Total May Use Atom To Power Oil Project --- Alternative to Costly Gas Is Sought for Canada Fields; Fear of Environmentalists
Wall Street Journal Europe, 22 September 2005
By David Gauthier-Villars Dow Jones Newswires
PARIS -- Total SA, amid rising oil and natural-gas prices, is considering building a nuclear power plant to extract ultraheavy oil from the vast oil-sand fields of western Canada.
This comes as oil prices driven even higher by Hurricane Katrina are removing lingering doubts about the long-term profitability of extracting the molasseslike form of oil that is much more expensive to produce and upgrade than is conventional crude. At the same time, prices of natural gas -- which oil-sands producers have relied on to produce the steam and electricity needed to push the viscous oil out of the ground -- have risen 45% in the past year. That is prompting Total, which holds permits on large fields in Alberta that contain oil sands, to consider building its own nuclear plant and using the energy produced to get the job done.
Several oil-sands producers are seeking ways to cut production costs, but so far few have been willing to talk about the nuclear possibility for fear of protests from environmentalists. Nuclear power doesn't bring back good memories in Alberta, where in the 1950s U.S. and Canadian scientists looked into the possibility -- later abandoned -- of detonating an atomic bomb to bring oil to the surface.
Total would speak about its plan only in general terms. "It's not foolish to look into the nuclear option," Yves-Louis Darricarrere, Total's director for natural gas and power, said in a recent interview. "We have a team looking into it." Mr. Darricarrere said the idea is in the early planning stages and that no decision to use nuclear power had been made, but that the French oil company is determined to forge ahead with its oil-sands project.
Total's interest is the latest sign that nuclear energy is making a global comeback. Finland commissioned a new reactor in 2003, the first such order in Western Europe in 13 years. France has chosen a site in Normandy where a reactor will be built. The U.S. hasn't commissioned a new nuclear plant for three decades, but the industry is talking seriously about a revival, encouraged by the administration of President George W. Bush and the rising cost of fossil fuel.
If Total's nuclear idea comes to fruition, it also would underscore a trend of heavy industrial users of electricity building their own power plants as insulation from soaring energy prices. The new reactor in Finland, being built at a cost of 3 billion euros by Areva SA of France and Siemens AG of Germany, was commissioned by a group of pulp-paper producers.
In Canada, Total holds half of an oil-sands permit in Alberta and has secured more heavy-oil acreage with the purchase of Deer Creek Energy Ltd., located in the same western province. Total said it plans to invest $7 billion (5.8 billion euros) in Deer Creek, on top of the $1.4 billion it expects to pay for the company. The company says it could one day produce 200,000 barrels of heavy crude a day, close to 8% of Total's current global output.
Canada's oil sands contain 174 billion barrels of recoverable reserves, the world's second-largest oil resource behind those of Saudi Arabia, according to Canadian government estimates.
Oil sands, a mixture of grit and a tarlike grade of crude oil known as bitumen, were discovered more than a century ago but have been considered economical to produce only in recent years as the price of oil has surged. In addition to nuclear power, producers are considering burning oil-sands residue and coal as alternatives to natural gas to make the steam needed for extraction.
Mr. Darricarrere said a nuclear power plant would help Total comply with tougher constraints on carbon dioxide and other so-called greenhouse-gas emissions.
Although they generate toxic, radioactive waste, nuclear reactors don't emit greenhouse gases that scientists believe contribute to global warming.
The government of Alberta said that although there is no nuclear power plant in the province, there is no moratorium on nuclear energy. "We don't favor one form of energy over another," said Alberta Energy Ministry spokeswoman Donna McColl. "We let the market decide."
Still, Total's idea could ignite complaints from environmental groups, which already are battling the possible construction of a nuclear power reactor in the province of Ontario, where most of Canada's 17 operating reactors are located. "I'm not confident that the public in Alberta would be supportive of opening Alberta to the nuclear industry," said Dan Woynillowicz, an oil-sands expert with Pembina, an environmental policy research institute based in the province.
Mr. Darricarrere said Total is relying on Areva, the French state-run nuclear engineering company, to define what type of reactor might suit its needs in Canada. Those discussions are separate from a debate within Total on whether the oil company should expand in the nuclear business, he added. This month, Total Chairman Thierry Desmarest said the oil company would be interested in increasing its 1% holding in Areva should the government decide to sell off part of the nuclear company. Mr. Desmarest is a member of Areva's board, while Areva Chairwoman Anne Lauvergeon sits on the Total board.
As it looks into the nuclear option for its oil-sands project, Total is focusing its research on a dedicated reactor, significantly smaller than those used by utility companies to produce electricity for large city grids. Areva said discussions with Total are centering on a new type of reactor, known as a High Temperature Reactor, with a capacity of around 500 megawatts, about a third of the size of a traditional reactor. Jean-Jacques Gautrot, Areva's director for international operations and marketing, said Total could opt for a larger reactor and sell the excess electricity to the regional grid, but added it is too early to say if that would be a viable option.
Areva has been approached by other oil companies but discussions are most advanced with Total, Mr. Gautrot said.
A spokesman for Imperial Oil Ltd. of Canada, an affiliate of Exxon Mobil Corp., which operates some of the world's largest oil-sands operations, said it looked into the nuclear option in the past but didn't pursue it because of cost and technology challenges.
Shell Canada Ltd. said it isn't considering nuclear power as part of its oil-sands plans. Rather, the company said it is looking into the possibility of turning asphaltene, very heavy oil, into gas to save on its natural-gas bill.
Small nuclear reactors mainly have been used in submarines, icebreakers and aircraft carriers. Despite the promise of abundant electricity, industrial companies have been reluctant to install such machines, however small, on their premises because of safety and cost concerns. A notable exception was the Soviet Union, which built four small nuclear reactors at Bilibino, inside the Arctic circle, in the mid-1970s to operate a gold mine. The plant still is in operation.
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Total Mulling Nuclear Power for Oil Sands Production in Canada
Global Insight Daily Analysis, 22 September 2005
Olivia Amaewhule
French oil giant Total is considering the use of nuclear energy instead of natural gas to power operations at its oil sands leases in Canada's province of Alberta. With the acquisition of Canadian operator Deer Creek Energy, Total now has access to the 50,000-acre Joslyn project, which has been designed as a three-phase Steam-Assisted Gravity Drainage (SAGD) recovery programme initially using natural gas and a four-stage mining recovery programme with a peak capacity of more than 200,000 b/d (see Canada: 3 August 2005: Total Makes C$1.35-bil. Takeover Bid for Canada's Deer Creek Energy). Natural gas has normally been the choice fuel for the bitumen extraction process, with the SAGD production method estimated to require as much as four times more natural gas than the mining process to create steam to facilitate the extraction process (see Canada: 19 July 2005: Investment Trends and Challenges in Canada's Unconventional Oil Production).
Although about 75% of the Josyln project will be produced using the mining extraction method, the first 25% of it is designed to be produced using the SAGD method. Total's natural gas requirements will be significant in the first phase of the project.
Significance: Canada's gas production has continued to decline, making it increasingly challenging for oil sands operators to justify the use of the valuable resource as an input in the production of the low-value heavy oil. Canada has a large petrochemical industry that depends solely on natural gas as a feedstock, and declining production and rising natural gas prices are beginning to put significant pressure on the profitability of the industry. One petrochemical industry participant even likened the use of the fuel in the extraction process to 'lighting a fire with one hundred dollar bills'. Although additional gas supplies are expected in Alberta through the Mackenzie Valley pipeline from northern Canada and the US$20-billion Alaska pipeline projects, these projects have encountered some delays and are proceeding behind schedule. In the meantime, natural gas prices continue to rise, hitting yet another all-time high of about US$13/Mmbtu in the aftermath of Hurricane Katrina in the United States. The costs of extracting the bitumen from oil sands was prohibitively expensive in the past, and the extra costs of natural gas added to these are beginning to affect the margins in the industry, although the effect has been mitigated somewhat by high oil prices. Despite these challenges, the use of nuclear energy in the extraction of bitumen from oil sands deposits has reportedly been considered and abandoned in the past because of environmental opposition. Total's move to resuscitate the debate is expected to bring on another wave of environmental opposition.
I have always felt that using nuclear energy to provide the process heat for tar sand extraction has really got to be the way to go.
Thought the ammounts of resource seem large, my understanding is that the energy costs for extraction and processing are close to unity (or possibly even worse)
(IE It takes nearly as much energy to turn the tar sands into useable fuel as the fuel eventually contains. That is to say, though the Tar sands may be a usefull "Fuel" source, that may not be a particularly usefull "energy" source.)
However, as a way of "converting" nuclear energy into transport fuel etc they could prove extreamly usefull (though there would not be the CO2 benefits that nuclear derived hydrogen would deliver)
I have also felt that reactors should also be used to provide the process heat in the chemical and petrochemical refineing industries. Doing so would significantly reduce oil and gas consumption and would reduce polution and extend the life of the reserves. (the figure of arround 10% comes to mind, though I may be wrong)
Definitely agreed that using nuclear energy to provide the process heat for tar sand extraction has really got to be the way to go. The only "funny" part of the story is that Total is even considering something other than a CANDU reactor in Canada -- just last week we all got T-shirts from AECL saying that "Canada is CANDU Country"
A smaller HTGR may perhaps make more sense technically for the oil sands, but that would mean either a South African PBMR or a US GT-MHR -- not a CANDU. And its certainly true that trying to get a (new) foreign reactor design licensed here in Canada by our regulator, the CNSC, is very likely more trouble than its worth. Anyway, it will be interesting to see how long it will take Total/ Areva to realise just what they're up against....
I suppose it all comes down to what sort of temperatures are needed.
According to my "Boys Book of Reactors" CANDU outlet temps are less than 300C. While this is OK (and the low end of OK at that!) for electricity production it is a bit on the cool side as far as industrial process heat is concerned.
Without meaniing to critisise CANDU in any way After all, CANDU has proved to be a safe and reliable reactor design and, as far as I am aware, is the only one, appart from MAGNOX that operates on unenriched urainium-which I like!
It may simply be that CANDU cant operate at a high enough temperature to do the job (eficiently). A HTGCR of some sort may be better for this particular set of applications.
Well whatdayaknow.... looks like they're backing out already....
Atomic power a remote option down the road for oilsands: Misunderstanding created recent reports The Edmonton Journal, Fri 23 Sep 2005 Gordon Jaremko, with files by James Baxter
EDMONTON - More than two years after Atomic Energy of Canada Ltd. offered to build a nuclear power plant for oilsands developers, the proposition still has no takers.
The latest entry into the Fort McMurray bitumen lineup -- French oil giant Total SA, which acquires the Joslyn project today by closing its August takeover of Deer Creek Energy -- said it is not about to buy a reactor, too.
A flurry of reports this week in New York and Toronto that Total wants to harness the atom for the oilsands were based on a misunderstanding of a French executive's answers to questions at an English news conference, Paris-based company spokesman Paul Floren said.
When asked about AECL's proposal to substitute an atomic power and steam plant for industry-standard natural gas-fired operations, the French executive said diplomatically that Total is willing consider all alternatives.
The company is equally open to a wide range of proposals such as emerging clean-coal technology, Floren said. "Of course we'd look at all options." But for now, "our position is gas will certainly be the privileged source of fuel."
Even if atomic power were to emerge as an economic substitute for increasingly expensive gas, it looks like one of the more remote possibilities 15 or 20 years down the road for the oilsands industry, Floren said.
A wide range of new approaches are being tried in an industry quest for low-cost power and especially steam, which is used to separate oil and sand. Several alternatives used by current projects eliminate purchases of gas without resorting to atomic power.
AECL launched its oilsands reactor pitch in early 2003 by commissioning the Canadian Energy Research Institute to do a report on comparative costs of making power and steam with gas or a new generation of small reactors currently under development.
The CERI report concluded "raw economics" justified considering AECL's proposal, especially because gas prices are rising.
But a 2004 state-of-the-industry review by the Alberta Chamber of Resources, which includes AECL and all the big oilsands companies, said there is more to deciding between industrial power and heat sources than fuel costs.
"Nuclear energy still has issues around societal acceptance, particularly in terms of the perception of safety risks and the disposal of nuclear wastes," the chamber report said.
In addition, "more work is required on an economically attractive scale" for oilsands atomic power and steam plants, the chamber said. Large projects using heat injection wells to extract oil "are normally spread out over an area not suitable for steam distribution from a single source."
Premier Ralph Klein said he has only ever had one "very informal" conversation about using atomic power in the oilsands, and that was part of a wider discussion on investigating all possible energy sources.
"Before a nuclear plant is considered I would like to see all other options considered," Klein said. That includes coal, coke, wind energy and solar power, he added.
"I do have tremendous concern (about atomic power)," the premier said. "If the environmentalists go nuts over building a dam, can you imagine how they would react to a nuclear power plant?"
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Oil's new friend: nuclear The Calgary Herald, Fri 23 Sep 2005 The Editorial Page
Technical marvel though oil extraction around Fort McMurray is, the process still suffers from one drawback: To get oil, one has to burn fossil fuels.
Thus, for every 12 barrels of oil produced in mines at Fort McMurray, the energy equivalent of one barrel is used generating process steam and electricity. For a steam assisted gravity drainage project, it's more like one barrel of oil to produce six. The whole thing starts to look a bit like running down an up-escalator.
Enter French oil giant Total SA, fresh from gobbling up Calgary-based Deer Creek Energy, asking what about a 500-megawatt nuclear plant to generate steam and electricity?
What indeed? No new nuclear plants have been built in North America for years, a consequence of widespread public perceptions that they are: a) dangerous and b) produce radioactive waste that will be a hazard for thousands of years. Who wants to live near one?
Yet, people do, in Ontario -- with no great harm.
They also enjoy cheap electricity. And those who believe that CO2 produced in the burning of fossil fuels causes the sort of climate change that leads to more ferocious hurricanes in Louisiana can celebrate the fact nuclear reactors produce no greenhouse gases. And if there really is a connection, it's worth noting hurricane Katrina killed far more North Americans (nearly 1,000) than nuclear accidents have (none).
As for the waste, a year's worth of it from a reactor the size proposed by Total, wouldn't fill your spare bedroom. Indeed, the volume of all the waste from all Canadian reactors in the last 47 years is less than half of the municipal waste generated by Toronto in one day, according to the Canadian Nuclear Society (www.cns-snc.ca/media/CNS_Position_Papers/NWMO_presentation.pdf)
No doubt, building a nuclear reactor in Alberta will be decided on emotion, not science. Alberta Premier Ralph Klein, for example, gave an emotional denunciation of the idea when questioned about it Thursday at the Global Business Forum in Banff.
"Nuclear is probably the least acceptable at this particular time because we do have a policy in this province of developing every other kind of energy other than nuclear," the premier said. "If the environmentalists go nuts over building a dam, can you image how they would react to a nuclear power plant?"
Still, we'd like to hear Total make the case.
Total cautions any use of nuclear power in Fort McMurray is 15 to 20 years away. And the Alberta Chamber of Resources notes there are many practical difficulties, including the problem of pumping steam from a fixed plant to many widely distributed well pairs.
One thing's for sure: The more expensive natural gas becomes, and the more important it becomes to reduce CO2 emissions, the better nuclear is going to look.
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Nuclear 'least acceptable' oilsands power source: Klein
National Post, Fri 23 Sep 2005 Claudia Cattaneo, Calgary Bureau Chief
BANFF, Alta. - Ralph Klein, Alberta's Premier, said yesterday he regards nuclear energy as the "least acceptable" source of energy to power the province's booming oilsands plants.
The oilsands industry has repeatedly considered the controversial idea to reduce its dependence on natural gas, whose cost is escalating.
The concept was rekindled this week by reports that Total SA, the French oil giant, is considering using nuclear power in its newly acquired Joslyn Project near Fort McMurray, Alta.
Total executives will be in Calgary today to talk about their plans for the project, which they took over through their acquisition of Deer Creek Energy Ltd. for $1.67-billion.
Mr. Klein said he wants to see industry investigate all other energy options to replace natural gas before Alberta will allow nuclear plants.
"I do have tremendous concerns, over the waste, the environmental concerns," Mr. Klein said. "If the environmentalists go nuts over building a dam, can you imagine how they would react to a nuclear power plant?"
Greg Stringham, vice-president of the Canadian Association of Petroleum Producers, confirmed Total and other oilsands developers are looking at all options to reduce their dependence on natural gas, including nuclear energy.
But he said it may be 10 years before nuclear technology evolves to meet their needs. One of the problems is that oilsands projects are spread over a vast geographical area and would require small plants rather than a large nuclear reactor, he said.
"Until we get there, there is no sense in talking about the public sentiment," he said. "Why would you do that until you solve the technical stuff."
Mr. Klein said he's keener to see the oilsands industry use hydro power from the Northwest Territories, the province's vast supply of thermal coal, energy through the gasification of oilsands waste like coke, or wind or solar power.
