Suncor ponders “stranding” oil sands reserves: humbly adjusting to the lowest common denominator, with spectacular results

A sad story appeared in the news the other day, in the business section of all places. Not comically sad like earthquakes or pet hamster deaths, more like the demoralizing sadness one gets when hearing an interview with a Wall Street banker. The sense that the wrong people are winning. In this instance, the disheartening story was how Suncor Energy, a major Canadian oil sands producer and general all around fossil fuel company, made headlines by announcing that it would be prepared to “strand” some oilsands reserves if they are too expensive to extract or too damaging to greenhouse gas levels.

The story, as is Suncor’s proposal, is just plain stupid, but that’s not what makes it sad. What makes this so disappointing is to see a decent and well-run energy company have to abandon common sense to appease environmental groups. Not by saying reserves will be stranded, that’s the dumb part and more on that in a second. What’s pathetic is that it worked. The proposal, and its enthusiastic acceptance by environmentalists, simply demonstrates how anti-intelligent the whole debate is.

Why is the proposal to strand reserves so dumb? It takes but a few seconds to illustrate, and it’s so repellant that if you throw up I don’t blame you.

Environmentalists have lately begun proclaiming that some unknown but significant percent of fossil fuels will have to remain in the ground in order for the planet to be saved from warming up a bit. The Canadian oilsands provide a perfect foil for their rage, because the huge deposit is, to environmentalists, the worst thing to happen to mankind since the bubonic plague, due to the fact that it’s a bit more energy intensive than most reservoirs. Also, the discrete nature of the resource makes it easy to pick on – its boundaries are known, it is easily observable because it’s in a democratic country, it isn’t photogenic, it has huge reserves, and oilsands producers are incapable of mounting any kind of eloquent defence. (Most of us would be happy to see even a lame defence, but that’s another story.)

Environmentalists sometimes like to say dumb things such as in the article linked above where a member of the Pembina Institute (a shrill and infrequently sensible environmental outfit) supported Suncor’s musing by commenting “we would agree that Alberta’s historic focus on maximizing oilsands production…rather than optimizing production on the highest quality ore may be having unnecessary environmental impacts on things like greenhouse gas intensity and tailings production…”

Making an intelligent conversation out of all this is as challenging as teaching dogs to fly a plane, but one must at least try (not the dogs), so here we go. It is unfathomable to think that anyone with even a third order connection to the oilsands would think that the whole thing will be developed. The oil sands reserves are enormous in aerial extent, and of highly variable quality (the Alberta government publishes detailed statistics and maps of the oil sands region that are not difficult to find). In total, oilsands deposits cover about 142,000 square kilometres or 54,000 square miles. Total mineable areas under active development are about 1,600 square kilometres/600 square miles, or about 1 percent. Much of the rest of the deposit is of such poor quality that no producer would look at it until oil hits $1,000 per barrel.

To the idealistic simpleton quoted above, these uncomplicated statistics should suffice as evidence that industry currently does “optimize production on the highest quality ore” and always will, in as small an area as possible. If industry doubled the area under active development – highly unlikely, ever – it would amount to 2 percent of the area. It is extremely difficult to misinterpret these statistics; it does not seem possible. Yet it happens. I hope someone helps that guy get his shoes on the right feet in the morning.

Maybe it’s reserves they’re talking about, since the geographical assertion is too dumb for words? Well that holds up about as well. Total estimated oil in place is 1.7 trillion barrels. Yes, trillion. Of that, about 10 percent is considered recoverable. Not will be recovered, but recoverable. This would, even to a goat, also qualify as high grading of reserves, while leaving the rest “stranded”.

A minute’s glance at the data makes it obvious to even the most savagely dimwitted critic that the vast majority of oilsands reserves will never be produced. So why would Steve Williams, Suncor’s CEO, announce that some reserves may be left stranded?

For the same reason that doctors don’t lecture 5 year olds on mechanical engineering while removing Lego from their noses. For the same reason that we don’t explain the concept of hamburger to a cow. There’s no point. We just do what needs to be done.

Williams is actually showing much wisdom in what he’s doing, sad as it might be to us bipedal folk. He is doing it because he knows intelligent answers won’t help him. The facts are there, real physical geological data you can prove with a shovel, yet he knows they will get trumped by outlandish stories about the theoretical dangers of burning every ounce of the oil sands.

He appears to be caving in to stupidity, acknowledging that facts are irrelevant, but again what’s important to note is that it’s working. He garnered headlines and the support of environmental groups for stating the obvious, the only difference being he used the terminology of the lowest common denominator. It’s like abandoning usage of the word “escape” in favour of “excape” because Ebonics says it’s ok and rappers do it, and everyone looks up to rappers.

Being frustrated or saddened by this pandering then is not only pointless, it is unwise. Mr. Williams appears to be on to something. He’s garnered positive press and unlikely support simply by rephrasing the obvious in terms that the environmental movement finds acceptable.

There’s much to learn here then – if making such an air-headed proclamation gets environmentalists on side, why not? Let’s put on our PR hat, switch our brains to glide, and announce to the world what it wants to hear. Yes, most natural gas will remain in the ground forever and ever (because deep ocean gas hydrates account for the bulk, and no one has a clue yet how to produce them). Yes, most oil – conventional, unconventional, shale, tar, whatever your green little heart wants to call it – will remain “stranded” in the ground forever (because few recovery factors exceed 50 percent, and traces of oil in quantities too small to develop are everywhere).

We agree to strand more than half the hydrocarbons in the ground. Now will you get out of the way so we can produce the other part, and keep feeding and fuelling the world until green energy is really ready to take over?