processes oil produced from bitumen.
Canada’s oil sands can provide an important source of energy in the decades ahead, but they must be developed responsibly. At over 170 billion barrels of crude oil, they are one of the most significant energy resources remaining.
Oil sands consist of bitumen – a heavy oil – mixed with sand, water and clay. Some of the oil sands lie close to the surface, where they can be mined. Conventional wells are used to produce deeper-lying resources, often with steam injected into the reservoir to ease the flow of bitumen.
The Athabasca Oil Sands Project (AOSP, Shell interest 60%) uses giant trucks and mechanical shovels to extract the oil sands mixture at its Muskeg River and Jackpine mines. Once separated, the bitumen is diluted with solvent for piping to the Scotford Upgrader, where it is converted into synthetic crude oil for refining into products.
In 2012, AOSP produced around 212,000 barrels of oil equivalent (boe) a day. Production from deeper-lying, or in situ, oil sands operations was around 20,000 boe a day (Shell share). Production from oil sands accounted for 4.4% of Shell’s global oil and gas production in 2012.
Some opposition exists to the development of oil sands. For these resources to play an acceptable role in the energy mix, the industry needs to continue to reduce its environmental impact. With other companies, we are working on ways to improve the management of carbon dioxide (CO2) emissions, water and land.
We continue to work with local aboriginal communities to reduce the impact of oil sands development on traditional land use and culture. We incorporate their traditional knowledge into our management of land and reclamation. We also help develop local skills and enterprises among these communities. By the end of 2012, AOSP had invested over C$1.25 billion since 2005 with more than 70 aboriginal businesses and contractors that provide a broad range of products and services to our operations.
Managing CO2 emissions
Fuels produced from oil sands typically emit 4 to 18% more CO2 than those from the average crude oil consumed in the USA, from production through to use as a transport fuel, according to Cambridge Energy Research Associates (CERA). Shell’s operations are at the lower end of that range as a result of steps to reduce emissions already in place, such as methods that use less energy to process the oil sands mix.
In 2012, we decided to go ahead with our Quest carbon capture and storage (CCS) project, the first in an oil sands development. From around 2015, Quest is expected to capture and safely store deep underground over 1 million tonnes of CO2 a year from the Scotford Upgrader. The governments of Alberta and Canada are providing C$865 million in funding for Quest over its construction period and first 10 years of operation. By demonstrating CCS on a large scale, Quest could help accelerate its use as a way to tackle global CO2 emissions that contribute to .
Water use and recycling
Shell uses one to two barrels of fresh water from the Athabasca River, supplemented by recycled water, for every barrel of bitumen extracted from our mining operations. No water from our mining and extraction operations is returned to the river. Most of the waste water from bitumen processing is treated and reused in operations, and we return effluent water from steam production to the river after testing to meet environmental standards. While Shell has permits to withdraw 0.6% of the Athabasca River’s average annual flow, we used less than 0.07 % in 2012. Shell also monitors groundwater by checking that water samples meet regulatory requirements.
Oil sands mining generates tailings, a mixture of water, sand, clay and residual hydrocarbons that remain after the bitumen is extracted. They contain concentrated naturally occurring chemicals that are toxic. We store them either in tailings ponds or in mined-out pits. Once the sand and clay have settled, the water is recycled, reducing the need for river water. Around 82% of the water used in Shell’s operations in 2012 was recycled from the tailings ponds at our two mines. Tailings ponds at the Muskeg River and Jackpine mines covered 24 km2 at the end of 2012.
Shell has invested over C$200 million since 2005 in developing technologies to speed up the tailings drying process, and shares this research with other companies.
Land and reclamation
Reclamation involves refilling the mined-out areas with dried tailings and restoring the contours of disturbed land, then placing topsoil and planting suitable vegetation. We aim to reclaim land used in our oil sands mining to a condition that matches its state before mining, as required by the Alberta government. The land will be able to support local plants and animals, although it will not be the same as the previous landscape. Reclamation work is under way and will proceed in stages as we complete mining operations.