style="border:thin solid #cccccc;">The Canadian Oil Rush* Alberta's Oil Sands

* Alberta's Oil Sands Slideshow

* Using Nukes To Extract Oil: Time Machine 1960The sky is blue and cloudless and north-country sharp, but you can barely see it from the cab of John Martin's Bucyrus 495 shovel. We are elevated three stories above a sea of mud and dirt and sand; a sulphurous stench permeates the air. Sitting in a chair similar to Kirk's in the Starship Enterprise, Martin, 54, flicks his wrists, both hands working video-game-like toggles to maneuver a shovel that weighs 3 million pounds. It takes Martin 25 seconds -- and three elegant but mechanical motions -- to scoop about 80 tons of gooey, brown sand, swivel 90 degrees to his left and release the load into a yellow dumptruck.

Scoop, swivel, dump.

Shovel operator John Martin works 30 ft. above the mine floor in a Bacyrus 495 cab that's big enough for a microave and a water cooler.

Five scoops and the truck is full. By the time it pulls away, there's another truck waiting at Martin's right flank. A few moments later, it rumbles away with a full load, and Martin swivels to another truck waiting on his left.

Scoop, swivel, dump.

Martin's shovel repeats the process nearly 24 hours a day, 365 days a year. The Bucyrus 495 costs over $15 million, and there are five of the machines working the Muskeg River Mine, 47 miles north of Fort McMurray, Alberta. The Caterpillar 797B trucks used to haul the tarry sands are the biggest in the world, costing about $5 million each. The Muskeg River Mine has 25 trucks in operation. Each earns back its price in eight days.

One day, perhaps, solar cells and nuclear power and wind turbines may meet our energy needs. Right now, the world runs on oil. But the easy finds are gone, and the only new sources left are in deep water, in turbulent regions or in forms that require a heavy investment to extract and process. Fueled by the current high price of crude, the industry sank $86 billion into tough-to-exploit "frontier hydrocarbons" between 2000 and 2005.

The red-hot center of this 21st century gold rush is the western Canadian province of Alberta. Spread under 54,363 square miles of boreal forest -- a little less than the land area of Florida -- lie proven reserves of 174 billion barrels, second only to Saudi Arabia's. Of course, there's a catch. The formation consists of grains of sand surrounded by water, which in turn is coated with bitumen, a complex and viscous hydrocarbon. A "rich" vein is 10 to 12 percent bitumen, but much of the sand here has a lower bitumen content, and all of it is covered with a layer of overburden -- trees, muskeg, rock, clay and soil -- up to 250 ft. thick.

Bitumen's existence in Alberta has been known for centuries. Chipewyans and other tribes used the pitch to waterproof canoes. The basic process for extracting it is seemingly simple, and that has been known for decades: Mix the sand with hot water, give it a shake -- and voilà! The bitumen, water and sand separate. But the process isn't cheap. Refining oil sands is only profitable if world crude prices are high.

The largest operators in Alberta, Suncor and Syncrude, opened mines in 1967 and 1978. Currently, they produce about 560,000 barrels of oil per day. Add the output from newcomer Shell, which began production in 2002, and the daily total climbs to 720,000 barrels. Some experts predict that by 2020, the oil sands will produce 3 million barrels every day.

A rare moment of inactivity for the 1450-ton shovel of a Bucyrus 495 at the Muskeg River oil-sands mine. Five shovels here are in use 24/7--four to scoop oil sands into trucks and one to remove overburden.

The center of the oil rush is Fort McMurray, a once sleepy town surrounded by thousands of square miles of forest, 275 miles north of Edmonton. It's early September and the air is warm and clear, the landscape one of austere beauty: muskeg and aspens, poplars and birch, cut with rivers and sprinkled with wildflowers.

But Fort McMurray teems with 58,000 people. Highway 63, which runs through its center, might as well be I-95 in New Jersey, as bumper-to-bumper pickup trucks and buses hauling crews to the mines creep through town. A few miles north, the wilderness begins again and a sign reads, "Travel at Own Risk; No Services Next 280 Kilometers." You are, it seems, deep in the outback.

That is, until you round a bend and come upon an industrial nightmare. There's not a tree or even a weed in sight. Nothing but a vast, khaki desert of sand and dirt and mud, where metal towers bellow smoke and steam and fire, and holding ponds of water and tailings are so toxic that the pop of air guns keeps birds from alighting on their greasy, silver surfaces. The scale of the operation is hard to grasp; in the middle of nowhere stand row upon row of dormitory mining camps against a backdrop of heavy equipment.

To understand this vast moonscape, it helps to know that the problem with extracting oil from oil sands is one of scale: It takes 2 tons of sand to make one barrel of oil. To harvest enough earth to produce profitable oil requires an army of giants: huge trucks, huge tracked electric shovels, vast conveyor belts, enormous crushers, thousands of equipment operators and engineers and scientists -- all in a remote region that's blazing hot in summer and 40 below zero in winter. Says Chris Jones, COO of Albian Sands Energy, the company that operates the Muskeg mine for Shell, "We are at the end of a very long cul-de-sac."

The Caterpillar 797B lugs 400 tons at 40 mph, and chugs 900 gal. of diesel per 12-hour shift at Alberta's Muskeg River oil-sands mine. A single tire costs $60,000.

The Muskeg River Mine is relatively small, yet its nearly 2-square-mile open pit yawns like 120 stadiums. (And that's just the start of work on a single lease covering 108 square miles.) Roads, ever under construction as the hole widens and deepens, snake into its hollows, as graders grade and bulldozers push and water trucks spray to keep down the dust and dumptrucks roar slowly past, the whole landscape a loud and constantly moving symphony of oversize machinery.

In the mine's gaping maw, geologists have taken core samples about every 50 meters. On monitors inside the control room next to the mine, a red grid is superimposed over an image of the pit. Every grid displays the ratio of sand to bitumen, known as the ore grade, at various depths. The process works best if a consistent ore grade is fed into the system. The mine's four shovels (a fifth clears overburden) work different levels of the pit; the trucks -- 24-cylinder beasts with engines that generate 3550 hp -- are in constant motion.

Once full, the trucks amble to the crusher pad, where they back up to a cliff face and dump their loads into a series of giant, turning steel teeth that break the sand into 18-in. pieces at the rate of up to 15,432 tons an hour. The chunks then tumble onto the largest-capacity conveyor belt in the world, which transports them to a storage tower five stories high.

From the storage tower another three conveyors feed a series of radial drum breakers that further reduce the chunks; here, hot water is added to create a slurry. The slurry is pumped through a 1.2-mile-long pipeline; as it agitates along its journey, the bitumen begins to separate and the heaviest sands settle out. The pipeline feeds the slurry into the primary separation vessel, where more water is added and the slurry separates further: Bitumen continues rising to the top; water is in the middle and sand settles on the bottom. At this stage the mixture is known as froth -- 60 percent bitumen, 30 percent water and 10 percent solids.

The froth is mixed with a solvent -- usually naphtha -- to form "dilbit," or diluted bitumen, which is pumped through a pipeline southwest to Shell's upgrader in Fort Saskatchewan near Edmonton. There, hydrogen is used to break up the long carbon molecules, producing synthetic oil products, including gasoline.

Some 33,000 people work the Alberta oil sands, usually in two 12-hour shifts, four days on and five off. It is, in total, a monument to the vast ingenuity and effort humans will devote to the pursuit of energy.

Squeezing Oil From Sand It takes about three times as much energy to produce a barrel of Alberta oil-sands crude as it does a conventional barrel of oil. The initial refining is done on site. (Illustration by DarylCampbell.com)

The economics of all this seem straightforward, at first. The Canadian Association of Petroleum Producers estimates that it costs about $20 to produce a barrel of oil-sands crude. At press time, with the price about $56 a barrel, the 720,000 barrels generated daily from the oil sands earn $14.7 billion per year--a profit of $9.5 billion. But the price after upgrading does not include interest on loans to build infrastructure, mineral royalties paid to the provincial and federal governments, or the cost of shipping the oil to market. As more leases are developed, the operators should achieve an increasing scale of efficiency, further reducing the cost per barrel.

But there are other costs. Running the mine takes power, and lots of it. Muskeg operates a 172-megawatt natural-gas-fired plant to generate electricity for shovels, conveyor belts, and other equipment and operations. Current production uses 600 million cu. ft. of gas per day, which represents 10 percent of the cost of squeezing a barrel of oil from the sands. That daily volume is enough to heat 3.2 million Canadian homes. And it takes two to five barrels of water to produce every barrel of oil. The mining operations are licensed to draw 132 billion gal. per year from the Athabasca River; 90 percent of it ends up in tailings ponds. Says Dan Woynillowicz, senior policy analyst at the Pembina Institute, a Canadian environmental organization: "Nobody even knows what the environmental impact will be."

This pipeline from the oil sands of northern Albert is used to transport diluted bitumen ("dilbit") -- a slurry of tarry hydrocarbons, solvent, water and sand -- to refineries some 300 miles south.

Only about 10 percent of Al­berta's oil sands can be extracted with open-pit mines. The rest is deeper, tucked into porous rock, and has to be extracted in situ. This much tougher process requires operators to inject steam into formations, and pump the resulting stew of bitumen and water to the surface. "In situ" alarms environmentalists even more than open pits. If all the oil sands' underground reserves were developed, the ecological impact would be 50 times greater than that of mining.

All of which raises the question: Are these frontier hydrocarbons worth so many resources? If the world ran only on oil-sands crude, the Alberta reserves would last just six years. Proponents of the theory known as "peak oil," first promulgated by an oil industry geologist named M. King Hubbert, contend that we are nearing the peak in world oil production. And, once the peak hits, reserves will disappear quickly--and neither conservation nor any known alternative fuel will be able to replace oil quickly enough to prevent massive economic disruptions.

The industry, of course, thinks differently. Rayola Dougher, senior economic analyst at the American Petroleum Institute, a Washington, D.C.-based trade association, says, "We don't believe there will be a peak until 2044 or even longer. New technology and higher prices allow us to go after new frontiers, and there may be more oil than we've ever thought. Oil shale, oil sands, deep water--these, along with conservation, could well bump up the horizon to the next century. There's plenty of oil--the issue is at what price and in what form."

Meanwhile, in Fort McMurray, apartment buildings and condos go up as fast as they can be built. The gold-rush money can be addictive; a heavy equipment operator can make $200,000 a year. "We call it Fort Crack, there's so much money here," a waitress tells me.

Scoop, swivel, dump.

"I make more in a day than I used to in a week," says Guy Mercer, 51, who's training to be a shovel operator and came to Fort McMurray from Newfoundland five years ago, like 21,000 other Newfies. "Fort Mac's been good to me. I arrived in a $300 van with the clothes on my back and now I own a home, a new car that's paid for and a $200,000 mobile home. Hell, an unskilled laborer can take home $80,000 a year."

Scoop, swivel, dump.

Shovel operator John Martin flicks his wrists and another 400 tons of Alberta heads to the crushers. He is from British Columbia, and arrived seven years ago. In the next week he'll work 60 hours. "Boredom is part of the job," he says, "but you can't get too bored because you're swinging a big hammer out there." He pauses for a brief second, his eyes darting across the rich black sand and the edge of blue sky overhead. "When I first started this was all trees."

But the thought is fleeting; another truck is waiting for more. "For us," he says, flicking his wrists again, "it's just a modern Klondike. But sometimes I go home and I'm working in my dreams."

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