization’spromiseofenablingbetterdecisionsinlesstime.45

In other words, the main effort in today’s petroleum exploration sector is to make 3Dvisualizationofgeologicalformationsavailableinthefield,ratherthanbeingboundtolargecomputingcentersinacompany’sheadquartersorlaboratory.Insuchaway,decisionsonexplorationandproductioncanbemadequickly,precisely,andremotely.The software also allows drilling operators to know exactly what to expect at variousdepthsandallowsthemtomakehighlyinformeddecisionsonexactlywheretospudwells.MarkBaldwin,asalesmanagerforKongsbergOil&GasTechnologies(whichproduces3Dvisualization software known as SIM Reservoir), adds that these technologies have beeninstrumental insavingexplorationcompaniesmoney:“Using3Dgivesadded informationwithregardstodepthanddistancesoftheobjectsbeingviewed,whichisinvaluableinanenvironmentwheretheslightestofinaccuraciescanbecostly.”46Afterall,amisplacedwellcancostupto$40million.Inthisageofadvancedcomputingtechnologyitisnosurprisethatcompaniesinvolvedinpetroleum exploration have focused on improving imaging capacity to enhance the verybasic 19th Century principles of petroleum geology. Yet current debates about 3Dvisualizationtechnologyrevolvearoundwhetherornotitwillenableproducerstotapinto

44JohnW.Schoen,Cantechnologyhelpfindoilfastenough?Debateover'peakoil'turnsonindustryadvances,December20,2004,http://www.msnbc.msn.com/id/6072980/ns/business‐oil_and_energy/.45MichaelM.Heck,3DVisualizationforOilandGasEvolves,October20,2006,http://www.hpcwire.com/features/17888554.html?page=1.46AsquotedinOffshoreMagazine,"KOGTgainsfirstorderfor3Dvisualizationtool,"Offshore,February11,2010.

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moreoilandgas.Skepticsarguethatoverall,thesupplyofpetroleumwillremainthesame,only itwillbeabletobeproducedata fasterrate.That is, theprocessofexplorationhasquickenedsignificantlyinthelastdecade,butthepaceofnewoilandgasdiscoveryhasnot.TechnologicalDevelopmentinOnshorePetroleumExtractionThefollowingpagesdiscusshowrelativelyoldtechnologiessuchasdirectionaldrillingandEnhanced Oil Recovery (EOR) have been improved and eventually combined to enablehydraulic fracturing through multilateral horizontal wells – an extraction technologypresently being used in the Bakken field in Saskatchewan. As explained below, oilcompanies in theUnited States first turned toEORmethods in the1990s in attempts toextract leftoverpetroleumfromwells thatno longer ‘produced’enoughtobeeconomicalusing traditional recovery methods. However, this technology stemmed from previousadvancements in secondary and tertiary recovery methods, which date back the earlydecadesofthe20thCentury.Similarly,differenttypesofdirectionaldrillinghavebeenusedsincethe1920swhenlateralwellswerefirsttested.Today,thecombinationofenhancedrecovery techniques and directional drilling techniques enable extraction technologiessuch as hydraulic fracturing to be used with extreme precision (even though the lattertechnology itself was first commercially introduced in 1949 in Oklahoma by Americancompanies suchasDevonandChesapeake). In short, extraction technologiesused in thepetroleumindustrytodayareusuallyimprovedversionsofoldtechnologies.A multiplicity of geological, technological, and economic factors influence the way apetroleumdepositwillbeextracted.Oilandgasreservoirscanbeasshallowasthesurfacelevel, or can be up to 6.4 kilometers below sea level; deposits can be small or extendoutwardsovermultipleacres;theresourcecanbeafewinchesthroughtoafewhundredfeetthick.Inaddition,theresourcemaynaturallyexpandandfloweasilyintoawell(likenaturalgas),oritmaybeextremelyheavyandviscous(likebitumen),inwhichcasespecialunderground treatment of the resource may be needed to create ideal extractionconditions.47Thesegeologicalfeaturesoftheresourcearecross‐referencedwithavailabletechnologies, expected costs and revenues, and thenanappropriatedevelopmentplan isengineered.There are three main levels of petroleum extraction: Primary Recovery is a form ofproduction in which the resource naturally flows into the well bore and is lifted to thesurface by either gas expansion or by being pushed up by water or natural pressure.SecondaryRecoveryisthatphaseinwhichadditionalartificialenergyisrequiredtopumptheresourceupwards,typicallybyinstallingapumponthesurface,orbypumpinggasorfluidsintotheresourcetopushtheresourceuptothesurface.Finally,TertiaryRecovery…

… occurs when means of increasing fluid mobility in oil reservoirs within thereservoir are introduced in addition to secondary techniques. This may beaccomplished by introducing additional heat into the formation to lower the

47K.LeeLerner,BrendaWilmothLernerandGaleCengage,"PetroleumExtraction,"WorldofEarthScience,July23,2006,http://www.enotes.com/earth‐science/petroleum‐extraction.

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viscosity(thintheoil)andimproveitsabilitytoflowtothewellbore.Heatmaybeintroducedbyeitherinjectingsteamina‘steamflood’orinjectingoxygentoenabletheignitionandcombustionofoilwithinthereservoirina‘fireflood.’48

ThetertiarylevelofproductionisalsoknownasEOR.ThefirstEORprocessesaresaidtohave emerged in Texas in the 1990s, when entrepreneurs such as Gary Dolberry (ofDolberryOil&Gas,Inc.)triedtogetouttheremnantdepositsofold‘dry’wells.49InCanada,asconventionalandeasy‐accesspetroleumresourcesdwindle, the industry ismoreoftenturning to secondary and tertiary extraction methods, to increase the amount of oilrecoveredfromtraditionalwells.Asdiscussedbelow,whenEORtechniquesarecombinedwithothermethodssuchasdirectionaldrilling,theproductionoutputincreasesbyalargemargin.

DirectionalDrillingAgain, directional drilling is a relatively old petroleum extraction technology that hasconsistentlybeenimprovedoverthedecades.Thefirstattemptstodrill‘laterally’occurredin the1920sand1930s,spearheadedbyaCanadianconsultingengineer inTexasnamedLeoRanney. In1939, theRanneyOilandMiningCompany(asubsidiaryofStandardOil)likelydugthefirstlateralwellwhenthecompanyputworkersatthebottomofashaftandhad themdrill horizontally.50 However, before this, petroleumwellswere all vertical. Inshort,theyweredrilledverticallyinordertotapintoaparticularsectionofahydrocarbondeposit–partlybecausehydrocarbonswereexpectedtoexistinlargeunderground‘pools’thatcouldbe‘tapped’atanygivenpoint(asitwasassumedthatthebulkoftheresourcewouldflowintothewell).Traditionalpetroleumdrillingmeantdiggingaverticalwellbore,theninsertingawellcasing(oftensteelpipeorcement)inordertopreventthewellfromcavingin,followedbytheuseofaperforatinggunusedtopierceholesinthecasingatthedepthoftheresource,whichwouldtheoreticallyallowoilorgastoflowintothewell.Bythe1920s,however, itbecameevidentthatverticaldrillinghadlimitations,giventhatmost petroleumdeposits radiate laterally, at a perpendicular angle to thewell, and thatoftendepositsexistinnon‐porous,non‐permeablerockformationswhichtraptheresourceinmultiple caverns: “The disadvantage of this [traditional vertical drilling] process wasthatonlysomanyfeetofsandstoneorotheroil[and]gasbearingrockcouldbepenetratedandthereforeonlyalimitedquantitycouldflowoutfromtheholesthatwerepiercedinthecasing.”51Assuch,itwasunderstoodfromearlyonthattheabilitytodrillawellinvarious

48Ibid.49HubPages,"GaryDolberryonEnhancedOilRecovery,"HubPages,http://hubpages.com/hub/Gary‐Dolberry‐on‐Enhanced‐Oil‐Recovery(accessed1027,2010).50JulieBonner,"Multilateraltechnologythenandnow,"E&P,August1,2007.51Scienceray,"Whatisdirectionaldrillingintheoilandgasindustry,"Scienceray.com,http://scienceray.com/technology/applied‐science/what‐is‐directional‐drilling‐in‐the‐oil‐gas‐industry/(accessedJune22,2010).

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directionswouldallowonewelltopenetrateamuchlargerareaofthedeposit,ormultipledeposits at once (see Figure 4: Directional Drilling). Further, by tapping into a largerportionofthedepositthanatypicalverticalwell,onedirectionalwellcoulddecreasetheoverallnumberofwellsneeded,andtherebysavecostsandlimitthesurfaceimpacttotheenvironment. In addition, directional drilling could allow deposits to be accessed fromvarious angles, thereby making deposits under towns, beneath lakes or belowimpenetrablerockformationsaccessible.52Nevertheless, there were some technological hurdles to overcome before directionaldrilling could be implemented successfully and without exorbitant expense. For one,traditionaldrills tendedtooperate inastraight line. Inorder forawell tobedrilled inanon‐verticalposition,anangledmetaldevicecalleda‘whipstock’hadtobeplacedintothewellcasing.Then,“usingadiamond,metalcuttingdrillbit,aholewasdrilledinthecasingand then a regular rock bit was used to drill the well out sideways into the oil or gasbearingrock,uptoafewhundredfeet.”53

Figure4:DirectionalDrilling54

52WikipediaContributors,"DirectionalDrilling,"Wikipedia,TheFreeEncyclopedia,June25,2010,http://en.wikipedia.org/wiki/Directional_drilling.53Scienceray,“Whatis…,”2010.54Horizontaldrilling.org,"Horizontal‐DirectionalOil&GasWellDrilling,"Horizontaldrilling.org,http://www.horizontaldrilling.org/(accessedJune25,2010).

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ThepioneeringworkofRanneyandsubsequentoperatorsinthe1920sand1930stryingtodefy the traditional vertical oil well led to increasing interest in ‘multilateral’ and‘horizontal’wells.Multilateralwells refer to directionally‐drilledwellswhich havemore than one ‘branch’stemmingfromtheoriginalborehole(seeFigure5:TheFirstMultilateralWell).By1953,AlexanderMikhailovichGrigoryandrilledthefirstmultilateralwellintheUSSR,knownasWellNo.66–45.Theideawastousemorelateralstoincreasetheoverallsurfaceareaofthewell relative to the deposit, just like the roots of a tree (more branches in thewellmeant more exposure to the resource). As multilateral wells yielded higher output, thetechnologycontinued tobeapplied in theUSSR,andhundredsofmultilateralwellsweredrilledbeforethe1980s.ItwasnotuntilthenthattheideaofmultilateralwellsreallytookoffinNorthAmerica.55

Figure5:TheFirstMultilateralWell56

55Bonner,“Multilateraltechnology…,”2007.56ReproducedfromBonner,“Multilateraltechnology…,”2007.

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AlthoughRanney’s1920s lateralwellswere technicallyhorizontalwells–wells inwhichthelowerboreholerunsparalleltothedeposit(itdoesnotnecessarilyhavetorunata90degree angle to the main borehole, depending on the shape of the deposit) – thistechnologywas not fully implemented across the industry in North America untilmuchlater,becauseoftheincreasedcostsassociatedwithdirectionaldrilling.Ahorizontalwellcostsuptothreetimesasmuchasaverticalwell.Nevertheless,proponentshavepointedtothefactthathorizontalwellsyielded15to20timesthepayloadofaverticalwell,andlesswellsoverallwereneeded,therebysavingproducerslotsofmoneyoverthelongterm.57It was not until the 1990s that firms in Canada began to drill both multilateral andhorizontalwells.In1991,CSResourceswasthefirstcompanytodrillanopenholelateralarmoffahorizontalwellinCanada,whichwasasteptowardsthisprocess.Then,by1993,thesamecompany“innovatedthesuccessfuldrillingofthefirstmultilateralhorizontalwell(11‐4)utilizingtheLateralTie‐BackSystem(LTBSTM)jointlydevelopedbySperry‐Sun,CSResources and IFP. This tool allows the lateral arms to be completed with a liner andmaintainslinerintegritythroughouttheentirewellborenetwork.”58

DrillMotoringTechnologyAnotherobstaclewhichplayedaroleindelayingthedrillingofhorizontalandmultilateralwellswastheavailabledrillingtechnology.Asmentionedabove,newinnovationshadtobedevelopedtoallowdrillbitstomoveinmultipledirectionsandangles.Bythe1950s,drillsstill couldnotbe ‘controlled’orsteered,and theycouldnotproducecurvedwells,as themotorpoweringthedrillbitwasatthesurfaceofthewell:“Itonlyworkedouttoacouplehundredfeet,sincetherewasnowaytocontrolwhatdirectionthedrillbitwasgoing,anditbecamehardtoturnthedrillpipeallthewayfromthesurfaceonceitreachedacertainangle.”59Thusdirectionaldrillinglaggeduntiltherighttechnologiesemerged.

By the late 1950s, new advancements in drill motoring technology made the newgeneration of horizontal andmultilateralwells possible. A ‘downholemotor’ (onewhichcontrolsthedrillbitfromdowninsidethewellratherthanatthesurface),enabledthedrillto reach higher levels of curvature. One type of downholemotor – the ‘mudmotor’ – ispoweredby the forceof liquidpumpeddown through thedrill stem, rather thanusingarigiddrillbeam. Inconjunction,aMeasureWhileDrilling (MWD)probe isused todetectthedirectionandinclinationofthewell,sendingtheinformationuptothesurfacethroughradiosignalandtherebyallowingtheoperatorstochart the impendingshapeof thewellbore.Inturn,theoperatorcouldusetheinformationandchangethedirectionofthemudmotor to alter the shape of thewell.60 The first industrial downhole drillingmotorwas

57JPTOnline,"FrontiersofTechnology:HorizontalandMultilateralWells,"JPTOnline,July1999,http://www.spe.org/spe‐app/spe/jpt/1999/07/frontiers_horiz_multilateral.htm.58ClaudeGadelleandGérardRenard,"Increasingoilproductionthroughhorizontalandmultilateralwells,"inWorkshoponEnhancedProductionofOldOilFields,(Surgut,Russia,1999).59Scienceray,“Whatis…,”2010.

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patentedin1957byW.ClarkoftheUnitedStates,andthetechnologyhasbeencontinuallyimprovedthereafter.61Usingtheseadvancementsindrillmotoringanddrillsteeringcapabilities,horizontalwellsbecame the industry norm. The 1990s are considered to be the ‘the decade of thehorizontal well’ in North America. Thousands of horizontal wells were drilled in thecontinent,andbytheturnoftheCentury,petroleumcompaniesmadeitarequirementthatall traditionalverticalwells neededprior approval frommanagement. By the year 2000,horizontalandmultilateralwellshadbecomecommonplace.62AssuggestedbyJonRuszkaofE&Pmagazine,thecurrentabilitytoeasilydrillinmultipledirections,withmultiple branches perwell is the result of decades of small incrementaladvancesintechnology:

Recent advances indrilling andevaluation technology, a growing experiencebaseand recognition of what can be achieved are driving an increasing number ofoperators towards multilateral wells for their field developments. When appliedcorrectly, the demonstrated benefits of multilateral wells include improvedproductivity, lower cost per bore produced, improved field recovery, delayed andreducedwatercutandlowerenvironmentalimpact.63

HydraulicFracturingWhencombinedwithsecondaryandtertiarymethodsofextractionsuchasEnhancedOilRecoveryorhydraulic fracturing (or ‘fracing’), horizontalwells can significantly increasetheyieldperwell. In fracing,amixtureofwater, sandandchemicaladditives ispumpeddown the borehole at extremely high pressure. The idea is to create fractures in thesurrounding sediments to unleash oil or gas that is trapped within sponge‐like rockformations such as sandstone or shale. Sand or other ‘proppants’ are injected into thefissures to keep them open. The fracing is often done in multiple stages and can bemonitored from surface‐level stations.Afterwards, the fluids are pumpedbackup to thesurface, where they are disposed or treated and re‐used (see Figure 6: HydraulicFracturing).64

60Scienceray,“Whatis…,”2010.61TartanControlsInc.,DrillingMotorIntroduction,http://www.tartancontrols.com/drillingMotors_introduction.php(accessedOctober28,2010).62JPTOnline,“Frontiers…”,1999.63JonRuszka,"Globalchallengesdrivemultilateraldrilling,"E&P,August1,2007.64ChesapeakeEnergy,"HydraulicFracturingFacts:TheProcess,"HydraulicFracturingFacts,http://www.hydraulicfracturing.com/Process/Pages/information.aspx(accessedJune23,2010).

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Again,althoughthetechnologyofhydraulicfracturingdatesbacktothelate1940s,itwasnot until multilateral and horizontal wells became the industry norm in the 1990s thathydraulicfracturingsimilarlybecamecommonplaceintheCanadianindustry.

Figure6:HydraulicFracturing65

Saskatchewan’sBakkenOilFieldSaskatchewan’sBakkenOilFieldisakeyCanadianexampleoftheuseofhorizontalwellscombinedwithhydraulicfracturing.Theexampledemonstrateshowcurrenttechnologiesare ameliorated versions of pre‐existing technological principles in oil exploration andproduction. Or, as CAPP puts it, “the Bakken oil field in south east Saskatchewan is asignificantconventionaloilplay inCanadaandcontinues togeneratestrong interestasaresultoftheimproveduseofexistingtechnology.”66OilhasbeenextractedfromtheBakkenfor decades, yet companies are now turning to EOR methods in attempts to draw outfurtherquantitiesfromexistinginfrastructure:

Oilwas first produced from the Bakkenmore than 50 years ago. Productionwasmainly from a few vertical wells until the 1980's when horizontal technology

65Ibid.66CanadianAssociationofPetroleumProducers,CrudeOil…,2009,5.

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became available. Only recently after the intensive application of horizontalwellscombinedwithhydraulicfracturingtechnologydidproductionreallytakeoff.67

Thedecision tousehydraulic fracturing is basedon theporosity andpermeability of therockformationinwhichthedepositissituated.Porosityreferstothelevelofemptyspaceavailableinareservoirinwhichhydrocarbonscanbestored,whilepermeabilityreferstotheextenttowhichhydrocarbonscanflowthroughtheformation.Thehighertheporosityandpermeability,thebettertheyieldwillbefromatypicalwell.Thebestreservoirs(suchasinSaudiArabia,theNorthSeaandtheGulfofMexico)haveporositiesofupto30%andpermeabilitiesofupto5darcies.However,mostpresent‐dayhydrocarbonplaysinNorthAmerica are much ‘tighter’, having porosities ranging between 1% and 10% andpermeabilitieswithafractionofadarcy.ThemiddleBakken,forexample,averagesoutat5% porosity and has a permeability of 0.04 millidarcies. With these factors in mind,petroleum companies have made use of horizontal drilling and hydraulic fracturing tocapturemoreoftheresourcefromthetightrockinSaskatchewan’sBakkenformation.68

ANoteonUnconventionalNaturalGas:CoalBedMethane,ShaleGas,andTightGasCanadianenergyanalystsoftenpointtothealarminglylowstocksofconventionalnaturalgas available in the country (by which it is meant gas recoverable through primaryrecoverymethods)relativetotheamountproducedeachyear.Forexample,in2007some6.6trillioncubicfeet(Tcf)ofnaturalgaswereextracted,whileremainingreservesin2009wereestimated tohold justover8 times thatvalue(57.9Tcf), suggesting thatatcurrentrates of production Canada would run out of natural gas within a decade. In response,industryhaspointedtopromisingdevelopmentsinunconventionalsourcesofnaturalgas–inparticularCoalBedMethane(CBM),shalegas,andtightgas.ThesametechnologiesexplainedaboveintheextractionofoilfromtheBakkenformation–directionaldrillingandhydraulicfracturing–arejustasoftenusedtoextractnaturalgas.However, within the petroleum industry, such extractionmethods are considered to be‘unconventional’whenitcomestonaturalgas,eventhoughtheactualresourcepumpedtothe surface is often raw natural gas (or methane). Thus using directional drilling andhydraulic fracturing, Canada’s petroleum industry hopes to exponentially increaseCanada’s natural gas reserves. In terms of Coal Bed Methane, Alberta alone has anestimated500Tcfof gas,which is assumed tobeaccessiblewith secondaryand tertiaryrecoverymethods!Inturn,gasdepositsinBritishColumbia’sMontneyshaleandQuebec’sUticashalecouldaddanadditional50TcformoreofnaturalgastoCanadianreserves, ifthetechnologyisdevelopedandprofitable.69Inthisway,thefutureofCanada’snaturalgas

67GailE.Tverberg,"TheBakkenFormation:HowMuchWillitHelp,"TheOilDrum:Canada,April26,2008,http://www.theoildrum.com/node/3868.68Ibid.69U.S.EnergyInformationAdministration,“Canada:NaturalGas,”2009.

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industry and the ability to satiate future demand is heavily reliant upon the success ofsecondaryandtertiaryextractiontechnologies.TechnologicalDevelopmentinOnshorePetroleumTransportationThetwomainmethodsforbulktransportationofpetroleumonlandarethroughrailandpipeline.Bothof these technologiesaresurprisinglyold.By the late1800sbothrailwaysandpreliminarypipelinetechnologieswereusedtotransportcrudeoil.Bothmethodsarestillusedtoday.Whilethebasicsinpipelinetechnologyremainthesame,newinnovationsin computerized monitoring (using ‘smart pigs’, for example) have improved the waypipelinesarebuiltandmaintained.Thefollowingparagraphsbrieflyexplorethegrowthofpetroleum pipelines in Canada, as well as the implementation of a pipeline technologycalled‘smartpigging’–stemmingfromthefirstdevelopmentof‘smart’pigsinthe1960sbypioneeringcompaniesinthepipelineindustry,suchasU.S.basedT.D.Williamson.

AdvancesinPipelineTechnologyPipelinesareused inCanada to transportmanydifferent typesofhydrocarbonmaterialsand petroleum products. Most large pipelines are made of steel and are inserted intounderground trenches. Pumps are used to drive thematerial down the line, with a keypumpstationheadingeverypipelineandinterspersedthereaftereach50to80kilometers:

Thespacingandhorsepowerrequiredtodrivethepumpsisbasedonanumberofparameters, including: desired pipeline flow rate, pipeline diameter, physicalpropertiesoftheproduct,andelevationchanges.Thepumpsthatdrivethepipelinesaremostoften centrifugalpumpsdrivenbyelectricmotors.NaturalGaspipelinesutilize compressors insteadofpumps.The compressorsaregenerallypoweredbygasenginesorelectricmotors.70

Petroleumisoftenshipped inpipelines in ‘batches’,separatedbydeviceknownasa ‘pig’(see Figure 7: ‘Smart’ Pig Traveling Through a Pipeline).71 Pigs are used in multiplecapacitiesinpipelines,andcomeinavarietyofshapes,stylesandforms. ‘Utilitypigs’areinsertedandtravel the lengthof the line inordertoactasaseparatorbetweendifferenthydrocarbonmaterialsorbatches,or tocleanthe insidesof thepipeline,or todewaterapipeline.Pigscanalsobeusedasin‐lineinspectiontools,eitherintheformofa‘geometrypig’which records information about angles, bends, dents, scratches, or in the formof a‘smartpig’whichcanprovidecrucial informationabout the insidesof thesteelpiping toexternalcontrollers.Finally, ‘gelpigs’ canbeused toenhance thecleaningordewateringprocess,andcanalsobeusedtodryapipeline.72

70ShellPipeline,"HowdoPipelinesWork?,"Shellpipeline.com,http://www.shellpipeline.com/aboutpipelines_howwork.htm(accessedJune28,2010).71Theveryfirstdevicesusedforthispurposewerecalled‘pigs’becausetheymadenoisessimilartoasquealingpigastheyrubbedalongtheinsideofthepipeline.Themonikerhassincebeenadoptedacrosstheindustry.

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Figure7:‘Smart’PigTravellingThroughaPipeline73

SmartPigsRecent technologies in pipelines have come in the form of ‘smart pigs’. The very firstpipeline smart pig emerged in the 1960s. Since then, new computing technologies havebeenemployed,continuallymakingpigseven‘smarter’.Today,apigcanbeinsertedintoapipeline to record important information, which is then transmitted by radio signal (orother forms of wireless communication) to high‐tech computing stations. In addition toinforming operators about hazards such as dents in the pipeline, smart pigs can takephotographs, can measure internal temperatures, relay changes in the pipeline shape,analyze weak spots and detect leaks and cracks; Smart pigs can detect and counteractcorrosion,sampletheinternalproductswithinthepipeline,mapthelocationandspeedofthe hydrocarbon travelling in the pipeline with GPS technology, measure the waxdepositioninthepipeline,orevenbeusedasatemporaryplugbygrippingthewallsofthepipelineandwithstandingtremendouspressure.74Thus since the 1990s Canada has witnessed the rise of automated pipeline networks,reducingthenumberofcrewsthatarerequiredtomaintainandoperatepipelinesonsite.As Shell explains, the automation of entire pipeline networks has limited the number ofsafety and environmental problems typically associated with the transportation ofpetroleumproductsthroughpipelines:

72PiggingProductsandServicesAssociation,"AboutPigs,"PiggingProductsandServicesAssociation,http://www.ppsa‐online.com/about‐pigs.php(accessedJune28,2010).73FromChesapeakeEnergy,Pipelines,http://www.askchesapeake.com/Barnett‐Shale/Pipelines/Pages/maintenance.aspx(accessedOctober28,2010).74PiggingProductsandServicesAssociation,"AboutPigs,"PiggingProductsandServicesAssociation,http://www.ppsa‐online.com/about‐pigs.php(accessedJune28,2010).

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Automation that has been a major factor in reducing the number and volume ofpipeline spills. These computer‐aided systems, called SCADA (SupervisoryControland Data Acquisition), allow highly trained operators working in sophisticatedcentral control rooms to control and monitor rates of flow, pressures and fluidcharacteristics.Fluctuationscanbedetectedquickly,alertingoperatorstopotentialleaksandallowingthemtoshutdownpipelinesanddispatchcrewstoinvestigate.75

Figure8:ControllingPigsRemotely76

SmartPigsandCathodicProtectionThenewestaddition tosmartpig technologyhas todowithexternalcathodicprotectionmonitoring.Typically,oilandgaspipelinesaresubjectedtoconstantelectriccurrentasameanstoprotectthemetallicpipefromcorrosion:“Cathodicprotectionprovidescorrosiondefence toapipelinebyprovidingasupplyofdirectcurrent through thesoil to thepipesurface,polarisingthepipe‐to‐soilinterface.”77Typically,thewaytomonitorthiscathodicprotection is to sendwork crews to the site to use top‐of‐ground surveying technology.Now, however, smart pigs known as ‘Cathodic ProtectionCurrentMeasurement’ (CPCM)pigsareabletomeasurethecurrentexternaltothepipelineusingamovingpiginsidethepipeline.CPCMpigshaveofferedanumberofadvantagestotheindustry,mostnotablytheabilitytomonitorcorrosionprotectionforpipelineslocatedindifficult‐accessareas(suchasunder

75ShellPipeline,"How…”,2010.76TDWOffshoreServices,"SmartPlugSystem,"Tdwilliamson.com,Tdwilliamson.com(accessedJuly5,2010).77MarkMateer,BertPotsandPaulNichols,"ThinkSmart,"Offshore­Technology.com,April8,2009,http://www.offshore‐technology.com/features/feature52934/.

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the sea or inhospitable terrain), or even during difficultweather. As a recent oil spill inMichiganhasdemonstrated,corrodedpipelinesposeextremedangertotheecosystemsinwhich theyare situated.Theaccident is said tohave resulted fromanEnbridgepipelinethatcorrodedtothepointofabreak,allowingoiltogushoutintotheKalamazooRiver.78TheCPCMpigisabout2.2meterslongandisextremelypreciseinitsmeasurements.Otheradvancements have been made in pipeline pigging technology, including theimplementation of ‘rover pigs’ that can “move up and down a flowline, carry fiber opticcables,andperformavarietyofotherserviceswithoutleavingtheinsideoftheflowline.”79Such rovingpigsoffer amajoradvantageas typicallypigs canonly flow inonedirection(andbuildingreverseflowlinesisanadditionalexpense).Withthe increasingcapabilitiesofpipelinepigs, it is likelythatpipelineswillcontinuetogrow as the preferredmethod of petroleum transportation in Canada. Today, some2.65millionbarrelsofcrudeoilandequivalentand17.1billioncubicfeetofnaturalgastravelthrough Canada’s pipeline networks each day! A number of new pipeline projects havebeenproposedinCanada,thoughthishasraisedconcernsfromanumberofcommunitiesaffectedbytheproposedpipelineroute.Inparticular,theMackenzieGasProjectintendstopipe natural gas from the Mackenzie Delta to Northern Alberta over a stretch of 1220kilometers; the Enbridge Northern Gateway Pipeline is proposed as a means to carrypetroleum from the bituminous sands in Alberta toWest Coast ports in Kitimat, BritishColumbia (over a distance of 1170 kilometers); and finally, the Keystone XL pipeline isproposed as a 2670 kilometer petroleum highway designed to link up the bituminoussands in Alberta to six American states – Montana, South Dakota, Nebraska, Kansas,Oklahoma,andTexas.80TechnologicalDevelopmentinPetroleumProcessingandRefiningSincetheearly1990s,whenoperationsinAlberta’sbituminoussandsexpanded(thankstoregulatorychangebroughtinbythegovernmentsofRalphKleinattheprovinciallevelandBrian Mulroney at the federal level) the focus of Canadian petroleum processing andrefining has turned to improving the isolation of bitumen and its subsequent upgradingintoSyntheticCrudeOil.TheAlbertaIndustrialHeartland(alsodubbed‘upgraderalley’),asa string of bitumen upgrading facilities and petrochemical refineries Northeast ofEdmonton, has emerged as the epicenter of Canada’s petroleum processing technologydevelopment.ThemultipleoperatorsintheAIHandthebituminoussandshaveworkedinconjunctionwiththeAlbertaEnergyResearchInstituteandtheCanadianEnergyResearch

78MoreinformationabouttheMichiganspillisavailablefromCBCNews,"MichiganOilSpillContained:Enbridge,"CBC.ca,July30,2010.79WilliamFurlow,"Smartpigtechnologyfocusesonone‐waypipeapplications,"Offshoremagazine,May1,1999.80CanadianEnergyPipelineAssociation,“FastFacts,”2010;SeealsoDanielGlick,StayingHookedonaDirtyFuel:WhyCanadianTarSandsPipelinesareaBadbetfortheUnitedStates,(Reston:NationalWildlifeFederation,2010).

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Institutetofindwaysofprocessingbitumenatlowercost,andwithalowerenvironmentalfootprint.In terms of conventional petroleum refining, the trend has been similar to technologicaldevelopments in petroleum transportation, extraction and exploration. That is, thebasicprinciplesofpetroleumprocessinghaveremained thesame,whilenew tacticshavebeenimplementedtoimprovetechnologiesinonewayoranother.Nevertheless,everyrefineryorpetrochemicalprocessingplantusesdifferentprocesses,dependinguponthenatureofthefeedstockandtheintendedfinalproduct.Petroleum processing and refining has always been necessary to convert naturallyoccurring hydrocarbons such as crude oil and natural gas into useable products such asgasolines and diesels, asphalt, plastics, kerosene, lubricating oils, etc. There are literallythousands of products derived from theprocessing and refining of petroleum resources.Theseproductsaretypicallydividedintothreecategories–fuels(suchasgasoline,aviationfuel,etc.),non‐fuels(suchaslubricatingoils,greases,asphalts,etc.),andrawmaterialsforthechemicalindustry.Refiningconventionalcrudeoiltypicallyinvolvesrepeatedroundsofdistillation.Bydoingso the resource can be separated into its various ‘fractions’, and unwanted components(suchas sulphur) canbe removed.Numerousadvancements in refining technologyweremadeinthe20thCentury,allowingpetroleumtoberefinedinavarietyofmethods,fallingunderthegeneralcategoriesofphysical,thermal,andchemicalseparation.81The petrochemical industry is a major sector in Canada. Petrochemical refineries areclusterednotonlyinAlberta,butalsonearSarnia,OntarioandMontréal,Quebec.Atypicalrefinery costs more than $500 million, and by the mid 1990s more than $10.3 billiondollars had been invested in Canadian petrochemical plants.82 In 1995, the Canadianpetrochemical industry accounted for 40% of the value of the country’s chemicalshipments,and1.4%oftheGrossDomesticProduct.83Onekey technologicaladvance inCanada’spetrochemical industry is thedevelopmentoflinear‐low‐density polyethylene by Dupont Canada in the 1960s. As a plastic resin, theproductbecamewidelyusedforflexiblepackaging.DowChemicalandNOVA,bothworkingfrompetrochemical feedstocks in Alberta, have built upon this technology to implement‘metallocene technology’and ‘AdvancedSclairtech technology’ respectively.Theresultingmetallocene linear low‐density polyethylene resins are said to be “tougher, clearer andeasiertoprocess”as“primaryingredientsforawiderangeofproducts[including]flexible

81SeeMcIntosh,ThePetroleumIndustry…,1992.82Todaythatfigureisexponentiallylargerastheworld’smajorpetroleumplayerscontinuetoinvestinupgradersinAlberta’sbituminoussandsregionandtheAlbertaIndustrialHeartland.83MichaelLauzon,"PetrochemicalIndustry,"TheCanadianEncyclopedia,http://www.thecanadianencyclopedia.com/(accessedJune30,2010).

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packaging, pallet stretch wrap, collation shrink‐films, general‐purpose and carrier bags,heavy‐duty bags, and food packaging and agricultural films”.84 Similarly, AdvancedSclairtechtechnologyisusedfortheproductionofpolyethyleneresins–particularlyusedinthinwallrigidpackaginginjectionmoldingresins.85AsIndustryCanadanotes,“ethyleneistheprincipal[petrochemical]productmadeinCanada,whichisusedtomakederivativesincluding ethylene oxide, ethylene glycol, and polymerized to synthetic resins includingpolyethylene and polystyrene.”86 In 2008, the Canada’s petrochemical sector saw $15billioninexportsandemployed7500workersatover175manufacturingestablishments.87The petrochemical industry in Canada continues to implement new technologies in theapplication ofmodern petroleum refining and processing,which in turn has served as acatalystforcontinuedinvestmentintheupstreampetroleumproductionindustry.Asnotedin the preceding pages, the technological advances made in the last two decades inCanada’s conventional petroleum industry have largely been improvements of basicexploration, extraction, transportation and processing principles of the traditional oilindustry.Theintentionhasbeentomakethesesectorprocesseseasier,moreefficient,andlesscostly,andhaveaimedtoattainhigheroutputyieldsfromexistingwells.

84UnivationTechnologies,MetalloceneTechnology,Pamphlet(Houston:UnivationTechnologies,2008).85SeeNovaChemicals,"AdvancedSclairtechTechnology,"Novachem.com,http://www.novachem.com/researchtech/researchtech_ast.cfm(accessedJune30,2010).86GovernmentofCanada,"Chemicals,"InvestinCanada,May21,2010,http://investincanada.gc.ca/eng/industry‐sectors/chemicals.aspx.87Ibid.

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PartIII:TechnologicalDevelopmentinOffshorePetroleumThesectionofthereportexaminestherecenthistoryofoffshorepetroleumproductioninCanada,alongwithsomeofthetechnologiesusedtoexploreforoilundertheocean,extractoilthroughoffshoredrillingplatforms,andshippetroleum(inparticular,LiquefiedNaturalGas, or LNG) by tanker overseas. As oil is not processed ‘offshore’, this facet of thepetroleumproductionprocessisleftoutofthischapter.

ABriefHistoryofOffshorePetroleumDevelopmentinCanadaThedrillingforoffshoreoilandgasisover60yearsold.Thefirsttrueoffshoreoilwellwasdrilled in 1947 off the coast of Louisiana by Kerr‐McGee Oil Industries (now AnadarkoPetroleum), and it is understood that this event transformed the petroleum industrysignificantlyasitopenedupdeep‐seahydrocarbonstotheworld.88InCanada,exploratorydrillingdatesbackdecades:TestwellsweredrilledintheBeaufortSeaaslongagoas1966.ExplorationoffofBritishColumbia’scoastsdatestotheearly1960s,whenShellusednewseafloormappinggeologytechnologies.By1967,thefirstoffshoreoilwellwasdrilledoffNovaScotia’scoastbyMobilOil,andsubsequentdrillingwasconductedofftheWestCoastofCanadabyShell.89OffshoregaswasdiscoveredbyShellinthelate1960sintheOnondagawellsouthofSableIsland, Nova Scotia. Despite findings of this type, however, technological and regulatoryobstacles prevented the advent of major offshore developments in Canada during the1970s. Similarly, development was also largely stalled in the 1980s as a result ofplummetingoilandgasprices.90 Inaddition,offshoredrilling inthe1980sslowedafteradisasterin1982offthecoastofNewfoundland,inwhichtheOceanRangermobiledrillingrigsank,causingthedeathsofall84crewmembersonboard.Thisgaveregulatorspausetorethink the safety of offshore drilling in the North Atlantic. Nevertheless, by the 1990s,interestinCanada’soffshoreoilandgasproductionreturnedinfullforceandconditionsforinvestment became ideal. Production in the Cohasset/Panuke (COPAN) field off of NovaScotia’scoast–Canada’smajorproducingoffshoreoil fieldinthe1990s–wasconductedby PanCanadian in the early 1990s.91 Between 1992 and 1999, COPAN produced 44.5millionbarrelsofoil.9288OffshoreMagazine,"HistoryoftheOffshoreIndustry,"Offshore,October2007,http://www.offshore‐mag.com/index/about‐us/history‐of‐offshore.html.89GeoHelpInc.,"HistoryoftheCanadianOilIndustry(KeyDates),"GeoHelpInc.,http://www.geohelp.net/history.html(accessed86,2010).90GovernmentofNovaScotia,"Oil&Gas‐OffshoreIndustry&ExplorationHistory,"NovaScotiaCanada,915,2009,http://www.gov.ns.ca/energy/oil‐gas/offshore/our‐history.asp.91OffshoreTechnology,"DeepPanukeGasField,Canada,"Offshore­Technology.com,http://www.offshore‐technology.com/projects/deep_panuke/(accessedAugust6,2010).92MinistryofEnergy,Mines,andPetroleumResources,"OffshoreOilandGasAroundtheWorld,"BritishColumbia,86,2010,http://www.empr.gov.bc.ca/OG/offshoreoilandgas/Pages/OffshoreOilandGasAroundtheWorld.aspx.

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OffshoreOilandGasProjectsinCanadaTodayDespitethelargecachesofhydrocarbonsinAtlanticCanadaandhighlevelsofinvestment,developmentinCanadianoffshoreoilprojectshascomeveryslowly:

Thefirstcommercialoilfield,Hibernia,wasnotdiscovereduntil1979anditsdevelopmentdidnotbeginuntil1990,withthefirstproductioninlate1997.A second field, Terra Nova, entered production in early 2002, and thedevelopment of a third, White Rose, started in 2002 with a view toproductioninlate2005.Thisfortyyearhistoryhasseentheslowemergenceofanew industry that isnowhavingsubstantial effectson theeconomyofNewfoundlandandLabrador.93

ThesethreeprojectsofftheAtlanticCanadiancoast–Hibernia,TerraNova,andWhiteRose–aretheonlyactiveoffshoreoilproductionprojectsinCanadatoday.AllthreeprojectstapintotheJeanneD’Arcoilbasin,fromwhich40%ofCanadianconventionallightcrudeoilisderived. Hibernia is owned by a conglomerate of companies including Exxon‐Mobil,Chevron, Suncor (formerly PetroCanada) andMurphyOil. The project produces 135,000bpd;TerraNovaisalsoownedbySuncorandproduces115,000bpd;whileWhiteRoseisownedbyHuskyEnergyandproduces117,000bpd.94InareportpublishedbytheStandingSenateCommitteeonEnergy,theEnvironmentandNaturalResources,thepresentstateofCanada’soilandgasactivitiesoffallthreecoastsismadeclear(andthusworthquotingatlength):

Thecommitteebelievesitisimportanttonotethatatpresent,suchactivityisonlytakingplaceintheoffshoreAtlanticwatersadjacenttoNewfoundlandandLabrador,and Nova Scotia. In fact, there is only one active offshore deepwater drillingoperationcurrentlyinprocess,namelyChevron’sLonaO‐55exploratorywellintheOrphan Basin of the Atlantic Ocean, some 430 km northeast of St. John’s,Newfoundland. There are also several oil and gas development and productionactivities ongoing in the Atlantic offshore region. There is also a standingmoratorium on any offshore exploration and drilling activities off the sensitiveGeorge’sBank.95

The committee goes on to note that petroleumactivities in the highArctic are at a verypreliminarystage:

93JacquesWhitford,Socio‐EconomicBenefitsFromPetroleumIndustryActivityInNewfoundlandandLabrador2003and2004,(St.John's:PetroleumResearchAtlanticCanada,2005).94U.S.EnergyInformationAdministration,“Canada:Oil,”2009.95TheHonourableDavidW.AngusandTheHonourableGrantMitchell,FactsdonotJustifyBanningCanada'sCurrentOffshoreDrillingOperations:ASenateReviewintheWakeofBP'sDeepwaterHorizonIncident,EighthReportoftheStandingCommitteeonEnergy,theEnvironment,andNaturalResources(Ottawa:CanadaSenate,August2008).

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As to theArcticoffshore, including theBeaufort Sea, there isnodrilling currentlytaking place. Licences have been issued which do contemplate future drillingactivity inArcticwaters,butnodrillinghasasyetbeenapproved. It isanticipatedthatactivitywillbeginin2014.96

Finally,anyoilproductionactivitiesontheWestCoastareeffectivelyblocked:

On theWest coast, in the Pacific Ocean waters off British Columbia, no offshoreactivity is takingplace.AmoratoriumonCanadianWestcoastoffshoreoperationswas implementedin1972andcontinues ineffectwithbothfederalandprovincialapproval.Noexploratoryordrillinglicenceshavebeenissued.97

DespitesomelimitedexploratorydrillingforgasinCanada’sArcticthattookplacearoundtheyear2000,todaytheonlymajoroffshoregasfieldinoperationinCanadaappearstobetheSableGasFieldoffthecoastofNovaScotia.AstheCenterforEnergynotes,“theSableprojectconsistsoffivefields–Thebaud,NorthTriumph,Venture,AlmaandSouthVenture–whichproducetoacentralfacilityontheThebaudplatform.Productionisthenpipedtoaprocessing facilityatGoldborowhere thenaturalgas liquidsareremoved.”98Theprojectfirst startedproducinggas in1999andextractsanaverageof400millioncubic feetperday.Asmentionedabove,drilling in the1970s (or the lack thereof)waspartly influencedbyenvironmentalregulationsimposedbytheFederalGovernmentandtheprovinceofBritishColumbia.In1970,oilexplorationwasbannedbytheprovincialgovernmentintheJuandeFucastraitandtheGeorgiastrait;In1972,theFederalGovernmentissuedamoratoriumontankertravel invariouswatersoffBritishColumbia’scoastsand laterbannedoilandgasexploration;Finallytheprovincialgovernmentextendedit’smoratoriumin1982toforbidallprivatesectorexplorationforoilandgasofftheWestCoast.99In the mid‐1980s, oil companies were in negotiations with the federal and provincialgovernmenttohavetheWestCoastmoratoriumoverturned.However,in1988therewasanoilspilloffthecoastofWashingtonState,causingregulatorstoreconsider.TheNestuccabargespilloffthewesternendofOlympicPeninsulabroughtnegativeattentiontotheideaofoffshoredrilling.Thenin1989,thefamedExxonValdezspillinPrinceWilliamSoundoffofAlaska’scoast,andtheresultinghorrificimagesofcatastrophicdamagetotheecosystem

96Ibid.97Ibid.98CenterforEnergy,EnergyFacts….99MJWhiticarandErinHildebrand,"HistoricalTimeline,"Energybc.ca,http://www.energybc.ca/explore3.html(accessed0815,2010).

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andwildlife,furthersolidifiedthecommitmentofWestCoastgovernmentstobanoffshoreoilandgasactivities.100Yetagain,effortstoallowdrillinghaverampedupinrecentyears,asoilcompaniesseektobenefitfromhydrocarbonresourcesthathavenotyetbeenexploitedoffofCanada’sWestCoast,andasthesuccessfulandprofitableexplorationofoilandgasonCanada’sEastCoastdemonstrates the potential economic benefits of overturning the moratorium.Nevertheless,thehighlypublicizedspillsintheGulfofMexicoandtheKalamazooRiverin2010arelikelytoserveascontinuingreminderstocitizensandregulatorsthataccidentsdohappen,andthattheecological impactsmayjustnotbeworththepotentialeconomicgainsofpetroleumproductionfromoffshoresources.

OffshoreRegulationsinCanadaWhileoilandgasactivitiesarebannedofftheWestCoast,threemainjurisdictionsexisttoregulate and guide development in Canada’s arctic and East Coast areas. The Canada‐Newfoundland and Labrador Petroleum Boardmanages the development of offshore oilnearNewfoundlandandLabrador,whiletheCanada‐NovaScotiaOffshorePetroleumBoardserves projects in Nova Scotia waters. All other areas, such as potential projects in theArctic,wouldbemonitoredbytheNationalEnergyBoardofCanada.AsclaimedontheNEBwebsite,companies intendingtodrilloffshoremustsubmit toanapplicationprocessandprovidesafetyandenvironmentalprotectionplans:

The NEB reviews applications; grants drilling authorizations; monitors companyoperations; and verifies company compliance. Each applicant for a drillingauthorization is required to provide contingency plans, safety plans andenvironmental protection plans which are carefully scrutinized by the Board'sexpertstaff.101

Typically,companiesbidforexplorationrightsafterseismictesting.Onceawardeddrillinglicenses, companies are required to follow existing established environmental laws. TheDepartment of Fisheries and Oceans (DFO) is largely responsible for monitoring theenvironmentalimpactsofanyformofindustrialdevelopmentrelatedtoaquaticresourcesandaquaticwildlife. Inaddition, theDFOhas setup theCentre forOffshoreOil,GasandEnergyResearch(COOGER),whosemandate is toconduct “nation‐wideresearch into theenvironmental andoceanographic impactsofoffshorepetroleumexploration,productionandtransportation.”102

100MJWhiticarandErinHildebrand,"HistoricalTimeline,"Energybc.ca,http://www.energybc.ca/explore3.html(accessed0815,2010).101NationalEnergyBoard,"Environment‐QuestionsandAnswers,"NationalEnergyBoard,http://www.neb.gc.ca/clf‐nsi/rsftyndthnvrnmnt/nvrnmnt/nvrnmntq‐eng.html(accessedJune7,2010).102FisheriesandOceansCanada,"CentreforOffshoreOil,GasandEnergyResearch(COOGER),"FisheriesandOceansCanada,413,2010,http://www.dfo‐mpo.gc.ca/science/coe‐cde/cooger‐crpgee/index‐eng.htm.

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TheFutureofOffshoreDrillinginCanadaA number of additional offshore oil projects have been slated for future development.WithintheFlemishPassbasin,StatoilHydrohasclaimedtohavefoundanoffshoredepositinitsMizzenfield.Meanwhile,ExxonMobil’sHebronprojecthasbeenapprovedbyenergyregulators and is scheduled to begin production by 2017. As the government of BritishColumbia notes, gas projects in Canada’s north have been put on hold until there isadequatemeansoftransportingthegasfromtheproductionlocationtoprocessingplants:“Major discoveries [of gas] have also beenmade in the Beaufort Sea off Canada's ArcticshoreintheNorthwestTerritories.ThesefindsareawaitingconstructionoftheMackenzieValleypipelinetobringthegastomarket.”103Itisthereforelikelythatthenextmajorareaof hydrocarbon development off Canadian shoreswill be the Arctic Ocean, provided theCanadian public and their political representatives find that the overall benefits ofproduction outweigh the potential damages that could be caused to the fragile Arcticecosystem.Itremainstobeseenwhetherthiswillbethecase.TechnologicalDevelopmentinOffshorePetroleumExploration Similar to onshore technological developments in exploration, advancements in researchand development in recent years havenot changed the basic geological and geophysicalprinciples of offshore petroleum exploration. Rather, new technologies have focused onimprovingimagingcapacity(aparticularlydifficulttaskthedeeperanoilplayissituated),andmaking undersea drillingmore precise. Thismeans that the new technologies havemade explorative drilling effortsmore exact and efficient (while not necessarily yieldingnewsubseadiscoveries).GiventhedifficultconditionsofoffshoredrillingintheArcticandtheNorthAtlantic,newvisualizationtechnologieshelpfirmsmakebetterdecisionsonwhetherexploratoryactivityisworthwhile off Canada’s shores. As the U.S. Energy Information Administration notes,“operatorsattheAtlanticoil fieldsmustcontendwithharshnaturalconditions, includingrough seas, seasonal icebergs, and extreme temperatures. These factors increase thedifficultyandcostsofoilproductionintheregion.”104ConditionsinCanada’sArcticOceanare evenmore extreme and farmore dangerous. Yet such difficult conditions have alsospurred investment into technologies that help explore and access oil from underwaterdeposits.

UnderwaterSeismicOneofthemostimportanttechnologicalimprovementsinoffshorepetroleumexplorationhas been in the development of underwater seismicmapping. This technologywas firstimplemented in theGulfofMexico in theearly1950s, througha seriesof trialeffortsby

103MinistryofEnergy,Mines,andPetroleumResources,"OffshoreOilandGasAroundtheWorld,"BritishColumbia,86,2010,http://www.empr.gov.bc.ca/OG/offshoreoilandgas/Pages/OffshoreOilandGasAroundtheWorld.aspx.104Ibid.

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ShellgeophysicistSidKaufman.105Kaufman’smethod tookholdas the industrynorm foroffshoreseismictestingofsubseageologicalformations–theprocessinvolvedspecializedships towing surveying ‘streamers’ to produce 2D images of subsea surfaces. Thesestreamersweredraggedbehindtheshipovertheareaexpectedtoholdhydrocarbons.Anenergy source emitted waves which would bounce off subsea surfaces, creating variouswavelengths in return depending on the geological features of various depths. Thestreamersthenrecordedthereturningenergywavestoprovideabasicpictureofsubseaformations (see Figure 9: Early Marine Seismic). In this way, the varying wavelengthsrecorded in the data sets could be used to interpret the location, size, and shape ofpetroleumdeposits.

Figure9:EarlyMarineSeismic106

Bythe1970s,geophysicsfirmssuchasFrench‐basedCompagnieGénéraledeGéophysique(CGG)were trying to improve the technology in order to provide 3D imaging of subseaformations:“In3Dsurveying,groupsofsaillines(orswathes)areacquiredwiththesameorientation,unlike2Dwherethereisarequirementfororthogonalorobliquelinestotheprominentacquisitiondirection.Simplistically,3Dacquisitionistheacquisitionofmany2D

105DavidBamford,"thGenerationSeismicOil&GasIndustryHistoryEvents,"ROGTECMagazine,September08,2008.106IAGC,MarineSeismicOperations:AnOverview,(IAGC,March2002).

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linesspacedinparallelclosetogetheroverthearea.”107Theselinesaretypicallyset200to400metresapart.Needlesstosay,thedataacquiredbya3Dsurveyisexponentiallylargerthan a 2D survey. For this reason, 3D seismic technology only came on streamonce thecomputingcapacitywasachievedforenormoussetsofdata.CGGwasthefirsttouse“wide‐lineprofiling”for3Dimagingin1971.InCanada,itwasnotuntil1982thatacompanybythenameofVeritas(whichhasnowmergedwithCGGtoformCGGVeritas)introduced3Dseismicimaginginthiscountry.

OceanBottomCables(OBC)Since the1980s3D imaging in theoil industryhasbecome commonplace – the effort to‘illuminate’undergroundhydrocarbonpoolshasevenbecomeknownas“conventional3Dseismic”. However, there were a number of limitations identified with this method ofsubseasurveying.Inparticular,areaswithobstructions(suchasoilplatforms)orshallowwaters, or busy shipping lanes are all inaccessible to seismic vessels towing multiplestreamers. Inaddition,theinformationobtainedfromfloatingstreamersisnotaspreciseasthedatathatcanbeobtainedusingtoolssuchas‘geophones’and‘hydrophones’–whichmustbe locatedon thesea floor.Asaresult, in the1990soil companiessuchasAtlanticRichfield have opted to use Ocean Bottom Cables instead: “OBC technique utilizes bothgeophonesandhydrophonesinacombinedcablethatisdeployedfromacable/recordingvesseldowntotheseabed…Unlikethedraggedarray,theequipmentislaidoutordroppedontheseabedanddatarecordedusingaseparatesourcevessel.”108Asopposedtodraggedstreamers which typically survey less than one kilometer, OBC allows as many as 72kilometers of ocean floor that can be covered, thereby allowing improved 3D surveying(seeFigure10:OceanBottomCablesusingMulti‐AzimuthSeismicTechnology).

Multi­AzimuthSeismicNevertheless,theoriginalimagesderivedfromOBCtechnologywerenotalwaysprecise.Inparticular,subsea‘saltbodies’wereoftensaidtonegativelyaffecttheimagingcapacityinsuchconventional3Dseismic imaging.Asa result, in theearly2000scompanies suchasPGSGeophysicalandEnovationResourceshelpeddevelopedwhatisnowknownas‘multi‐azimuth 3D seismic’. As a pamphlet by the latter explains, “Multi‐Azimuth seismic is atechnique primarily used to improve illumination of the subsurface in areas of complexstructures. In such areas velocity overburden effects and ray bending can mean thatillumination isnot evenat aparticular targethorizon.”109Multi‐Azimuth seismic enablesmultiple readings of the same location from a variety of ‘azimuths’ (or directions,understoodmost simply): “Different shooting directions illuminate different parts of thetarget.Collectively,theoveralltargetilluminationwillbefarmoreuniformandcomplete.Thedatasetsarecollectivelyprocessed tooutputa single3Dseismiccube.”110Withsuch

107IAGC,MarineSeismicOperations:AnOverview,(IAGC,March2002).108IAGC,MarineSeismicOperations:AnOverview,(IAGC,March2002).109EnovationResources,"Technologies,"EnovationResources,http://www.enovationresources.com/approach/multi‐azimuth_seismic.html(accessedAugust15,2010).

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multi‐directional 3D seismic surveying, the interference caused by salt bodies has beenlargelyeliminated.

Figure10:OceanBottomCablesusingMulti­AzimuthSeismicTechnology111

ImprovedComputingCapacityAgain, the advancement in subsea imaging technology has required (and evolvedalongside) improvements in computing capacity.AsGeneKliewernotes, “the increase indatasetsizethatcomeswithmulti‐azimuthseismicacquisitionslowscomputerprocessingofthatdataforinterpretation.Also,thegrowingapplicationofreal‐timedatamonitoringofupstreamdrilling andproduction activities demandsmore computingpower than in thepast.Computersystemsarebeingdevelopedtoaddresstheseproblemsandtoshortenthetime between data acquisition and interpretation.”112 To address this issue, graphic

110AndrewLong,"TechnicalFocus:Multi‐AzimuthSeismic,"PESANews,April/May2005.111GeneKliewer,"SeafloorSeismicAcquisitionComingofAge,"OffshoreMagazine,February1,2007.112GeneKliewer,"ComputingPowerDrivesExplorationAdvances,"OffshoreMaganize,January1,2009.

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processing unit (GPU) ‘personal supercomputers’ have been developed by hardwaremanufacturerssuchasNVIDIAin2008.Thecompany’snewestmodel,‘Tesla’,namedafterinventor Nikola Tesla, is 250 times as powerful as a typical PC workstation. Thesesupercomputers canbeusedonoceanvessels to acquire real time imaging fromseismicrecording. In fact, combinedwithnewsoftware,complexdatawhichpreviously took twohourstoloadnowcanbeaccessedwithintwominutes.113

TechnologicalDevelopmentinOffshorePetroleumExtractionThetechnologicaladvancementsinoffshoreexploration,asnotedabove,havebeenusedtoimprove the ability of oil companies to map hydrocarbon pools, which in turn hasfacilitatedextraction.Oncedevelopershavecompletedtheseismicimagingandarereadytobeginoffshoredrilling,aplatformneedstobemovedorbuiltonsite, intheexactareawhere drilling is expected to occur. There are multiple forms of drilling platforms (seeFigure11).Thedecisiontouseaparticulartypeofplatformhastodowithalargenumberoffactors,includingthedepthoftheseafloor,thedepthoftheresourceundertheseafloor,productioncosts,location,thenatureoftheresource,etc.

Figure11:TypesofOffshoreDrillingPlatforms114

113Ibid.114ArmstrongEnterprises,"OffshoreOilRigsandOffshoreDrillingCompanies,"OilJetPump,http://www.oiljetpump.com/offshore‐drilling‐rigs.htm(accessedJuly10,2010).

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CanadianExample:HiberniaPlatformFor example, the Hibernia conglomerate chose for its offshore platform a ‘gravity‐base’structure(GBS),whichweighsoveronemilliontonesandwas fixedto theocean floor in1997.Thedesignisexpectedtowithstandacollisionwithaonemilliontonicebergandadirecthitfromasixmilliontoniceberg.Thechancesofsuchcollisionsareexpectedhaveachanceofoccurringonceinevery500yearsand10,000yearsrespectively:

TheHibernia's novel 450,000t gravity base structure design consists of a 105.5mconcrete caisson, constructed using high‐strength concrete reinforced with steelrods and pre‐stressed tendons. The caisson is surrounded by an icewall, whichconsistsof16concreteteeth.Structurally,the1.4m‐thickicewallissupportedbyasystemofXandVwalls,whichtransmittheloadstotheinteriortiewall.TheXandVwallshaveathicknessvaryingfrom0.7mto0.9mandthetiewallhasathicknessof0.9m.Puttogether,thesewallsformtheicebelt.Thecaissonisclosedatthebottomand topbyhorizontal slabsand thebase slabhasadiameterof108m.Theuppertop‐surfaceslabisabout5mabovesealevel.115

Withthisstructure,theHiberniaplatformcancontainupto1.3millionbarrelsofcrudeoil.Oil is transferred from the platform to a special purpose‐built “shuttle tanker”, using anOffshoreLoadingSystem(OLS)whichincludesunderwaterpipelines,andflexible loadinghoses.TheHiberniaplatformcanalsoaccommodateupto185peopleinthetopside.Theplatform was largely built in Bull Arm, Newfoundland and Labrador, though manyadditionalcomponentsandpartswerebuiltandsourcedfromaroundtheworld.116

UnderwaterRoboticsThefaceofoffshoredrillingischangingdramatically,fromthestereotypicalsurfacelevel‐drilling platform to underwater robotics. It remains to be seenwhether newer types ofplatformsandunderwaterroboticswillbeusedinCanada.Theideaistohavemoreprecisesubmarineaccess.Asoneoffshoreindustryobservernotedin2004,

Advancesindrillingtechniquesdoholdthepromiseoffurtherloweringthecostofproducing new oil and extending the industry’s reach. That’s especially true indeepwateroffshorefieldswheremanypromisingdiscoveriesareturningup.Asidefrom thehuge costof conventional steeldrillingplatforms,operationsongiganticrigs are subject to costly interruptions fromhurricanes in theGulf ofMexico andtyphoonsinthePacificrim.117

115Offshore‐Technology.com,"Hibernia,Jeanned'ArcBasin,Canada,"Offshore­Technology.com,NetResourcesInternational,2010,http://www.offshore‐technology.com/projects/hibernia/.116Ibid.117Schoen,“Cantechnology…,”2004.

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Barton Smith of the Rice University confirms the industry trend: “What they’re movingtowardisrobotics–inwhichyouliterallyhavesubmarineoperations.Thedrillingactivityall occurs at thebottomof the ocean.And these roboticswill have all the capabilities ofbeingable to fixanythingdown there.”118Nevertheless, theharshconditionsofCanada’sNorth Atlantic, and even harsher conditions of the Arctic make the prospects forunderwaterroboticslesslikelyinthenearfuture.TechnologicalDevelopmentinOffshorePetroleumTransportationIn the previous chapter, various methods for transporting petroleum on land werediscussed(suchasthroughpipelinesandrailcars).However,giventhecurrentincreasingdemand forglobalpetroleummarkets, theneed to shiphydrocarbonsacrossoceansandlargebodiesofwaterhasonlypromptedfurthergrowthintheuseofshipstocarrycrudeoil over seas. Since their original development by Ludwig and Robert Nobel’s companyBranobel in the late 19th Century,119 oil tankers have followed conventional shippingtechnologypairedwithsafeoilstoragesystems.However,theshippingofnaturalgashasprovedtobemuchmoredifficult,andwouldnotdevelopinearnestuntilthe1940s.Despitethis,naturalgashasneverbeenahighly‐transportedformofpetroleum,especiallyin bulk quantities over longdistances. For one, natural gas has oftenbeen sourced fromdomestic or regional outlets. That is, the source of supply is often relatively close todemand.Secondly,naturalgasinitsnormalstateisexpansiveandtakesupalotofspace.Assuch,transportershavehesitatedtoshipnaturalgasinitsgaseousformgiventhattheenergyyieldswouldoftenbeuneconomic after considering shipping costs.Nevertheless,improvements in natural gas liquefaction (and subsequently) regasification technologieshavefacilitatedthetransportationofnaturalgasacrossoceans.Thefollowingparagraphsbriefly explore the incredible growth in Liquefied Natural Gas (LNG) transportation inNorthAmerica.

LiquefiedNaturalGasThe idea to compress gas into a liquid was very early recognized as an importantadvancementinnaturalgascommercializationandakeytechnologyingastransportation.Bythe1940snaturalgasliquefactionplantswereonstreaminvariouspartsoftheUnitedStates, and by 1959 oil tankers began shipping LNG across the ocean. Nevertheless, tobecomeuseable,LNGmustbere‐gasified.ThuswhileLNGisconsideredamid‐20thCenturytechnology, it did not really take off until the end of the 1990s, given that an entireinfrastructureofLNGliquefactionandregasificationplants,tankersandpipelineshadtobeinplaceinordertoprocessLNG.Inaddition,theliquefactionandregasificationprocessesarecomplicated,energyintensive,andthusexpensive.Toconvertnaturalgasintoaliquid,the hydrocarbon must be cleansed and then supercooled to –162°C and kept at thattemperature throughout transport (as a liquid, LNG takes up 600 times less space thannaturalgasatroomtemperature).Thus,formanyyearstheLNGindustrysimplywasnot

118AsquotedinSchoen,“Cantechnology…,”2004.119LudvigandRobertwerebrothersofthefamedAlfredNobel.

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profitable, as domestic supplies satiated demand and infrastructure was not fully inplace.120

Figure12:ProposedCanadianLNGImportandExportProjects121

Yetagain,thedecliningstocksofnaturalgassincetheturnofthemillennium,particularlyin countries like Canada (which uses tremendous amounts of natural gas and have verylittleleftinreserve),hasrecentlycausedarenaissanceinLNGmarkets:“HighernaturalgaspricesandgrowingefficienciesintheLNGvaluechainaremakingiteconomicallyfeasibleto ship LNG over long distances, transforming natural gas from a regional to a globalmarket.”122InNorthAmerica,LNGcurrentlyaccountsfor3%ofgasdemand;yetby2020demandforLNGasashareofnaturalgasisexpectedtogrowto8%.ForthisreasonmanyCanadiancompaniesare investingheavily inLNGregasificationplants, topreparefortheexpected growth in gas imports from overseas (particularly on the East Coast).Nevertheless, Canada does not yet import LNG. Despite this, Natural Resources Canada

120SempraEnergy,"AboutLNG,"LNG­TheNorthAmericanSolution,http://www.sempralng.com/pages/About/WhatIsLNG.htm.(accessedJune27,2010).121ReprintedfromNaturalResourcesCanada(Ibid.).122PricewaterhouseCoopers,"Fast‐pacedgrowthinLNG,"Pwc.com,http://www.pwc.com/gx/en/oil‐gas‐energy/liquefied‐natural‐gas/publication‐fast‐paced‐growth‐lng‐liquefied‐natural‐gas.jhtml(accessedJune27,2010).

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notesthat“therearesevenproposalstoconstructLNGimportfacilities.Theseareexpectedin Atlantic Canada (three projects), Québec (three projects), and British Columbia (oneproject).”123 Inaddition, therearetwoproposals forLNGexport facilities inCanada– theKitimatLNGExportTerminal,andTeekayCorporationandMerrillLynchCommodities.

Figure13:ComponentsofaGenericLNGReceivingTerminal124

CanadianExample:KitimatExportLNGTerminalThe proposed LNG terminal at Kitimat is Canada’s pioneer facility for overseas LNGexportation,expectingtodrawnaturalgasfromsourcesinWesternandNorthernCanada:“The Western Canadian Sedimentary Basin will supply natural gas to the Kitimat LNGTerminal.AttheTerminal,thegaswillbechilledtominus160degreesCelsius.Atthispointthenaturalgasbecomesliquefiednaturalgas(LNG),latertobestoredinfullcontainmenttanks and then shipped in specially designed marine vessels to markets in Asia, wheredemand forcleannaturalgas is strongandgrowing.KitimatLNGTerminaladdressedallthegovernmentregulatoryandstateof theartengineeringandsafetystandards.”125 TheKitimatterminalisalsoplanningtobefittedwithregasificationtechnology,soastoenableeasy on‐site conversion of LNG and Natural Gas (to facilitate both exports and futureimports).Thefacilitywillbeabletohold160,000cubicmetersofgasinstorage,andwillbeable toexportup to610millioncubic feeteachday.The terminalwillbe located18kmnorthoftheKitimatfour‐seasondeepwaterport–whichislargeenoughtohandleshipsof325,000 tonnes. Front‐End Engineering and Design (FEED) contracting was awarded toTractebelGasEngineering, and conducted in2006.The import terminal is consideredof

123NaturalResourcesCanada,CanadianLNGImportandExportProjects:StatusasofMay2009,(NaturalResourcesCanada,2009).124NaturalResourcesCanada,"LiquefiedNaturalGasRegulatoryRequirements,"EnergySources,http://www.nrcan.gc.ca/eneene/sources/natnat/regreg‐eng.php(accessedAugust25,2010).125Hydrocarbons‐Technology.com,"KitimatLNGImportTerminal,Canada,"Hydrocarbons­Technology.com,http://www.hydrocarbons‐technology.com/projects/kitimatlng/(accessedAugust25,2010).

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modestsize–withjettyandportfacilitiesfortankersanddirectconnectionsintotheNorthAmericanenergymarketthroughaseriesofpipelinessystems(seeFigure13).126

To conclude this section, the offshore petroleum industry in Canada is becoming moreimportantasconventionalonshoresuppliesdwindle.Numerousenvironmentalregulationshavebeenimplementedtopreventpetroleumexplorationanddrillinginecologicallyandculturallysensitiveareas(suchastheGeorgesBankandontheWestCoast).Nevertheless,thepetroleumindustryiscurrentlyactiveintheNorthAtlantic,andseesenormousfuturepotentialinCanada’soffshoreproduction,especiallyasdemandforoilandnaturalgasbothhereandabroadshowsnosignsofabatinganytimesoon.

126Ibid.

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PartIV:Canada’sPetroleumIndustryandtheEnvironmentThere is no doubt that all aspects of the production of petroleum resources – fromexploration,extraction,transportationandprocessing(nottomentiontheconsumptionofthefinalproduct)–haveimpactsontheenvironment.Fortheirpart,oilandgascompanieshaveinvestedheavilyinefficiencymeasurestoreducetheirecologicalfootprints.Assomeenvironmentalcriticsnote,industryhasalsospentsubstantialamountsonPublicRelations(PR)strategiestoinformthepublicof ‘green’ initiatives.Despitetheincrediblegrowthingreencommunicationscampaignsfromthepetroleumsector,environmentalorganizationsareveryconcernedabouttherolethatthefossilfuelindustryisplayinginthedestructionofthebiosphere,especiallyinCanada.Thispartofthereporthighlightssomeofthemainconcernsaboutthepetroleumsectorfromanenvironmentalperspective,thoughitshouldbenotedthatindustry,governmentandcivilsocietygroupsdonotalwaysagreeabouttheextentofenvironmentaldegradation.127

ClimateChangeThe fossil fuel age is largely responsible for completelyaltering theplanet’satmosphericconcentrationofcarbondioxideandothergreenhousegases(GHGs),therebychangingtheclimate in unnaturally fast and unpredictable ways. In its most recent comprehensivereport,theworld’sleadingauthorityonclimatescience–theIntergovernmentalPanelonClimateChange(IPCC)–confirmedthat“warmingoftheclimatesystemisunequivocal”.128In Canada, a large portion of GHG emissions results from the energy sector (thiswouldincludepetroleumproduction).Infact,theemissionsfromthissectorhavebeenincreasingtremendouslyoverthelasttwodecades,ratherthandecreasing(astheyshouldifCanadaistomeetitsinternationallegalcommitmentstohelpmitigatecatastrophicglobalwarming).AsEnvironmentCanadanotes,“emissionsfromtheenergyindustriesrosebyabout79Mtbetween 1990 and 2008. Almost half of that increase (38.4Mt)was from the fossil fuelproduction and refining, pipelines, and fugitive sources subsectors, a product of theincrease inoil andgasproductionover theperiod.”129Further, thegovernmental agencynotesthat“emissionsfromtheMiningandOilandGasExtractionsubsectorhaverisen17.7Mtor287%since1990.Whilethissubsectordoesincludeemissionsfromcoal,metalsandminerals mining, a rapidly increasing proportion of the emissions are from activitiesassociated with Canada’s oil sands.”130 Indeed, the industrial processes in Canada’sbituminoussandsaresaidtoaccountfor5%ofthenation’stotalemissions–andserveasthefastestgrowingsourceofemissionsinCanada.127OneofthemosthotlycontestedenvironmentalissuesinCanadaisthebituminoussands,withenvironmentalorganizationsportrayinganimageofecologicaldevastation,andindustrysuggestingthatmanyoftheimpactscanbenegatedthroughnewtechnologicalmeasures.128LennyBernsteinandetal.,"SummaryforPolicyMakers,"inClimateChange2007:SynthesisReport(Geneva:IPCC,2007).129EnvironmentCanada,Canada's2008GreenhouseGasInventory:ASummaryofTrends1990­2008,May26,2010,http://www.ec.gc.ca/ges‐ghg/default.asp?lang=En&n=0590640B‐1.130Ibid.

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TheCanadianAssociationofPetroleumProducers(CAPP)suggeststhat“Canada’soilandgas industry is working to reduce greenhouse gas emissions through innovation andtechnology.”131TheassociationcitestwomaintechnologiesusedtoreduceGHGemissions–Toe‐to‐HeelAirInjection,andCarbonCaptureandSequestration.

Figure14:Toe­to­HeelAirInjection132

Toe­to­HeelAirInjectionToe‐to‐HeelAirInjection(THAI)isanenhancedoilrecoverymethodusedwithhorizontalwell technologies primarily in the Alberta bituminous sands. The technology wasdevelopedbyProfessorMalcolmGreavesofBathUniversityandDr.AlexTurtaofCalgary’sPetroleum Recovery Institute (PRI). First attempts to use the technology in NorthernAlbertacameonstreamin2003.Itispresentedasamethodofinsitubitumenproduction,andanalternative to themorecommonsteam‐basedmethods(knownasSteamAssistedGravity Drainage, or Cyclic Steam Stimulation). The latter techniques use tremendousamountsofenergy(andthusemitlargequantitiesofGHGs)becausesteamisinjectedintoundergroundwells that lie perpendicular to a bitumendeposit, formonths at a time.AsCAPP notes, the new THAI “technology helps the industry reduce our GHG emissionsbecause it requires less energy than heating water to make steam.”133 Essentially,131CanadianAssociationofPetroleumProducers,"GreenhouseGasEmissions,"CanadianAssociationofPetroleumProducers,http://www.capp.ca/environmentCommunity/airClimateChange/Pages/GreenhouseGasEmissions.aspx#wm7I0Rf57ukf(accessedAugust25,2010).132KurtCobb,"WillToe‐to‐HeelAirInjectionExtendtheOilAge?,"Scitizen,April21,2010,http://scitizen.com/future‐energies/will‐toe‐to‐heel‐air‐injection‐extend‐the‐oil‐age‐_a‐14‐3449.html.

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companies employing THAI still steam the resource for a number of months, but thenswitch off the steam pumps and finish the job by igniting a very hot slow burning fireunderground (reaching temperatures of 400°C). The fire melts the bitumen, partiallyupgrading it, and causing it to drain into the horizontal well. The resource can then beeasilypumpeduptothewellheadwiththehelpofnaturalpressure(seeFigure14:Toe‐to‐HeelAirInjection).

There are a number ofways inwhich industry suggests that THAI helps to improve theecologicaldamage typicallyassociatedwithbitumenproduction.First,THAIandother insitumethodshaveamuchsmallerlandfootprintthanthatofopenpitmines.Second,THAItechnologyuseslesssteamasSAGDandCSSanddoesnotrequirethelargewaterhandlingfacilitiesassociatedwiththelattertwoinsitutechnologies.Third,becausetheresourceispartially upgraded, some of the harmful compounds within bituminous sand (such asasphaltine) are left underground, thereby reducing some of the upstream pollutionassociatedwithbitumenupgradingfacilities.Fourth, lesswater isrequired,meaningthatlesswateriswithdrawnfromtheecosystem.Finally,thetechnologyissaidtoproducehalfthe emissions of other steam‐based in situ methods.134 For these reasons, THAI isshowcasedbyindustryasamoresustainablemethodofbitumenextraction.

CarbonCaptureandStorageIn addition to newmethods of extraction, the industry has implemented new pollutionmanagementpractices.CarbonCaptureandStorage,orCCS, refers toaprocess inwhichGHG emissions are ‘captured’ at the point of emission, then buried underground inimpermeable formations. In Canada, the EnCana Corporation has been operating thecountry’sfirst(andpresentlytheonly)CCSpilotprojectinWeyburn,Saskatchewansince2000. The process can also double as an Enhanced Oil Recoverymethod,where carbondioxideispumpedintooldoilreservoirsasameanstorecoverremainingquantitiesoftheresource: “Carbon dioxide is injected into an oil reservoir to allowthe oil tomovemorefreely– it is likemixing turpentinewith paint.Water is then injected into the reservoirtoflushtheoiloutoftheholesandcracks,andtheoil/watermixtureisthenpumpedtothesurface. The CO2remains in place. This process not only resultsin an increase in theamountofoilrecovered,butalsoinmillionsoftonnesofcarbonstoredunderground.”135Inthisway,theWeyburnprojecthasmanagedtostore13milliontonesofCO2todate,withplanstoultimatelystore30milliontones(seeFigure15:CarbonCaptureandStorage).

133CanadianAssociationofPetroleumProducers,“GreenhouseGasEmissions…”134CanadianAssociationofPetroleumProducers,“GreenhouseGasEmissions…”135Producers,CanadianAssociationofPetroleum,"CarbonCaptureandStorage,"CanadianAssociationofPetroleumProducers,http://www.capp.ca/energySupply/innovationStories/Air/Pages/capturingStoringCarbon.aspx#M0440TN9plaI(accessedAugust27,2010).

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Figure15:CarbonCaptureandStorage136

ACritiqueofIntensityBasedEnvironmentalTechnologiesWhileTHAIandCCStechnologiescertainlyhelptoreducetheperbarrelemissionsofGHGs,someecologistsworrythatimprovingtheintensityofecologicaldamagemerelypavesthewayforanincreaseinoverallproduction,whichwillultimatelyseeanetincreaseinGHGemissions.After all, the technologies inquestiondonot tackle the rootproblemof fossilfuel consumption – in fact, they serve to continue petroleum use. Further, increasedproductionusingone formof environmental technologymayhelp to alleviate emissions,whilecausingfurtherdegradationinanotherecologicalarea(inwatercontamination, forexample).Forthisreason,ecologistsprefertoseeregulationsidentifyinghardquantifiablecapson the extentofdamage, rather than relyupon technological innovations to reduceemissions. Nevertheless, some ecologists go further to suggest that the environmentaltechnologies used in the petroleum sector do not reduce ecological damage, somuch as‘displace’ittootherspaces(eitherundergroundortobedealtwithbypoliticiansorfuturegenerations).137 Further, technologies suchasTHAI andCCSare relativelynewandposehighrisks– if they fail, thedamagecouldbecatastrophic.AsKurtCobbnotes, “theTHAI

136AlbertaEnergy,"FactsandStatistics,"GovernmentofAlbertaEnergy,July16,2010,http://www.energy.alberta.ca/OilSands/791.asp.137Theconceptof‘displacement’isfurtherexploredbyenvironmentalsociologistJohnBarry,seeJohnBarry,EnvironmentandSocialTheory(London:Routledge,2007):226.

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processhasyettobeprovenonalargescale.And,theremaybemanyunforeseenproblemsthatcouldlimititsusefulness.”138Similarly,areportonCCSbythePembinaInstitutenotesthatwhileCCSmayplayaroleinthesuiteofenvironmentaltechnologies,itisnotamagicalsolution to climate change: “More information is required and more work is necessarybeforeadecisioncanbemadeaboutthepotentialroleofCCSinastrategytocontainandreduceatmosphericconcentrationsofGHGs.”139Finally,theverypurposeofthepetroleumindustry is to produce hydrocarbonswhich are then burned (and thereby produce GHGemissions). Theworld ultimately needs tomove to a post‐carbon economy if we are toeventuallyeliminatetheanthropogenicimpactsofcarbonconsumptionupontheclimate–and this means eventually moving away from oil and gas, and towards alternative,renewablesourcesofenergy.

UsingNaturalGastoProduceOil–AWasteofEnergyUnfortunately, increasing demand for oil and gas is expected to lead to increases inproduction (and as such, consumption), which in turn will unleash even more carbondioxide into the atmosphere. One of the biggest concerns of Canadian environmentaliststodayisthattheexpectedincreaseindemandfornaturalgasinCanadaissaidtobefromoperators in Alberta’s bituminous sands. A geological interpretation may see this as awastefuluseofenergy.Inasense,oilsandscompaniesareburninghydrocarbonsinorderto yield more hydrocarbons, which then go on to be burned by consumers! NaturalResources Canada forecasts “natural gas demand in the industrial sector (including oilsandsproduction)inCanadaincreasingby0.66Tcffrom2008to2020,largelybecauseofincreaseddemandbyoilsandsoperatorsinAlberta.Thisrepresentsa50%increaseoverlastyear'sforecastofa0.44Tcfincreaseinindustrialdemand.”140Formanyecologistsandpeak oil analysts, the use of large quantities of natural gas to procure more carbon‐intensive bitumen is not only extremely wasteful, it is also a sign that the priorities ofcivilization are severely out of check. As Andrew Nikiforuk has written, “the tar sandsindustry burns enough natural gas every day to heat fourmillion homes. At this rate ofconsumption, theprojectcouldseverelycompromise thenation’snaturalgassuppliesby2030.”141TheuseofnaturalgastoextractpetroleumisatopicripefordebateforCanadiansociety.

AirPollutionInadditiontounleashingGHGssuchascarbondioxideandmethane,theproductionofoilandgas,andinparticulartheprocessingandrefiningofhydrocarbonscausesthereleaseofother pollutants into the atmosphere. As Environment Canada notes, “the petroleum

138KurtCobb,"WillToe‐to‐Heel…”139PaulCobbandThomasMarr‐LaingMaryGriffiths,CarbonCaptureandStorage:AnArrowintheQuiveroraSilverBullettoCombatClimateChange?,(Edmonton:ThePembinaInstitute,2007).140NaturalResourcesCanada,“NaturalGas…,”2010.141AndrewNikiforuk,TarSands:DirtyOilandtheFutureofaContinent(Vancouver:GreystoneBooks,2008):4.

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refining process results in the release of a number of air pollutants, including: sulphuroxides,nitrogenoxides,volatileorganiccompounds,particulatematter,carbonmonoxide,andbenzene,aswellasmanygreenhousegases(GHGs).”142Similarly,somehavepointedtotheproduction facilitiesusedtoextractoilandgas,whichemitchemicals thatmayharmresidentsdownwind:“Gasfieldsthemselvesarehighlypollutingofthesurroundingairandwater. Hydrogen sulphide is a commonwaste byproduct that can kill when breathed inhighenoughquantities.Otherwastegasescauselong‐termdamagetohumans,eveninlowdoses.”143Needlesstosay,theendproductinpetroleumrefiningendsupbeingburnedinautomobiles and furnaces across the country, unleashing even more air pollution, withpotentiallynoxioushealtheffects.Forexample,a2005studybyHealthCanadafoundthatthe resulting smog from automobiles burning fossil fuels is responsible for nearly 6,000deathseveryyear.144

PipelinePoliticsandtheEnvironmentIn Canada, the construction of proposed pipelines related to bituminous sandsdevelopment – both to bring natural gas to the bituminous sands (to be used forextraction), and to transport SyntheticCrudeOil from thebituminous sands to theWestCoast (for export across thePacificOcean) has raised the ire ofmany environmentalistswhoworryaboutthepotentialdamagesthatcouldbecausedbyboththeconstructionofthe pipelines and potential future leaks. Concerned groups also include the many FirstNationswhoseterritorieswouldneedtobecrossed.AsRogerAnniswritesofoneproposedEnbridgepipeline,“thepipelinewouldtraversetheterritoriesof50indigenouspeoplesinBritishColumbiaandAlbertaaswellas700rivers,streamsandlakes.Itwouldfacilitatetheexpansion of tar sands production and its already vast quantities of toxic pollutants. Itwould be served by supertankers from a terminal point in the northern coastal town ofKitimat.”145TherecentoilspillinMichigan’sKalamazooRiverinthesummerof2010–theresult of a corroded pipeline owned by Enbridge – suggests that these worries are notunfounded.While pipeline companies dowhat they can to limit the likelihood of a spill,environmentalistspointtoaplethoraofhistoricalexamplestoremindusoftheinevitablerisksassociatedwithpetroleumtransportation.

WaterContaminationInmost typesofnaturalgasoroilextraction thereareconcernsraisedabout the impactuponlocalwatersources–beitanundergroundaquiferoranoceanecosystem.Thesameconcernsapplytopetroleumexploration,transportation,andprocessing.Forexample,anoilrefinerymaybe locatednearariverandunwittingly leachharmfulchemicals intothe

142EnvironmentCanada,"PetroleumRefining,"CleanAirOnline,http://ec.gc.ca/cleanair‐airpur/Pollution_Sources/Petroleum/Petroleum_Refining‐WSBB3EBEBF‐1_En.htm(accessedJune25,2010).143RogerAnnis,"BritishColumbia'sFuelSuperpowerAmbitions,"TheBullet,no.376(June2010).144CBCnews,"AirPollutionKillsThousandsEachYear,"CBC.ca,May5,2005,http://www.cbc.ca/health/story/2005/05/02/air‐pollution050502.html.145RogerAnnis,"BritishColumbia'sFuelSuperpowerAmbitions,"TheBullet,no.376(June2010).

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watersource.Or,aswithpetroleumtransportation,thereisalwaysapossibilitythattrains,ships or pipelines carrying petroleum will accidentally leak in some way. Numerousexamples,recentandold,exist–includingtheheadlinedisastersintheGulfofMexicoandMichigan(describedabove).WhileCanadiansarelargelyawareoftheecologicaldangersposedtowaterresourcesasaresultofburstpipelines,derailedtrains,andleakingchemicalplants,theyarelessawareofthe dangers posed by underground petroleum extraction techniques, which may affectwatertables(andgounseen).Forexample,thereareconcernsthathorizontalwells,andinparticular the increasingly common practice of hydrologic fracturing, is leading to thecontamination of underground aquifers. Large amounts of natural gas are produced inWyomingwiththistechnology,andrecentenvironmentalassessmentshavefoundthat88outof220waterwellshadbeencontaminatedwithbenzeneandothertoxiccompounds:“Scientistsareincreasinglyworriedthatthechemicalsusedinhydraulicfracturingposeathreat,eitherundergroundorwhenrelatedwastefluidsarehandled,orsometimesspilledonthesurface.”146MultipleAmericanstateshaveemployedhydraulicfracturingasameansofnaturalgasextraction,andhavefoundthatwatertableshaveoftenbeencontaminated.The problem is suspected to lie with the frac fluid polymers which are pumpedundergroundandintorockformationsinordertocausefractureswhichallowtrappedgasto flow into thewell. While a varietyof different typesof frac fluids canbeused,manycontain dangerous chemicals that can contaminate regional watersheds. However, thisenvironmentalhasnotsolicitedagreatdealofattentioninCanadathusfar.

OffshoreDrillingSafety:ReliefWellsThe environmental risks posed to ocean ecosystems as a result of offshore drilling hasrecentlybeenbrought topublic attention thanks to theexplosion (and resulting spill) ofBP’s Offshore Horizon. As the Gulf of Oil disaster demonstrated, it is essential thatpetroleumdevelopmentshavereliefwellsinplace,intheeventofaproblem.Areliefwellisunderstoodtobethemostreliablesolutiontoanoffshoreoilspill,andyetbecausenoreliefwellwasinplaceinthatcase,thecompanyhadtospendmonthsdrillinganewwell,allthewhile gallons upon gallons of oil contaminated the ocean. All too often, however, theplacementandnumberofwells isdecidedbyeconomic factors,ratherthantechnologicalbarriers or ecological considerations. Take this entry from theWorld of Earth Scienceencyclopedia: “Wells are designed to contain and control all fluid flow at all timesthroughoutdrillingandproducingoperations.Thenumberofwellsrequiredisdependentonacombinationoftechnicalandeconomicfactorsusedtodeterminethemostlikelyrangeof recoverable reserves relative to a range of potential investment alternatives.”147 Ofcourse, decisions on well placement is rarely made in light of ecological considerationssuchasthelikelihoodofmistakesorunintendeddisasters–thoughthismayhavechangedas a result of the incredible attentionpaid to theBP spill in theGulf ofMexico. If future

146AbrahmLustgarten,"Reporter'sNotebook:HydraulicFracturing,"Youtube.com,January21,2009,http://www.youtube.com/watch?v=yy556ACxJ2I&NR=1&feature=fvwp.147Lerner,etal.“PetroleumExtraction,”2006.

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offshore petroleum development projects are to fully consider the environment, thenemergencyreliefwellswillhavetobefiguredintothedevelopmentplanfromthestart.Already,onlymonthsaftertheBPspill,itappearsthatCanadianregulatorshavebeguntotakenoteoftherisksofoffshoreproductioninthiscountry.AstheCBCnotes,“theNationalEnergy Board now requires companies to commit to drilling a second relief well in thesameseasontorelievepressureonamainwellintheeventofablowout.Thefearisthatwithoutareliefwell,arupturedwellwouldleakformorethanayear.”148Nevertheless,justtwomonthsbeforetheGulfofMexicospill,BPaskedtheNationalEnergyBoardofCanadato be exempt from having to drill emergency relief wells in their projects in Canada’sBeaufortSea.PerhapsonegoodthingtocomefromthedisasterintheGulfofMexicoisthelikelihoodofmorestringentregulationsinCanadianoffshoredrilling.Toconclude,allpetroleumrelatedprocessesfromexplorationtoextraction,transportationand processing have environmental impacts. Industry players have tried tomitigate theintensity of ecological damage through the implementation of new technologies.Governmentagencieshavetriedtoimplementregulationswhereneeded,thoughtheyhavebeen accused at times of favouring business over the environment by not applyingstringent rules or allowing laissez‐faire development. Meanwhile, holistically‐thinkingenvironmentalists worry about the overall systemic impacts of the fossil fuel industry,throughout the entire cycle of production and consumption. From an environmentalperspective,ecologicaldamageisanintegralpartofthefossilfuelindustry;theonlywaytoavoid it is tomake themove toward amore sustainable, ‘green economy’ that relies onalternativesourcesofenergy.

148DaveSimms,"Callsgrowfortougheroffshoredrillingrules,"CBC.ca,May4,2010,http://www.cbc.ca/money/story/2010/05/03/f‐offshore‐drilling‐rules.html.

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