Nexen’s “bait and switch” means trouble for the Clearwater River

By JULIA KO, WATER MATTERS AND JEFF GALIUS — JUN 28, 2010

**Error: please note the sentence “Industry averages indicate that most projects use 1 barrel of steam for 1.1 barrels of bitumen. (For more information please see, Drilling Deeper: The In Situ Oil Sands Report Card by the Pembina Institute, 2010)” has been removed. The Pembina report discusses water intensity not steam to oil ratios. Updated April 6, 2011.

You’ve heard of “bait and switch,” right? It’s when a company advertises something that it can’t deliver (say, a TV for $200), and then tries to get you to buy something at a higher price (say, a $500 TV) once you’ve made the trip to the store.

Bait and switch seems to be Nexen’s strategy for its Long Lake oil sands project — with Alberta on the hook to ultimately supply more water to the project. The Long Lake project is different from other projects because it integrates steam-assisted gravity drainage (SAGD) with upgrading. The original plan indicated that only saline water, which is unfit for human consumption, would be used to create steam to bring up bitumen (the SAGD process). The freshwater for upgrading the bitumen, through which some of the water is lost or consumed, would come from underground wells.

But like the $200 TV, the promise was too good to be true, and Albertans, and at least one of their cherished rivers, are being asked to pay a higher price. Nexen has now applied to withdraw up to 17,000 cubic metres of freshwater from the Clearwater River each day for this project. So, instead of this freshwater coming from already approved underground wells, Nexen is asking for water from the Clearwater River.

*Credit: Canadian Heritage River Systems, 2010
Credit: Canadian Heritage River Systems, 2010

Nexen argues that it needs water to upgrade oil, but it’s not asking for more water. It maintains that water from the Clearwater River is needed to “meet current and long-term upgrader water requirements in a sustainable and environmentally responsible manner” (Nexen, 2010: p.10). Nexen says it is “not increasing the volume of water our facility requires relative to the updated water balance that was submitted to the regulators as part of the Long Lake South [Environmental Impact Assessment Review]” (Bhardwaj, June 10, 2010); rather, it is looking for a change in the source of water.

Here’s what’s wrong with this picture.

The Long Lake Project has a history of using more water. In 2006, Nexen requested an increase in the use of water from an original plan of 2.4 barrels of steam for one barrel of bitumen to 3.3 barrels of steam for one barrel of bitumen produced. It also said that it might need more freshwater in the future if it needed more steam to bring up oil.

From the 2009 year end results reported by OPTI, who partnered with Nexen, and in an update by Nexen in February 2010, Nexen reported an average of five to six barrels of steam for every barrel of bitumen. The Long Lake Project was approved for three barrels of steam for one barrel of bitumen, so from 2009 to 2010 the Long Lake project has used almost twice as much water as originally planned. Thus, the argument that freshwater from the Clearwater River is needed to meet water requirements in an environmentally responsible manner seems contradictory.

The Clearwater River is not just any river. It is a Canadian Heritage River that deserves the best protection possible. It originates in Saskatchewan and flows into Alberta, where it empties into the Athabasca River at Fort McMurray. It was designated as a Heritage River first by Saskatchewan in 1987 and later by Alberta in 2004. The Clearwater River was an important route for fur traders in the eighteenth century and was part of the voyageur route to the Arctic. Peter Pond, Alexander Mackenzie, and Sir John Franklin canoed this legendary river. It is one of the few western rivers that has remained relatively untouched since the time the voyageurs, Cree, and Beaver nations once paddled it.

Albertans deserve a clear and transparent system to ensure the rivers and wetlands in the Fort McMurray region are not over exploited. Albertans are being asked to sacrifice a Canadian Heritage River for a secure water source in future oil production. Federal and provincial officials need to ensure that the Clearwater River is protected and that avenues for efficient water use are exhausted before Albertans lose a part of their Canadian heritage.

On July 5, 2010, Nexen plans to issue a public notice under the Water Act for public consultations for its application to withdraw 17,000 cubic metres of water a day from the Clearwater River. Look for the notice in local papers in Anzac, Wood Buffalo, and Saprae Creek. This notice will invite members of the public, which could include you, to submit Statements of Concern that will be reviewed by Alberta Environment.

Sources
Bhardwaj, Sachin. 2010. Environmental Specialist, Community Consultation and Regulatory Affairs email communication. May 14, 2010

Canadian Heritage River System. 2010. The Clearwater River. [] Website. (accessed May 13, 2010).

Griffiths, Mary and Simon Dyer. 2008. Upgrader Alley: Oil Sands Fever Strikes Edmonton. Drayton Valley, AB: The Pembina Institute.

Healing, Dan. 2010. “Oilsands water plan raises fears for river: Long Lake project to draw 17,000 cubic metres a day.” [] Edmonton Journal, April 9, 2010. (accessed May 14, 2010).

Nexen Inc. 2010. Nexen Provides Long Lake Project Update. [] News release. February 9, 2010. (accessed June 16, 2010).

Nexen Inc. 2010. Long Lake Source Water Project. April 2010. Application to Fisheries and Oceans Canada, Transport Canada, and Alberta Environment.

Moorhouse, Jeremey, Marc Huot, and Simon Dyer. 2010. Drilling Deeper: The In Situ Oil Sands Report Card. [] Drayton Valley, AB: The Pembina Institute (accessed May 14, 2010).

Nexen Inc. 2006. Long Lake South Environmental Impact Assessment. December 2006.

Long Lake South. Application to Alberta Energy and Utilities Board and Alberta Environment.

Nexen Inc. 2006. Request for Amendment Steam Capacity, Ash Processing Unit &

PAD 11 Approval No. 9485 to the Alberta Energy and Utilities Board. February 22, 2006.

OPTI Canada Inc. 2010. OPTI Canada Announces First Quarter 2010 Results. [] News release, April 29, 2010. (accessed May 14, 2010).

OPTI Canada Inc. 2009. OPTI Canada Announces Year End 2009 Results. [] News release, February 9, 2010. (accessed June 16, 2010).

Schlumberger. Oilfield Glossary: Steam-Oil Ratio. [] Sclumberger Inc. (accessed May 14, 2010).