Alberta regulator approves oil sands lakes in place of reforesting

Satellite image comparing Athabasca Region in 1984 and 2011

Satellite image comparing Athabasca Region in 1984 and 2011

Alberta has approved a controversial and commercially untested method for cleaning up tailings in the Canadian province's vast oil sands fields.

The province's oil and gas regulator Alberta Environment and Sustainable Resource Development (AESRD) gave the OK for so-called end pit lakes as an alternative to reforesting.

Canadian giant Syncrude will be the first to test the technology and 30 of these pits capped with fresh water are planned for the Athabasca region.

The Edmonton Journal reports :

Filling an old mine pit with water at the end of the mine’s life is common in the metals mining industry, but the technique has not yet been tried in the oilsands mining in the boreal forest.

Nikki Booth, AESRD spokesperson, noted that several coal mines in Alberta closed with an end pit lake, and at least one is now used for fishing. It has received a provincial reclamation certificate, which relieves the company of liability for the site.

AESRD said in May it expects oil sands production to hit 3.8 million barrels per day by 2022, up from 1.9 million barrels per day in 2012.

Roughly 20% of oil sands crude is extracted through conventional mining activity where the reserves are accessed through open pit mines.

In situ steam-assisted bitumen extraction where the oil is recovered via drills and wells is growing more rapidly than traditional mining technology using trucks and shovels.

A recent study by the Petroleum HR Council of Canada estimated that over the same period, the oil sands operations workforce is projected to grow by 71%, adding 16,000 direct new jobs and increasing overall employment to 38,300 workers.

Western Canada Select – a blend of conventional crude and oils sands – was last trading at $75 a barrel, almost $19 below the benchmark US crude West Texas Intermediate and at a $28 discount to the international price in the form of North Sea Brent which on Tuesday changed hands for $103 a barrel.

WCS recent trading levels is a marked recovery from five-year lows of $41 below WTI the blend reached in December. At the same time the gap between WTI and Brent has also narrowed, further boosting the profitability of oil sands producers.