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We all know the value of a barrel of oil, but how do you put a price on a barrel of water? It’s a growing and challenging debate in the oil sands, where oil, which sells at a readily available market price, and water, which is priceless but restricted, are so intertwined one cannot be produced without somehow shortchanging the other.
Indeed, oil sands projects are also giant water handling factories, with oil sands mines using on average of about 3.1 barrels of fresh water for every barrel of oil they produce, and in-situ operations using about 0.4 barrels of fresh water for every oil barrel they produce.
Much like the larger debate over the oil sands’ greenhouse emissions, views on the right oil and water mix are polarized: for some, any water used to produce oil comes at an unacceptable cost to an ecosystem that needs it; for others, water use is minor relative to its abundance and justified by the value it creates through oil.
Environmental organizations like the Pembina Institute, for one, are indignant over withdrawals of any amounts of water from rivers like the Athabasca that run through Alberta’s oil sands region, claim development contaminates water bodies nearby and that monitoring is inadequate.
The Canadian Association of Petroleum Producers, which represents Canada’s oil industry, says use of fresh water is minimal, or 0.6% of total Athabasca river flows, that a lot of the water used by the industry comes from saline underground pools, and that projects recycle more than 80% of the water they use.
The Alberta government, for its part, says it has monitored water quality in the oil sands region since the early 1970s, when the sector was in its infancy, and that the Athabasca has always had measurable levels of naturally occurring hydrocarbon compounds because bitumen from exposed oil sands along the riverbanks seeps naturally into the river.
The province sets limits on withdrawals that it says maintain flows at or near natural conditions. To protect the quality of the river, no production water can be returned and is instead stored in tailings ponds.
Still, with many more oil sands projects planned, and water-related incidents fuelling the backlash against development of the oil sands, the sector recognizes it needs to improve.
Water is one of the priority areas of Canada’s Oil Sands Innovation Alliance (COSIA), the consortium of 14 oil sands producers formed last year to accelerate environmental performance improvements. The other priority areas are reducing greenhouse gas emissions, reducing the impact on land, and cleaning up tailings ponds, which is treated as a separate water issue.
For the rest of this column, click here: http://business.financialpost.com/2013/08/29/the-price-of-a-barrel-of-water/?__lsa=5a28-c5a8