|Oil sands projects vary widely in carbon intensity. Click to enlarge.|
Trucost Plc, an UK-based environmental research company, has analyzed carbon data from Canadian oil sands projects to identify which oil producers are more exposed to financial risk from energy and carbon costs. Oil sands production is, in general, 3-4 times more carbon intensive than conventional oil production, reflecting the large amounts of natural gas and other fossil fuels burned during the production process.
While energy and carbon efficiency is improving in the oil sands industry, carbon intensity varies widely among projects. The carbon intensity of eight projects analysed by Trucost ranges from 9 kg CO2e per barrel of oil produced up to 106 kg CO2e per barrel. The average was 76 kg CO2 per barrel. This intensity correlates with energy costs and potential profitability of each company’s oil sands operation.
Oil sands developments account for 4% of Canada’s greenhouse gas emissions, and are contributing to the country’s failure to meet its Kyoto Protocol target to cut emissions by 6% below 1990 levels between 2008-2012. Canada is on track to miss its target by at least 30%. Rising oil sands production is driving Canada’s emissions up at a faster rate than nearly any other OECD country.—“Oil sands: Exposure to energy and carbon costs”
Findings show the most carbon-intensive project to be at Syncrude Canada Ltd.’s Mildred Lake and Aurora North Plant. The project’s carbon intensity rose between 2004-2006, reflecting a rise in energy intensity. This indicates a reversal of its improving carbon performance with a reported 14% fall in GHG emissions per barrel between 1990 and 2004.
The Mildred Lake and Aurora North Plant surface mining project includes energy-intensive upgrading operations which involve fluid coking, hydroprocessing, hydrotreating and reblending. Petroleum coke, a carbon-heavy by-product of fluid coking, is burned to provide heat for the bitumen cracking process.
Muskeg River Mine extraction project, a joint venture between Royal Dutch Shell, Marathon Oil Corporation and Chevron, was ranked as the least carbon intensive. This is the only surface mining project analysed that does not include upgrading activities.
The production process and fuel mix used to power facilities have a major effect on the energy and carbon intensity of operations. In situ extraction is much more energy intensive than surface mining. Some companies use advanced technologies that improve energy efficiency. Oil sands projects that use cleaner fuels and are more energy efficient emit fewer greenhouse gases.
...Projects with rising carbon intensity are most at risk of exceeding mandatory targets, and investors in these projects are exposed to financial risk from energy and carbon costs.