Oil Sands History and Development

Early Oil Sands History

Bitumen appears in the very first writings about the Athabasca region, immediately identifying it as a resource ― but the primary use had nothing to do with energy. Rather, bitumen was described as being combined with spruce gum to waterproof canoes. Sir Alexander MacKenzie writes in 1788 of encountering: ”bituminous fountains; into which a pole of twenty feet long may be inserted without the least resistance. The bitumen is in a fluid state, and when mixed with gum or the resinous substance collected from the Spruce Fir, serves to gum the canoes. In its heated state it emits a smell like that of Sea Coal. The banks of the river, which are there very elevated, discover veins of the same bituminous quality.”

How long the First Nations people had used bitumen on their canoes is unknown. But furs ― the economic engine of the day ― were what drew the first European, Peter Pond, to the region. MacKenzie made his observations only a few years after Pond, with a cursory reference to the energy potential of bitumen, but the subject appears repeatedly in the annals of subsequent explorers.

Map maker David Thompson, and Arctic explorers Franklin, Richardson and Simpson, all mention the oil sands during their travels through the Athabasca region. Less than a hundred years after Pond and MacKenzie, the first government-sponsored geological study of the oil sands was carried out by John Macoun in 1875. Another government expedition headed by Robert Bell was sent into the area seven years later.

But the most prophetic descriptions and observations were published in 1908 by Charles Mair, a recording secretary travelling with the David Laird Treaty Expedition of 1899. Mair includes the Fort McMurray region in his “Through the MacKenzie Basin: A Narrative of the Athabasca and Peace River Treaty Expedition of 1899”. In fact, he begins “The Athabasca River Region” chapter with: “We were now traversing perhaps the most interesting region in all the North.”

Mair also predicts future developments: “That this region is stored with a substance of great economic value is beyond all doubt, and, when the hour of development comes, it will, I believe, prove to be one of the wonders of Northern Canada. We were all deeply impressed by this storehouse of not only hidden but exposed resources we possess in this enormous country. What is unseen can only be conjectured; but what is seen would make any region famous.”

He even includes a description of the boiling process the First Nations people used to liberate the oil from the oil-sand mixture for waterproofing their canoes ― a rudimentary, but similar approach to the one currently used in the massive oil sands facilities of today.

Little did Mair know how accurate his predictions would prove ― today, the oil sands represent almost all of Alberta’s proven oil reserves. Indeed, the oil sands comprise virtually all of Canada’s reserves. Alberta accounts for about 98 percent of Canada’s oil reserves, of which, approximately 99 percent of the province’s 168.7 billion barrels of reserves are contained in the oil sands; the remaining 1.5 billion barrels are conventional crude oil.

Early Commercial Research and Development

Commercial developments of the oil sands did not begin until the early 20th Century and the first efforts involved drilling wells. The assumption was that surface seepages stemmed from vast oil pools, but some two dozen wells between 1906 and 1917 failed to yield the ‘mother lode of oil’. 

During that period, the federal Department of Mines hired Sidney Ells, an engineer, who began in 1913, using the same principle of hot water separation as the First Nations people. He was the first to ship samples from the area for laboratory testing, sending them to Edmonton where they were tested as road paving material. And while the paving application was successful, oil sands could not compete economically with imported asphalt and the project was abandoned.

During the 1920s, Bitumount, some 80 km. north of Fort McMurray, became the focal point for two early oil sands refining efforts. Ironically ― as with the early waterproofing usages ― energy production was not the focus when R.C. Fitzsimmons built the International Bitumen Company plant in 1927. The intent was to produce roofing and road surfacing products and he operated until 1942 when he ran into financial difficulties and sold the facility.

But the Bitumount plant was to play a key role that would lead to major developments. In 1926, Dr. Karl Clark began work on the oil sands for the Alberta Research Council and the University of Alberta. His project was first true ‘energy-focussed’ research on bitumen and he eventually perfected a hot water separation process that is the basis of today’s extraction methods. The Alberta Government took over Bitumount in 1948 and Dr. Clark scaled up the extraction methods, processing 450 tonnes of oil sands a day. The plant was closed in 1949 after the provincial government decided to forego launching a commercial venture, but information from the hot water flotation processes pioneered by Ells, Fitzsimmons and Clark became the foundation for latter day commercial production.

The World’s First ‘Oil Mine’ – 1967

Large-scale oil sands development operations were formally addressed in 1962 when the Alberta government developed an oil sands policy to provide for the orderly development of the province’s oil sands. A chief policy consideration was how the oil sands would supplement, but not displace, conventional crude oil policy.

The inaugural project was the Great Canadian Oil Sands (GCOS) project which went through a number of ownership changes until 1963 when ownership came to reside with the Sun Oil Company (later Suncor Energy). Suncor brought the world’s first oil sands operation ‘on stream’ in 1967.

Shortly after Suncor had begun work, another future operator ― the Syncrude consortium was formed in 1964. The group conducted its own research and final approval was given for a production facility in 1969. Construction would not begin until 1973 and five years later, Syncrude became the second major oil sands producer when it shipped its first barrel on July 30, 1978.

The Oil Sands Today

The oil sands are the world’s third-largest proven oil reserves, following Saudi Arabia and Venezuela. Alberta actually has three major oil sands deposits comprising 140,200 square kilometres (km2) (54,132 square miles) in the Athabasca, Cold Lake and Peace River areas in northern Alberta. About 9 percent of the total volume ― an estimated 1.84 trillion barrels (initial volume in place) of crude bitumen ― amounting to 168.7 billion barrels of oil, is recoverable using current technology. The term “tar sands” is a misnomer ― “tar” is a man-made product.

Oil Sands Recovery, Extraction and Upgrading

Recovery

Two methods are used to recover oil sands deposits: surface mining, and in-situ. Surface mining collects deposits less than 75 m deep, and accounts for 20 percent of the recovery; about two tonnes of mined oil sands are needed to produce one barrel of Synthetic Crude Oil (SCO).

The in-situ method is used for the majority of oil sands recovery, whereby high bitumen concentrated underground deposits are steam-heated and pumped to the surface. As of January 2013, there were 127 operating oil sands projects in Alberta, of which, only five are surface mining projects. By 2021, crude bitumen production is expected to more than double to 3.7 million bbl/d. 

Extraction

The crude bitumen must be separated, or “Extracted”, from the other oil sands constituents of sand, water and clay. An advanced version of Dr. Karl Clark’s hot water process of the 1940s is used in which heated water (much the same as the First Nations approach) liberates the bitumen. Large volumes of water are required which cannot be readily returned to the environment because of suspended clay particles and, more importantly, heavy metals and other contaminants ― the water and suspended materials are “wet tailings”, which are isolated in “tailings ponds” for further treatment.

Upgrading

Once extracted, the bitumen is then “Upgraded” to Synthetic Crude Oil (SCO), before it can be refined into marketable products such as gasoline, fuel oil, ethylene, and propylene. Currently, about 60 percent of the oil sands bitumen is upgraded at four facilities in the Fort McMurray area and one in the Edmonton area. The balance of the bitumen is piped to markets across the U.S. and Canada for upgrading.