With conventional oil production in decline, the global oil industry is investing heavily in dirtier and riskier forms of oil such as heavy crude, and also in unconventional resources, such as tar sands, and oil shale. All are difficult and costly to produce - and usually more carbon intensive than conventional oil. These resources are often found in “frontier” locations – in or nearby pristine environments as yet untouched by extraction. Current projects include exploration for bitumen-type resources in Venezuela, Madagascar and the Caribbean, and heavy oil in the remote Western Amazon.
Such extreme oil extraction has potentially devastating implications: for global and local efforts to curtail carbon emissions by transitioning away from a fossil fuel-based energy model in emerging and developed economies; for the energy security of importing countries; and ultimately for sustainable growth in producer countries. In addition, many of the new technologies developed to extract the most inaccessible forms of oil are untested, dangerous and may have calamitous long-term impacts on the local environment. As a result, these investments pose a major challenge to the welfare of local communities.
While the companies and governments have promised substantial benefits to the local population, our on-the- ground investigations have revealed significant environmental impacts – threatening pristine rainforest and wildlife, as well as impacting on the livelihoods of local people. Similar impacts are found in the other “frontier” areas. As a result, both the local populations and civil society are beginning to challenge drilling as a viable strategy for development which will help them to achieve the Millennium Development Goals – and in particular to access clean water, education, health – and, of course, energy.
Scale of the problem
Unconventional oil – whether deep-water drilling , oil shale, or tar sands – depends on technological breakthroughs to unlock resources whose recovery on a commercial scale may have previously seemed impossible. Many of these breakthroughs have only happened in the past 20 years. However by 2030 unconventional oil could account for one third of total oil production worldwide.
Implementing these technologies is expensive and is only made possible by high oil prices. According to the International Energy Agency (IEA) oil prices will remain around US$100-120 per barrel. High oil prices are driven by an expansion in demand – particularly by India and China.
Together these countries are expected to account for nearly half of the entire increase in global energy demand over the next 25 years: "The staggering pace of Chinese and Indian economic growth in the past few years, outstripping that of all other major countries, has pushed up sharply their energy needs, a growing share of which has to be imported.“ (IEA)
Production of conventional crude oil is declining at existing fields in OPEC countries. The IEA estimates that oil demand is expected to rise from 87 million barrels per day (mb/d) in 2010 to 99 mb/d in 2035. To compensate for declining crude oil production at existing fields, an additional capacity of 47 mb/d will be required – twice the current oil production of all OPEC countries in the Middle East. Unconventional oil is expected to meet a large share of this. Consequently the cost of bringing oil to market will also rise as oil companies are forced to turn to more difficult and costly sources to replace lost capacity and meet rising demand.
Other factors promoting unconventional oil are geo-political and security issues: the United States intend to decrease its oil dependency on the Middle East, the sanctions against oil imports from Iran, the volatility of oil supplies from Venezuela etc. Unconventional oil forms in countries such as Canada, and the African region are seen as a less risky alternative.
Africa , in particular , represents an attractive alternative to existing sources of supply due to its vast petroleum resources and the political weakness of its states making it susceptible to easy exploitation. The activity of Western oil companies in tar sands in countries such as Madagascar and Republic of Congo as well as Chinese company plans for deep-water drilling reflect this.
The rising demand, diminishing supply of conventional oil and the search for alternative sources will make oil “the pre-eminent strategic resource on the planet, whose acquisition, production, and distribution will increasingly absorb the time, effort, and focus of senior government and military officials. “ (Michael Klare, Rising Powers, Shrinking Planet)
Environmental & Social Implications
The production of unconventional oil is potentially more destructive than conventional oil. In the case of deep-water drilling – which now accounts for 30% of total world oil production – environmental concerns about oil spills – such as the spectacular BP spill in the Gulf of Mexico - have pitted environmentalists against oil and gas companies.
Tar sands, in particular, are infamous for the environmental destruction and harm to indigenous populations caused by mining in northern Alberta, Canada. Vast swathes of boreal forest have been destroyed, the highly intensive use of energy and water in tar sands projects have raised concerns, along with increases in water and air pollution. Open cast mining techniques have lead to a creation of huge lakes or “tailings ponds” for storing toxic waste matter. This has in turn leaked in water supplies of indigenous peoples living near the tar sands deposits, causing sever health problems and impacting hunting and fishing activities.
The impacts in third world countries – such as Madagascar and Republic of Congo, Trinidad and Tobago – are likely to be even greater due to the limited environmental regulation and lack of local and national environmental groups to protest destruction of resources. In addition, the proposed tar sands mines are next to areas of extremely high biological diversity not found elsewhere on the planet.
In Venezuela, the extra heavy oil development in the Orinoco threatens a “globally important wetland and a critical habitat to a number of endangered species” with high biodiversity.
Conventional oil production in developing countries has brought little in the way of development - in many case making people’s lives worse. Unconventional oil is expected to produce the same results. In Africa, in particular, oil revenues line the pockets of well-connected government officials – often with no “trickle-down” effect whatsoever.
Furthermore, the history of oil companies involved in tar sands mining – such as total, ENI, BP and Shell – in oil extraction in West Africa in particular – does not bode well for countries or communities where unconventional oil prospecting is under way. Even where the companies undertake to compensate the communities, the money is diverted into the pockets of corrupt local officials or spent on unnecessary infrastructure projects. The actual needs of the people – health, education, nutrition, basic energy needs – tend to be disregarded, even though they could be met with a small investment.
Unconventional oil production is therefore expected to have minimal or even negative impacts on the achievement of the Millennium Development Gorals (MDGs).
The most commercially advanced form of unconventional oil production is tar sands. Using technologies developed in Canada, oil companies are set to exploit tar sands deposits around the world. Canada’s oil sands are going through boom times, as the world’s need for petroleum, and the accompanying rise in prices, has made extraction of unconventional oil economically viable.
In 2011, Canadian oil sands - thick heavy oil called bitumen that is mixed with sand and clay – produced about 1.5 million barrels per day. Half came from the strip mining of relatively shallow deposits and the rest from “in situ” mining – using natural gas to create super hot steam that is injected to heat the bitumen underground. The resulting liquid – a mixture of bitumen and hot water – is fluid enough to flow into a well and to the surface.
In strip mining, three to four gallons of water are used for every gallon of oil produced and the waste water can be toxic. “In situ” steam injection uses far less water. But so much natural gas is used to make the steam that a gallon of oil produced in this way results in emissions of the heat-trapping carbon dioxide that are several times higher than those from producing a gallon of conventional oil, resulting in a higher carbon footprint. According to scientific analysis, fuels produced from tar sands have particularly high Greenhouse Gas (GHG) emissions: the industry average is 23 percent higher than the average GHG intensity of fuel from conventional oil
Unconventional – or extreme oil – production therefore risks tipping the world over the brink in terms of climate change. It will also raise the level of GHG emissions for countries producing tar sands – making it hard to meet international obligations under proposed international climate treaties. Indeed Canada’s withdrawal from the Kyoto treaty in December 2011 is thought to be a direct result of the high level of emissions produced by tar sands. In the case of countries like Madagascar – it will make it virtually impossible to agree to GHG reduction targets.
Global expansion of tar sands
Unconventional oil – tar sands/extremely heavy oil – investments are underway or proposed in Africa, the Middle East, Central Asia and Latin America. We consider the case of 4 countries to examine the potential, problems and resistance.
Dossier: Unconventional Oil - A Challenge for Local Communities
With conventional oil production in decline, the global oil industry is investing heavily in dirtier and riskier forms of oil and also in unconventional resources, such as tar sands, and oil shale. All are difficult and costly to produce, usually more carbon intensive than conventional oil and may have calamitous long-term impacts on the local environment. Documented by Christopher Walker Dossier »