Challenges Facing the Development of the Athabasca Oil Sands

Before the 2008 Financial Crisis, the 2011 Keystone XL controversy, and the withdrawal of Canada from the Kyoto Protocol, Challenges Facing the Development of the Athabasca Oil Sands looked at the environmental, economic, and political consequences of continuing with business as usual in Alberta.

Supported by the Harvard University Center for the Environment Undergraduate Summer Research Fund, the 2007 Environmental Science and Public Policy thesis won the Thomas Temple Hoopes Prize and a Laurance S. Rockefeller Thesis Prize. An overview can be found below:

In the 21st century, the world will face unprecedented challenges regarding economic development and environmental change. At the intersection of economic development and environmental change lies energy. In order to meet the growing demand for energy, especially fossil fuels such as oil, production from existing suppliers has increased and new resources, such as the oil sands of Northern Alberta, Canada, have become economical to develop. Canada has the world’s second largest oil reserves after Saudi Arabia, most of which are contained in the Athabasca oil sands, which span over 100,000 square kilometers and contain an estimated 174 billion barrels of recoverable oil. While this vast reserve resides in a politically stable country close to the largest oil market in the world, its development still faces significant challenges.

The National Energy Board (NEB), a federal regulatory agency, projects that production in the oil sands will double from 920,000 barrels per day in 2003 to 1.8 million barrels per day in 2010, putting the timing of this thesis in the middle of the current rapid development. In the five years after 2010, the NEB expects production to increase to 3 million barrels per day. The manufacturing of synthetic crude oil from the oil sands has significant environmental and economic consequences that Alberta must address in the coming years. The oil sands are a rapidly changing industry, and many regulatory and governmental policies are under intense scrutiny because of changes in both the physical and economic scale of operations.

While the Athabasca oil sands face significant technical, environmental, economic, and growth-related challenges, this is an unprecedented opportunity to explore how Alberta will chart future development. Chapter 1 will introduce the oil sands to the reader and Chapter 2 will explain the methods of synthetic crude oil production. Chapters 3 and 4 will observe and examine current and future production from a quantitative and qualitative perspective. Chapter 5 will analyze the consequences of the growth of the oil sands, and Chapter 6 will offer recommendations for the future.

Overall, this thesis will conclude that the continued profitability of the oil sands industry is at risk from increasing capital and operating costs and that its development creates untold and potentially enormous consequences for the environment. The oil sands industry, however, due to current economic circumstances, is too integral to the Alberta economy to have a moratorium placed on its development, and therefore these challenges must be overcome through policy-induced environmental and economic change. The thesis will recommend that the following actions be taken to mitigate the environmental and economic consequences of the rapid and expansive development that will take place in the coming years: 1) that the Province of Alberta chart new policy directions based on the precautionary principle, 2) that Albertans demand reforms in the independent research organizations and the provincial ministries that study and oversee the oil sands development, 3) that Alberta estimates the environmental cost of production, and 4) that the province explores alternative development futures.