The oil sands of Alberta are a huge natural resource and bitumen production has expanded dramatically in the past five years as the price of oil has risen to record levels. Bitumen recovery from oil sands deposits involves either strip mining the sands and extracting the oil, or pumping large quantities of steam into the ground to free the bitumen from the sand which is then pumped above ground for upgrading. Traditionally, the energy to produce the steam and hot water used in these processes has come from natural gas. The use of increasingly large amounts of natural gas for oil sands recovery presents a number of economic and environmental problems. Steam generation and upgrading processes will contribute large amounts of greenhouse gas emissions while Canadian and regional environmental policies seek long term reductions. Large planned increases in natural gas consumption will cause western Canada to become a net importer of gas, with potentially serious impacts on regional natural gas pricing and market volatility. This is likely to impact not only the profitability of the oil sands business but also the price and availability of natural gas to home owners, commercial uses and other industries.
This paper explores the feasibility and economics of using nuclear energy to power future oil sands production and upgrading activities. Although more expensive to build than conventional facilities, nuclear reactors produce no greenhouse gas emissions and offer relatively low and stable fuel and operating costs. Although uranium has been subject to recent price increases as a result of improved operation of existing reactors and plans for new plants, nuclear energy production costs are relatively insensitive to uranium costs. There are, however, several trade-offs. This paper compares the benefits and the drawbacks, and puts forth several nuclear energy application scenarios for steam or steam and electricity for upgrading bitumen from both in-situ and surface mining operations.
This review includes the Enhanced CANDU 6, the Advanced CANDU Reactor (ACR) and representing high temperature gas reactor technology, the Pebble Bed Modular Reactor (PBMR) which represents the first advanced high temperature gas reactor technology to become commercially available within the next decade. Based on reasonable projections of available cost information, nuclear energy used for steam production is expected to be less expensive than steam produced by natural gas at current natural gas prices. For electricity production, nuclear becomes competitive with natural gas plants at natural gas prices of $10-13/MMBtu (CAD). Costs of constructing nuclear plants in Alberta are affected by higher local labor costs which this paper took into account in making these estimates. Although more definitive analysis of construction costs and project economics will be required to confirm these findings, there appears to be sufficient merit in the potential economics to support further study.
The primary environmental benefit of nuclear energy in this application is to reduce CO2 emissions by up to 3.1 million metric tons per year for each 100,000 barrel per day (bpd) bitumen production Steam Assisted Gravity Drainage facility, or 2.0 million metric tons per year for the replacement of 700MWe of grid electricity with a nuclear power plant. The potential impact on future regional gas markets can be dramatic considering that natural gas use to support current plans for oil industry expansion through the year 2020 represents 20% of projected western Canadian gas production.
A single PBMR reactor is able to supply high pressure steam for a 40,000 to 60,000 bpd SAGD plant, whereas the CANDU and ACR reactors are too large and unable to produce sufficient steam pressures to be practical in that application. A single module PBMR cogenerating its own power requirements can supply steam for SAGD operations from 30,000 to 50,000 bpd in size.1 The CANDU, ACR and PBMR reactors have potential for supplying heat and electricity for surface mining operations.
Key challenges to deployment of new nuclear plants in Alberta include obtaining public acceptance, achieving acceptable construction costs, transportation of large components, resolving workforce issues and addressing nuclear licensing requirements. All would require an integrated planning process to address the prerequisites to make nuclear energy a realistic option in the near future. Recommendations are provided which include development of conceptual designs of specific nuclear energy oil sands applications; developing and implementing a public information program; the development of an integrated oil sands energy strategy including nuclear to address electricity, work force issues, natural gas supply, greenhouse gas reductions and licensing such that nuclear energy can be a viable option for the future.
A number of current initiatives have been announced that will consider options to utilize bitumen derived fuels in advanced gasification systems with CO2 capture and sequestration. Since nuclear energy can be an alternative to these projects which are also capital intensive and challenging, a study comparing nuclear options with other proposals to address future gas supply constraints and options for achieving greenhouse gas reductions would be beneficial. With the possible imposition of carbon taxes, limits on natural gas availability, or restrictions on natural gas use, it would be prudent to begin to seriously investigate nuclear energy as an alternative to growing utilization of natural gas and expensive carbon capture schemes using bitumen or coke gasification. If the oil sands development plans currently being discussed are implemented in the 2017 to 2020 timeframe, should nuclear energy be used instead of natural gas, the total reduction in CO2 emissions could be as high as 745 million metric tons over the lifetime of the operation.
In summary, nuclear energy applications appear to be well suited for long term oil sands production and are likely to provide an economically competitive, CO2 emission free option to greatly help Canada in meeting its Kyoto greenhouse gas emission commitments and reduce pressure on limited regional gas supply, allowing more responsible development of its rich oil sands resources.