Oil sands and Conventional Energy Projects
importance the energy industry has to Canada as a primary economic driver:
Total (including Dry & Service):
2004 Year End:
4,354 million barrels
5,294 million barrels
2,082 million barrels
56.5 trillion cubic feet
1,410,000 barrels per day
465,000 barrels per day
532,000 barrels per day
163,000 barrels per day
Crude oil & equivalent:
2,570,000 bar rels per day
17.0 billion cubic feet per day
Fees & Income Taxes
Direct and Indirect
Total Employment Impact
1,611,000 barrels per day
9.7 billion cubic feet per day
The three major activities within this sector are oil sands, conventional production and
pipelines. Each of these activities gives rise to major transportation challenges. Sometimes the
challenge relates to the remoteness of the location or its inaccessibility due to ground condition.
This is the case with the northern boreal areas where it is only possible to move drilling
equipment during the winter season when the muskeg is frozen. The oil sands face a different
challenge. Large invisible loads must be moved to the constructions sites at great expense and
disruption given that there is only one road and one rail line from the south to Fort McMurray.
Oil sands Development
The development of the Alberta Oilsands is a mega project on a grand scale. The Alberta
Government estimates that new and sustaining capital requirements to produce this resource
may reach $93.5 billion over its expected 30-year life. The Canadian
Association of Petroleum Producers (CAPP) estimates that the Oilsands will account for up
15% of the world's oil crude oil reserves.
Oil sands production has surpassed one million barrels per day and with 175 billion barrels of
reserves in the ground it is one of the few basins in the world with growing production.
Companies expect to produce 2.9 million barrels per day of bitumen and synthetic light crude
oil by 2015. To appreciate the immense scope of the second largest petroleum deposits in the
world after Saudi Arabia, consider that at current production rates it would take over 400 years
just to deplete the reserves at existing oil sands operations. Overall, Canada has 15 per cent of
the world's crude oil reserves, produces 2.5 million barrels per day, and is the largest and most
reliable foreign supplier to the United States.
A report issued by the Alberta Economic Development in the spring 2005 provides a very
comprehensive overview of the status of the individual projects.
The Oilsands are located in Fort McMurray, Alberta. Most of the major equipment is imported
and much of the construction is being done off site and transported to the projects in modules
from Edmonton. Highway 63 is a two-lane highway and provides the only road to Fort
McMurray. This highway is often congested because large loads must be moved at slow speeds
along its 457 kilometre length.
Many of the world's largest energy companies have projects that are operational, under
construction or planned. Included are companies such as Imperial Oil (Exxon), Shell, Petro
Canada, EnCana, Nexen, Suncor, Syncrude, etc.
In addition to the movement of large industrial equipment, there is a need to move other
types of construction and extraction related material. The objective in the mining operation is
to move as much material as possible. The limit to the size of the mine trucks is the largest
tire that can be transport to the site. Most of the other truck parts can be disassembled into
pieces that to be moved by road or rail. However, a tire, by definition is an indivisible load. If
the mines want to build larger trucks they need to transport the tires to the mine. At Suncor,
there are 30 trucks, each has 6 tires and a tire lasts about 11 months. They need about 180
tires per year. An individual tire weights about 8,000 lbs. They spend about $8 million per year
on tires alone. If hybrids could transport larger tires, the potential benefits to the mines would
be very significant.
On a daily basis, over 300 hundred bus loads of workers are transported from the city of Fort
McMurray to the project sites. This is a time consuming and costly exercise given the limited
road capacity and bridges in the area. The furthest site is 125 km, one-way, from Edmonton.
An option for moving passengers by hybrid air vehicle could be well received.
In summary, hybrid air vehicle could be used for at least the following missions in the
Movement of larger industrial equipment from ports or inland manufacturing facilities
to the project construction sites.
Movement of large indivisible loads that have clearance that exceed the road and/or rail
Movement of people and supplies from the rail head in Fort McMurray to site.
The Oilsands projects are of a scale and duration (30+ years of forecasted
construction) that the transportations requirements stemming from this industrial
activity alone could justify the development of a fleet of hybrid air vehicle of varying
capacities and mission requirements. This may be a killer application this industry has
sought for so long.
Conventional Exploration and Production
Energy exploration and production is distributed over a broad geographic area. This
necessitates transporting significant volumes of oilfield related equipment, supplies and
construction materials and equipment. In the southern areas, roads and truck transportation
provide adequate options for moving most products. However in the north, the two most
significant issues are the lack of roads in some areas and inaccessibility of these roads during
a significant portion of the year due to the adequacy of the roads and soft conditions during
break-up that necessitate road bans. These factors contribute to seasonality and peaking
issues that result in increased direct costs or opportunity costs.
A case in point, is seasonally drilling activity. The recent surge in energy prices has put further
pressures on the energy industry to explore and produce new wells. As the oil extraction
industry drains the easy to access sedimentary basins, new capacity is being sought in the
more logistically challenging Arctic climate zones. In much of northern Canada and Alaska, local
ground conditions severely inhibit oil and gas drilling activity. Oil drilling in areas with muskeg
or marshy conditions requires the ground to be frozen before heavy drilling rig equipment can
be transported. During the remainder of the year, impassable mud and environmental
restrictions prohibit surface transport to these sites.
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Millennium Airship Inc/SkyFreighter Canada Ltd