I'd like to spend a little bit of time talking about the perspective of water availability in the province of Alberta, and then I'll talk specifically about water use in the oil sands industry, both in surface mining and in the in situ industry.
Each year in the province, approximately 130 billion cubic metres of water flow through the rivers of Alberta, and 85% of this water flows north. By far the largest rivers in the province are the Peace and the Athabasca rivers, joining to become the Slave River, leaving the province to the north. In contrast, in the province 88% of the water demand is in the agricultural areas and the major population centres in the south half of the province.
All the oil sands production is in the northern basins. The mining oil sands are all within the Athabasca River basin, and in situ oil projects are distributed among the Peace, the Athabasca, and the Beaver river basins.
Of the 130 billion cubic metres on average available in the rivers of Alberta each year, the Alberta government has licensed or allocated just under 10 billion cubic metres per year to all sectors within the province. The oil and gas industry accounts for about 7% of this provincial allocation--on here, the yellow portion of the bar--after the large sectors of agriculture, commercial, and municipal use.
Most of this allocation, unlike the other sector use, is allocated or licensed for oil sands mining in the Athabasca River basin, about 70% of that 7%. The rest of the oil and gas sector uses the remaining water, and comparatively small volumes are used for in situ oil sands production.
It's noteworthy that criticism of oil sands water use often fails to recognize that the use is in the northern basins, where the water supply is much more plentiful and water use is a small percentage of natural supply.
Focusing on that with a little more detail, oil and gas allocations represent 2.2% of the allocations of the natural flow of the Athabasca River, 0.04% of the natural average flow in the Peace River, and 3.7% of water availability in the Beaver River basin. It's worth noting that the actual water use is often less than the allocation, but concerns and water shortages in central and southern Alberta have led to misperceptions about water supply in the north for the oil sands.
If you take a quick look at the chart, there are three bars. The axis represents billions of cubic metres of water. The blue bar is the average natural supply in the river basin, the red bar represents the total amount of water allocated in that basin for use in all sectors, and the yellow bar represents the amount of water allocated for use in the oil and gas sector. What we can quickly see is that the allocations in the south half of the province, in the North Saskatchewan and South Saskatchewan River basins, represent a large percentage of natural supply, some 30% of the North Saskatchewan and nearly 60% of the South Saskatchewan.
In comparison, including forecast growth in the oil sands industry, the Athabasca, Peace, and Beaver river basins will remain among the least utilized basins in the province.
I'll now focus on the oil sands mining industry. Over the last several years, the Oil Sands Developers Group has been working on forecasting how much water might be required from the Athabasca River. Both lines on the chart represent aggressive growth cases, the purpose being to try to determine how much water might be required from the river if projects go forward as envisioned and if future projects go forward as envisioned.
The lower case represents 2.5 million barrels of oil per day, and the second case is 3.5 million barrels of oil per day, which is approximately four times current production rates. The left axis shows the absolute amounts of water being withdrawn from the Athabasca River, and the right axis shows the percentage that this withdrawal represents of the mean annual flow at Fort McMurray. We can see for those two growth cases that the industry use of water is expected to rise to between 10 and 15 cubic metres per second, which represents about 1.5% to 2.5% of the flow of the Athabasca River. We also see that it peaks, in the most aggressive case, at around 16 cubic metres per second, or just under 2.5% of the mean flow. And I'll be talking about that number again.
So why is there so much concern about water use from the Athabasca River, given the very low percentages of water that are allocated, and the low percentages of water that are being used now, and will be used in the future?
This is mostly because the Athabasca River is ice-covered for five to six months per year, and the winter flows are about 10 times lower than the open-water flows. Also, the Athabasca River's flows are not regulated by dams. The concerns very much focus on withdrawals during low winter flow weeks, and especially in dry periods during those low winter flow weeks.
It's worth mentioning that when the Athabasca River joins the Peace River beyond Lake Athabasca to become the Slave River, the low flows in that river system are not as much of a concern. This is because the Peace River has the W.A.C. Bennett Dam in British Columbia that takes some high summer flows and distributes them for hydro during the winter months, creating higher-than-natural flows in the Peace and Slave rivers—by about 700 cubic metres per second. If you compare that with the 16 cubic metres per second projected for the oil sands industry, we see that the low-flow concerns are really a concern only for the Athabasca River.
These low flows have been regulated by the federal and provincial governments, with water restrictions during these low-flow periods capping the cumulative amounts of water available to the oil sands industry. This is in the Water Management Framework: Instream Flow Needs and Water Management System for the Lower Athabasca River.
This framework was released in 2007, after seven years of multi-stakeholder research, resulting in a very protective and conservative framework. It applies to segments four and five of the lower Athabasca River, and these are the segments where we find the oil sands mining operations. It limits water withdrawals by the oil sands operators during low-flow winter periods to between eight and 15 cubic metres per second, depending on the river flow and the time of the year.
This process is being refined in a multi-stakeholder process, taking advantage of additional research on the river, with a phase two water management framework anticipated for implementation at the beginning of 2011.
So what does this mean? Given the projections of oil sands mining growth to a peak of 16 cubic metres per second, and given the protection provided by the lower Athabasca River water management framework, what does this mean for withdrawals and natural flows?
On this next slide, we've taken the driest period on record at the Fort McMurray gauge, as contained in the period of 1998 to 2004. The natural flows are the blue curve on the slide. You can see the low winter flows, and you can see the high summer flows and variability of the flows on the hydrograph. The other curve—which is difficult to make out—is the amount of water that will remain in the Athabasca River if that growth case of 16 cubic metres per second comes to pass.
With the protection provided by the water management framework, we see that the difference between that rate, even for a growth case during a very dry period, and the natural flow of the Athabasca River is almost imperceptible. However, we are concerned about those low winter flow periods, and research is ongoing in that area.
There have been some suggestions that the Athabasca River is drying up in the winter. This very much depends on the timeframes that we look at. If we take a look at the high-flow periods from 1970 to 2004 at the Fort McMurray gauge, we can see there's quite a steep declining trend. It's a little difficult to see on the chart, but if you take a look at the full record of flow history on the Athabasca River at Fort McMurray, you see that from 1957 to 2007, the trend—including a forecast for the future—is much less alarming.
The town of Athabasca, which is upstream of Fort McMurray, has a longer flow history, and the river flows track very similarly. Of course, it's a smaller river upstream, because of fewer tributaries entering into the river. At the town of Athabasca, we have a full century of monitoring data, and if we take a look at that full history, we can see there have been no trends in flows recorded over the last century on the Athabasca River. There are seasonal increases and decreases due to seasonal and longer-term fluctuations in the weather patterns.
However, that having been said, if the flows in the Athabasca River were to decrease because of climate change or for other reasons, the effect would be that the water management framework would be implemented more often, and that would restrict the oil sands withdrawals more often in order to ensure protection of the river.
In addition, industry would manage the reduced water availability through the use of various mitigation tools, including the use of additional off-stream storage, thus spilling storage in the wetter periods, the summer high-flow periods, and then using that water shortfall in those winter periods. In addition to that, we can expect ongoing water efficiency improvements. As well, we've heard about some new technologies that may be promising.
I'd like to spend a couple of minutes talking about the oil sands in situ industry, which is quite different from the mining industry.
Water is also critical for most in situ oil sands production, and as the industry grows, so does the requirement for source water. However, increases in fresh-source water demand have been offset by a number of initiatives, including the transition to the use of saline water--water that's too salty for potability or agriculture--and high recycle rates of water produced with the bitumen. These rates are greater than 90% and sometimes approach 100% in some years.
I'd first like to call your attention to the black line on the chart. It indicates the bitumen production or oil production from the in situ oil sands industry. We can see that over the last 20 years there has been a sixfold increase in production.
In contrast, the blue curve, which indicates fresh water, shows fluctuation over the years. We have seen a slight increase in recent years, but the volume of fresh water has been greatly offset by the volume of saline water used, especially since 2002. There has been quite a steep increase in the use of saline water over fresh water, and you can see for the first time in 2007 that the industry now uses more saline water than fresh water for recovery.
We would expect that trend to continue into the future, depending on the availability of saline water. Depending on this mixture, by 2020 the in situ oil sands industry's forecast is to use between 25 million and 45 million cubic metres of fresh water to produce more than 1.6 million barrels of oil per day, or 90 million cubic metres per year. This represents less than 0.5% of Alberta's current water allocation to produce almost 40% of Canada's total crude oil.
Continuous improvement is also an important aspect of the industry. The chart here shows the water use efficiency of Imperial Oil's Cold Lake operation. It's in terms of units of fresh water per unit of bitumen produced. We can see that over the last 30 years there has been a dramatic reduction in the amount of fresh water required to produce each incremental barrel of oil. It is this record of continuous improvement that gives me confidence that the oil sands industries, both the in situ industry and the mining industry, will continuously improve their water use efficiency.
In closing, I'll mention that some new projects in the in situ industry, such as Devon's Jackfish project, use only saline water for steam generation. They're not using any fresh water at all.
Thank you very much.
I'd like to now introduce Ian Mackenzie, who will talk about water quality.