Canadian Crude: Impact Felt 1,200 Miles Away
- 11/12/2007
Canada produces two and a half million barrels of oil a day and production is expected to double over the next decade. So, energy companies are looking for ways to get a newly developed oil from Canada to refineries in North America. One option is TransCanada's proposed Keystone Pipeline that would run through South Dakota and it all would start in Fort McMurray, Alberta.
It's about as far north as any paved road in Alberta goes. Fort McMurray sits in the Athabasca River valley 275 miles north of Edmonton.
But one look at downtown and you can tell, Fort McMurray is quickly growing from a remote town into a booming city.
Fort McMurray Realtor Jeanette Sibley says, "The oil sands actually put Fort McMurray on the map."
Fort Mac, as many Canadians call it, is all about oil. Seventeen companies that mine the oil sands in and around the city have brought in thousands of workers who now call it home.
Athabasca Regional Issues Working Group Executive Director Jacob Irving says, "This community's population has actually doubled in the last ten years."
Doubled to 70 thousand people. Realtor Jeanette Sibley has seen that growth first hand.
Sibley says, "When I arrived in 1987 myself and my family we purchased a home up here for $92,000. That same home to go on the market today in my opinion would probably list between 560 and $600, 000. That's more than triple."
Demand for housing is so high that most homes have a starting price of a half million dollars.
Irving says, "People need affordable places to live in order to come and work, and this is something where we need to catch up both in Fort McMurray and I would say throughout all of Alberta."
Sibley says, "I feel that the oil sands with the companies that has sprouted up in the past few years have made a big impact on Fort McMurray."
And that impact just keeps getting bigger as the development of oil sands grows.
Vice President of the Canadian Association of Petroleum Producers Greg Stringham says, "About the early to mid-90's and that's really where when the reserves started being exploited and now we're up to one million barrels a day being produced out of it."
The oil in this part of Canada is actually part of the dirt. It's dug out of the ground and then separated from the sand in a refinery. But getting oil out of sand is more expensive than just pumping it out of the earth.
Stringham says, "Today, it's probably 50 to 60 dollars a barrel to get it out of the ground and get it upgraded to light oil, so it's very costly."
The oil sands have always been in northern Alberta, development actually started in the 1960's but it wasn't until the past few years when the technology improved and the price of oil rose and that's when the oil boom started.
Now hovering around 90 and even 100 dollars a barrel, this northern Canadian oil has become a profitable product. And it's being developed at a rate that will make Canada the fourth leading oil producer in the world by 2015.
Brenda Kenny of the Canadian Energy Pipeline Association says, "We're looking at numbers up to about 5 million barrels a day and a lot of that will be U-S destinations."
Experts say Fort McMurray's oil sands have 174 billion barrels of potential oil, enough to rank Canada just behind Saudia Arabia for having the second largest oil reserves in the world.
Stringham says, "That's over 400 years worth of reserves in the oil sands."
But that means nothing without a means to get the oil to market. And that's why Canadian experts say projects like TransCanada's Keystone Pipeline are needed.
Kenny says, "There's an absolute one-for-one link because you have to be able to get the oil into markets where people can use in refineries to make gasoline or other purposes."
Stringham says, "Right now I probably think there's 17 proposals for new pipelines to try and meet this growing supply push that's coming from the oil sands."
With several pipeline projects being developed, South Dakota is just one of many states that sits in the path of an oil boom happening more than 12 hundred miles away.
Irving says, "More companies are coming all the time, more leases are being purchased and plans are being announced."
And that's why South Dakota may soon feel the impact from Fort Mac.
The impact of the oil development and growth around Fort McMurray may have an even bigger impact on South Dakota in the next decade than just the TransCanada pipeline.
Hyperion Energy's proposed project near Elk Point is also planning on using the oil from Alberta's oil sands in it's refinery.
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