Scraping the bottom of the barrel

TWENTY-FOUR hours, 365 days a year, trucks the size of three-storey houses roll across an Arctic wasteland, scooping up a sticky sand that has become the holy grail of global oil companies and multinational investors.

In the wake of soaring prices and the hunt for new fuel sources, a vast swathe of western Canada is being mined for its precious “oil sands”. It’s all part of the kind of oil rush that hasn’t been seen for generations in North America.

It’s happening in Alberta, in a town called Fort McMurray where, in the dead of winter, the temperature rarely goes above freezing.

Oilmen are digging up dirt saturated with oil. There’s a lot of it buried beneath the rolling arboreal forests surrounding Fort McMurray. Dug out of the ground, steamed and refined, the sand turns into that balm of the world economy: crude oil.

Reserves are so vast that they are destined to help solve America’s energy needs for the next century, becoming more important to the US than Saudi Arabia’s oil.

The Bush administration also wants to promote the tapping of the US’s vast oil shale deposits, estimated to hold up to 800 billion barrels of recoverable oil. “We should expand oil production by tapping into the extraordinary potential of oil shale,” said Mr Bush in a speech last month, urging Congress to lift bans on developing oil reserves in Alaska and Colorado.

That’s good news for the oil barons, but bad news for the environment.

Exploitation of North America’s shale and tar sand oil reserves could increase atmospheric CO2 levels by up to 15%, a report from WWF-UK (World Wildlife Fund) and the British financial group Co-operative Financial Services (CFS) has warned.

“Oil sands are like tarmac before it sets on the road,” explains Paul Monaghan, head of sustainability at CFS. “Shale oil is locked firmly into the rock. The high price of oil suddenly makes extraction from these two sources commercially viable. We are at the beginning of a new oil rush in North America.”

Companies such as Shell, ExxonMobil and BP have announced over €78.36 billion worth of development in Canada’s oil sands by 2015.

The problem is the environmental cost. Extraction of the projected 1,115 billion barrels of recoverable oil, which involves energy intensive procedures, would significantly increase global risks of dangerous climate change, the report says.

“Companies and investors claim to recognise the need to tackle climate change and support international efforts such as Kyoto. In oil sands we have an activity that is going against this imperative,” says James Leaton, WWF-UK’s senior oil and gas adviser. “Shareholders should challenge those oil companies that fail to steward investment responsibly.”

That’s unlikely to happen, this, after all, the Klondike of the 21st century: “I think it’s bigger than a gold rush. We’re expecting over [CAN]$100bn over the next 10 years to be invested in this area [Fort McMurray] — C$100bn in a population that, currently, is 70,000 people,” says Brian Jean, a regional representative in Canada’s parliament.

Fort McMurray’s boomtown transformation has been compared to those of the Texan oil rush in the last century.

Most of the trucks in Alberta are on their way to the gas tanks of the US. If the Americans reject it, the Chinese are more than happy to fill the breach. Despite this, environmentalists are still hoping to harness public opinion in Ireland and elsewhere against significant production of these reserves.

“Everyone with a pension or investment can be guaranteed that some of their money is working its way into these businesses,” said Paul Monaghan, CFS sustainability chief, speaking yesterday on RTÉ’s Morning Ireland. “But if we all speak with one voice, we can turn this around.”

That voice may not be loud enough. Money talks, and oil money talks loudest of all. Investors are confident about the future, predicting that oil prices will remain high, driven by diminishing stocks of recoverable oil, war in the Middle East and insatiable demand from fast-developing nations such as India and China.

Meanwhile, Fort McMurray residents are proud of their growing prosperity and, of course, their local hockey team. They’ve been winning all round them lately. What would you expect for a team called the Oil Barons?

Black gold: sources of oil

Sands: Deposits of bitumen, a tar-like viscous oil that will not flow unless heated or diluted with lighter hydrocarbons. They are contained in three areas beneath 140,200 square kilometres of north-eastern Alberta, an area almost three times the size of Ireland.

Shale: A sedimentary rock that contains solid bituminous materials that are released as petroleum-like liquids when the rock is heated. The largest deposits in the world are found in the Green River Formation, which covers parts of Colorado, Utah, and Wyoming.