What's new in production

	Vol. 230 No. 8
DAVID MICHAEL COHEN, MANAGING EDITOR

A nuclear option for greener oil sands?

About a year ago, the UK advertising industry’s watchdog organization forced Shell to pull a newspaper ad claiming that the company was working toward “a profitable and sustainable future,” in part by investing in Canadian oil sands.

“Because we had not seen data that showed how Shell was effectively managing carbon emissions from its oil sands projects in order to limit climate change, we concluded that, on this point, the ad was misleading,” said the group, called the Advertising Standards Authority.

The decision illustrates the huge divide between current practices for extracting and upgrading the vast Alberta bitumen deposits and the priority that Western nations are beginning to place on carbon-conscious energy development. It will take more than “greenwashing” to bridge that divide.

The environmental challenges associated with oil sands development are many and well known. Byproducts of the bitumen extraction and upgrading processes include large quantities of sulfur, highly toxic liquid fine tailings (which must be stored indefinitely in leakproof ponds because no means of reclamation yet exist), and of course, significantly greater amounts of greenhouse gases than conventional crude produces. Two new reports from the provincial government of Alberta suggest that this difference in greenhouse gas emissions is smaller than previously thought, with oil sands producing 10–45% more greenhouse emissions than conventional crude. Other estimates have placed emissions from oil sands as much as three times higher.

It is the oil sands’ carbon footprint that will cause producers the most trouble as their biggest customer—the United States—moves toward a cap-and-trade plan that, at least in the current version passed by the House of Representatives, includes a “border adjustment,” or tariff, on imported goods that have a larger carbon footprint than those made in the United States. US refiners receive 60% of Canada’s oil sands output. In response to the climate bill, Jim Prentice, Canada’s environment minister, told The Globe & Mail that Ottawa plans to match US laws governing greenhouse emissions.

Particularly galling to climate advocates is the fact that oil sands producers consume large quantities of lower-carbon-emitting natural gas to extract and upgrade a much more carbon-intensive product. According to the Canadian Energy Research Institute, it takes about 1 Mcf of gas to produce a barrel of bitumen by in situ processes, or about 0.5 Mcf/bbl to surface mine the bitumen, for electricity to power the mining equipment. Upgrading the bitumen to synthetic crude oil takes an additional 0.9 Mcf per barrel of final product. In 2006, the oil sands industry consumed about 1 Bcfd of natural gas, accounting for more than 40% of Alberta’s total gas demand.

Recently, proposals have emerged to use nuclear energy to replace some of that natural gas. In March 2008, Ontario utility Bruce Power applied to the Canadian Nuclear Safety Commission to prepare a possible site for a nuclear plant in Alberta’s Peace River district, which contains one of the province’s three main deposits of bitumen. In March 2009, the company announced its selection of a site at Whitemud, 30 km north of Peace River. Bruce’s proposal calls for two to four 1,000-megawatt reactors, with the first to be completed as early as 2017.
The Peace River plant would likely use Advanced Candu reactors, which Bruce Power owns the rights to market in Alberta. The Generation III+ design builds upon the Candu pressurized heavy water reactor developed in Canada in the late 1950s and 1960s, but incorporates a compact fuel-channel design, light water coolant, and other improvements. Despite its advanced design, such a plant would have the extremely high Capex, waste disposal, water, insurance and security costs typically associated with nuclear energy—costs that would have to be subsidized by taxpayers. The security concern is particularly poignant in light of recent bomb attacks by environmental activists on energy infrastructure in British Columbia.

An alternative nuclear option would rely on many extremely small nuclear plants to heat in situ bitumen, power mining equipment and/or provide hydrogen for upgrading. Several designs exist for these “nuclear batteries”; none have been built. However, Santa Fe, New Mexico-based Hyperion Power Generation Inc. hopes Alberta’s oil sands will be the testing ground for its garden shed-sized nuclear batteries, which the company claims can produce enough heat to generate 25 megawatts of electricity for up to 10 years at a cost of $30 million per unit.

The Hyperion design is based on the TRIGA (Training, Research, Isotopes, General Atomics) small reactors used by students of nuclear science. It would use low-enriched uranium hydride as a fuel, which can’t be used to make a bomb and is self-cooling, eliminating the need for a massive containment building and cooling water and making a meltdown virtually impossible, according to the company.

To avoid tampering, Hyperion says the reactors would be sealed in the factory, transported by truck with special security to their destination and buried 3 meters underground before being turned on, after which little to no human intervention would be required and the units would be monitored remotely. After the fuel was used up in 5 to 10 years, the units would be dug up and returned to Hyperion for disposal or refueling.

Though theoretically much safer and without the heavy Capex of large-scale nuclear, these nuclear batteries would have their own special risks and costs. It is much more difficult to provide security for hundreds of mini-reactors than for one big plant, and voters are unlikely to let the government cede that responsibility to private industry. And of course, waste disposal is still a costly public expense. Nevertheless, this technology is an intriguing option.
Whether large or small, one can still question the wisdom of transitioning from use of a low-carbon fuel to produce a high-carbon fuel, to use of a no-carbon fuel (after reactor construction and mining of the nuclear fuel) to produce a high-carbon fuel. And with gas prices at their current lows, even carbon pricing may not make nuclear more economical than gas-assisted oil sands. But as long as oil remains the world’s transportation fuel of choice, oil sands development will be a prime market for all sorts of new energy technologies, nuclear included.