January 1, 2006
By Nordahl Flakstad
These days, plans for multi-billion dollar oilsands projects near Fort McMurray, Alberta, seem to roll out with the regularity and ease of 380-ton mining trucks dumping loads of bitumen. A conservativ...
These days, plans for multi-billion dollar oilsands projects near Fort McMurray, Alberta, seem to roll out with the regularity and ease of 380-ton mining trucks dumping loads of bitumen. A conservative tally of proposed and planned oilsands projects in the region adds up to more than $60 billion.
Sometimes the big stories simply bury the smaller ones, such as how these mega-projects are placing pressure on municipal, transportation and other supporting infrastructure in northeast Alberta and in Fort McMurray, a community bursting at the seams.
Being 440 kilometres northeast of Edmonton, Fort McMurray may seem to be on the periphery. However, with around 60,000 residents, its population ranks only behind Calgary, Edmonton, Red Deer and Lethbridge among Alberta centres. And with its large contingent of transplanted Atlantic Canadians, there is the standing joke that Fort McMurray is Newfoundland’s second most populous town. This is the heart of Alberta’s current resource boom. Bars are crowded with construction workers. The airport is packed.
In this town, storefront premises in strip malls that elsewhere might be expected to harbour fast-food outlets are more likely to house the offices of engineering or other consultants who have been drawn there to help meet the demands for infrastructure.
Last spring, a report by the Athabasca Regional Issues Working Group Association placed the cost of needed infrastructure in the Fort McMurray region by 2009 at $1.2 billion. That breaks down into $353 million for municipal projects, including water, wastewater, road and recreation facilities; $236 million for schools and post-secondary educational structures; $500 million for highways and $136 million for health and affordable housing.
The Athabasca group cautions: “If public infrastructure needs are not met, oilsands projects could experience higher capital costs and/or be significantly delayed.” And, the report warns, “public sector infrastructure needs in the region are not being met.”
Government officials are kept busy trying to breach the infrastructure gap.
“We have 47 capital projects on our 2006 sheet alone,” explains Larry Wright, R.E.T., capital projects leader in the planning and development department of the Regional Municipality of Wood Buffalo. The department oversees public infrastructure in the entire oilsands region around Fort McMurray. Carved out of northeast Alberta in 1995, Wood Buffalo’s jurisdiction covers 68,454 square kilometres — enough space to allow Nova Scotia to fit in nicely. Besides Fort McMurray, its main urban centre, Wood Buffalo includes nine smaller communities, the lands of five First Nations, six Metis settlements as well as the oilsands leases now catching so much attention.
Building on a Roll
In a municipal meeting room in downtown Fort McMurray, Wright sits surrounded by project plans, and discusses numerous initiatives for the burgeoning population. Among them is a planned $17-million water system project designed by Associated Engineering, Alberta. The project recently went to tender calling for 30 kilometres of pipe, a pump house and booster system to deliver water from the regional airport to several communities south of Fort McMurray. They include Anzac, a hamlet that until recently was forecast to see its population grow to 1,800 in 25 years. The projection, as in other communities, is now out the window and Anzac can expect a population of 3,000 to 5,000 within two decades.
Growth in the smaller centres is more than mirrored in Fort McMurray, which has an average annual population increase of around nine per cent. It means that rather than just over 70,000 residents, the municipality could be serving 120,000 by 2010. That includes 7,000-10,000 or more workers temporarily located in area construction camps. Generally these non-permanent “shadow populations” depend on municipally provided services, including trucked-in potable water, and wastewater and solid waste disposal.
The growth is forcing decision-makers to consider crumpling up their existing plans. Take the Fort McMurray’s water treatment plant next to the Athabasca River. Commissioned in 1984 with a capacity of 40 megalitres a day, it is designed for stepped-up expansions up to 120 megalitres, or enough to supply a population of 100,000. Recently, the municipality has been wrestling with “scope creep” and whether to scrap the incremental approach in favour of a new, larger plant capable of meeting the needs of 100,000-plus.
Several other major municipal projects now in design and development already respond to the higher growth scenarios. They include a tertiary wastewater treatment plant to replace the existing lagoon system on the outskirts of Fort McMurray. Preliminary design has been completed by Earth Tech with sub-contractors Stewart Weir/Athabascan Resources and Thurber Engineering.
The facility had a planned cost of $94 million but recently returned to the municipal administration for review when the lowest bid came in at $140 million. Now its completion will likely be postponed until 2009.
Trying to stay within cost estimates is an all-too-familiar problem for Wright and his associates. A value-engineering assessment done four years ago showed that the added transportation, labour and material outlays raise average Wood Buffalo costs 38 per cent above those of comparable projects in or near Edmonton. Today, that premium is substantially even higher given the new mega-projects and an already heated Alberta economy with its shortages of skilled labour, supply and services. Add to all this external factors such as a high international demand for steel and the supply-chain havoc following Hurricane Katrina.
“It is difficult for the consulting industry and their people to give solid estimates,” Wright suggests sympathetically.
The municipality seeks to spread the risk by casting its net widely — in some cases as far as the Maritimes in search of contractors, consultants and suppliers. For instance, the wastewater treatment plant involves bids by some 20 subcontractors. Where possible, the municipality also tries to tap into possible synergies, for example, when consulting firms already have personnel in the region but are facing a temporary dip in their oilsands work schedules.
Solid waste and wastewater disposal is also on the municipal line-up in the form of a $9.5-million regional landfill site under design by EBA Engineering. To be located nine kilometres southwest of Fort McMurray, the landfill has a projected life of 65 to 100 years.
Recycling waste is a challenge in Fort McMurray because of its geographic isolation. However, the possible use of carbon-amendment technologies on waste paper to produce compost holds promise, not only in reducing landfill needs, but also in providing organic land cover, which is scarce locally.
Land for development has been in short supply — something the Alberta government sought to alleviate by releasing nearly 1,000 acres of Crown land for housing. Not only is housing hard to find, costs are on par with the high-end Toronto or Montreal markets and fairly basic homes sell for $400,000-plus. Two-bedroom apartments on average rent for $1,400 a month, making them the most expensive in the country.
These sorts of figures also translate into planning headaches for officials in charge of educational infrastructure. Either families are scared off by these high real estate costs, or in a so-called “household lottery,” they are tempted to cash in their Fort McMurray homes and move away. The principal income-earner then commutes long-distance to work on the oilsands. Also, many of the people moving into Fort McMurray are in their 20s and do not yet have school-aged children.
That may all help explain why despite the general population growth, student enrolment in the Fort McMurray Public School District, which built its last school in 1986, has stayed fairly steady at around 4,700 for the last three years. Such statistics, says assistan
t superintendent of business and finance Allan Kallal, leave his board at a disadvantage in seeking provincial funds for expansion to meet a projected enrolment.
Keyano College, which is Fort McMurray’s main post-secondary educational facility, offers technical and health-care training and university-level courses to 6,000 full and part-time students. Not only must the college provide up-to-date technical equipment for training oilsands personnel, but it also must offer an environment that attracts and retains faculty and students. Consequently, Keyano’s master development plan prepared by Stantec Consulting placed a high priority on proceeding with a 13,000m2, $36-million sports and fitness centre. Also, an existing leisure complex on MacDonald Island Park is to be expanded with an aquatic centre, a full-size arena and a library.
Transportation accounts for another major piece of the infrastructure picture. Plans being developed by Stantec, Earth Tech, CH2M Hill and McElhanney Consulting Services, for example, involve a series of four or more interchanges on Highway 63 as it passes through Fort McMurray. The highway is not only the main north-south route, it also cuts right through the core of Fort McMurray and then pushes north to the Suncor and Syncrude mines. Redesign and rerouting of Highway 63 could entail a bypass skirting downtown along the Clearwater River before swinging across the Athabasca River. This would literally take some weight off the existing two parallel spans across the river that carry the load of heavy equipment moving north. A bypass also would redirect some of the highway’s bumper-to-bumper rush-hour traffic going to and from Suncor which lies 25 kilometres north of Fort McMurray on a paved two-lane route. There are also plans to twin the 15-kilometre single-lane stretch north of Suncor to Syncrude.
A 10-year, $530-million Alberta Transportation plan for the region includes work under way to complete and pave Highway 881 from Lac La Biche north as an alternative north-south route to Fort McMurray and the oilsands. And in September, Alberta announced it would spend $40 million and Saskatchewan would spend $5 million finally to start construction in 2006 on a long-discussed, all-weather road from Highway 881 to La Loche, Saskatchewan. The connection will speed access from the east and also provide a much-needed safety valve in the event of a Highway 63 closure.
Highway 63 south of Fort McMurray toward Edmonton is heavily used by trucks, including those carrying large modular components for the oilsands. Road modifications under way include relocating above-ground utility lines that currently must be sometimes removed to accommodate over-sized loads.
Highway 63 is also the land route for commuting workers. It has been the scene of numerous fatal accidents, including a high-profile bus crash last year. Public complaints have been persistent and work is under way to twin stretches of the road. These improvements cannot come soon enough for Fort McMurray Medical Examiner Dr. John O’Connor, who following an accident that claimed another two lives in early January lamented, “This is just like Formula One. The numbers are getting higher, the population is getting bigger, and the road is getting busier, and yet (the politicians) do nothing.”
Current Oilsands Mining
In its early commercial days, starting in the 1960s, the oilsands industry was symbolized by slow-moving bucketwheel excavators biting into the bitumen. These behemoths gave way to huge mechanical shovels and oversized trucks that scoop and shunt bitumen for processing. Truck-and-shovel is used at the three operating Fort McMurray-area mines of Suncor Energy, Syncrude Canada, and Athabasca Oil Sands Operations (headed by Shell Canada). The same methods will be used by Canadian Natural Resources Limited (CNRL) at its Horizon site, scheduled to produce initially 110,000 barrels a day of synthetic crude oil (SCO), starting in 2008. A number of other producers — Petro-Canada, Total and EnCana among them — are also developing oilsands properties in the area.
Mining makes practical and economic sense for recovery if the bitumen is located relatively close to the surface and not too distant from processing sites. For many projects now ongoing ($26 billion) or proposed ($34 billion), alternative means of accessing the resource are needed. So, like a mine face, Alberta oilsands technology keeps advancing.
Currently, the leading alternative to shovel mining is steam assisted gravity drainage (SAGD), which uses closely spaced horizontal wells for steam injection and production. Once coaxed to the surface, the bitumen/water emulsion can be sent downstream for handling in conventional refineries. Present SAGD technologies require 1,000 cubic feet of natural gas per barrel of synthetic crude oil produced. Similar in-situ thermal technology is employed extensively in Alberta’s Cold Lake and Peace River regions.
Following primary treatment separating oil and sand, the pioneering operators Suncor and Syncrude convert their feedstock to synthetic crude at their Fort McMurray upgraders, and CNRL will do the same. The Athabasca Oil Sands partners, however, ship unrefined liquid bitumen, transported with the assistance of diluents (condensate) via pipeline for upgrading at Shell’s Scotford complex near Edmonton. Similarly, Imperial Oil recently announced that once production begins at its Kearl project in 2010, bitumen will be piped out for upgrading. This strategy lets Imperial and others access existing refining capacity and use fabrication skills and facilities in places like Edmonton.
Indeed, a massive pipeline infrastructure is required for the oilsands, not just for processing, but also to deliver it to the market, sometimes through other provinces. So for instance, a soon-to-be-built $2-billion Access pipeline will carry 150,000 barrels a day (later 315,000 barrels a day) of processed bitumen for owners Devon Corp. and MEG Energy Corp. from their Christina Lake and Jackfish developments to Edmonton, 347 kilometres to the south. Another project, Enbridge’s planned $4-billion, 1,200-kilometre Gateway pipeline, will transport synthetic crude oil from Edmonton to ocean-going tankers moored at Kitimat, B.C. Meanwhile, the National Energy Board has been asked to approve a 16 per cent capacity increase of Terasen’s existing Edmonton-to-Burnaby Trans Mountain pipeline.
Besides having to obtain landowner permission along the right-of-ways, the pipeline companies often face demanding schedules, which mean building on swampy sections during winter when the frozen ground will support heavy equipment.
These initiatives are just part of the tasks ahead if oilsands production is to rise to 5 million barrels a day by 2030 from 1 million barrels a day now.
With production on such a scale, the environmental challenges are manifold. They have been outlined in a “roadmap” prepared by the Alberta Chamber of Resources. They include:
* Finding ways of disposal and settling of tailings, including slow-settling fine tails (every cubic metre of synthetic crude produced results in 6 cubic metres of sand and 1.5 cubic metres of fine tailings);
* Finding energy sources (internally from the bitumen itself, or coal or nuclear) as an alternative to increasingly scarce and costly natural gas, currently a major building block of oilsands development;
* Reducing the footprint of oilsands operations;
* Conserving water;
* Maintaining air quality, currently impacted by the burning of greenhouse-gas-producing hydrocarbons as well as by nitrogen oxides and sulphur dioxide emissions.CCE
Nordahl Flakstad is a freelance writer based in Edmonton, Alberta.