September 2014

Clean steam

Oil sands operations need steam to extract bitumen, and only two heat sources can feasibly meet the industry’s demands: natural gas and nuclear

By Christopher Pollon | Illustrations by Chloe Cushman

Chloe Cushman Illustration

It all sounded like science fiction: Back in May 2005, as natural gas prices were on the rise, Jerry Hopwood, general manager for advanced reactor applications at Atomic Energy of Canada (AECL), put forth a radical idea: The time had arrived for small modular reactors (SMRs), which could be assembled in remote industrial locations like Lego blocks for a fraction of the cost of Canada’s legacy reactors. Energy-hungry projects in Alberta were of special interest.

In particular the increased energy needs of in situ bitumen extraction methods such as steam-assisted gravity drainage (SAGD) – reliant on steam production that some SMRs are well suited to provide – would increasingly make nuclear attractive. “The economics will favour nuclear,” Hopwood said at the time.

The main driver for nuclear in the oil sands was the higher cost of natural gas, but that was not all Hopwood had to go on. At the time, Canada had signed on to the Kyoto accord, and greenhouse gas (GHG) emissions from the oil sands threatened to become a liability that would stagger the industry.

Flash-forward nearly a decade: fracking has brought newly cheap prices and natural gas remains the primary fuel for Alberta oil sands producers. North America is flush with inexpensive supply at present, but the amount of this fuel required to drive the oil sands industry of the future will be colossal. The Canadian Energy Research Institute (CERI) predicted in July that oil sands natural gas consumption will spike by 2046 – rising from 1,474 million cubic feet per day (MMcf/d) in 2013 to as high as 3,753 MMcf/d. (Emissions will rise in lockstep, potentially tripling during this time.)

The oil sands are not the only industry angling to devour presently cheap natural gas, however. Caterpillar has announced that mining trucks and locomotives will be among the first of their products that use natural gas. Three major automobile manufacturers have introduced “bifuel” pickup trucks that can burn both gasoline and natural gas, and the use of natural gas for fleets – everything from garbage and transport trucks to buses – is already here.

Electricity generators are also increasingly leaning towards natural gas. A 2012 “long-term outlook” from Alberta Electric System Operators (AESO) projected that “the future generation mix in Alberta is expected to shift from a predominately coal-based fleet to a natural gas-based fleet” within the next 20 years.

At the same time, Dinara Millington, principal author of the CERI research, says if some combination of B.C. and U.S.-based liquefied natural gas (LNG) export plants proceed, North American prices for natural gas could rise before the end of the decade. “With LNG and a lot of movement of gas over water [for export], there will be the development of a global natural gas market, with an uptick in prices in North America and a downward trend in prices in Asia.” And the natural gas market is notoriously unstable, with prices commonly 50 per cent more volatile than those of crude oil.

Could the industry’s vulnerability to that volatility coupled with new uncertainties around the provincial, national and global carbon pricing schemes eventually make small nuclear attractive again? Next: Micro nuclear power in development

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