Unconventional Bridges over Troubled Water - Lessons to Be Learned from the Canadian Oil Sands as the United States Moves to Develop the Natural Gas of the Marcellus Shale Play
Jefferies, Cameron, Energy Law Journal
Synopsis: As North America's energy demands grow in the face of diminishing conventional fossil fuel resources, unconventional oil and gas figures to play an increasingly important role. This article assesses two important unconventional fossil fuel deposits, namely the oil sands located in Alberta, Canada and the Marcellus Shale gas located in America's Appalachian region as well as the importance of properly crafted regulatory regimes that safeguard another critical natural resource - fresh water. Development of unconventional fossil fuels requires considerable quantities of fresh water for extraction and produces substantial quantities of contaminated wastewater as a byproduct. This analysis addresses the importance of unconventional fossil fuels, compares the two resources in terms of extraction and water impact, highlights the weaknesses in the regulatory regimes in Alberta and the Marcellus Shale states, and proposes federal intervention and/or regional management as a possible solution, as justified by traditional theories of regulation (i.e., the externalization of pollution and race to the bottom theory). Commercial oil sands extraction has been ongoing for at least forty years and, above all, the Canadian experience demonstrates the importance of properly considered regulation and regional monitoring prior to accelerated development in the Marcellus Shale gas play.
North American society is fossil fuel dependent. From the suburban lifestyle to lengthy daily commutes, our day-to-day lives depend upon a reliable and readily available supply of hydrocarbon-based energy. In contrast, scientists and politicians are becoming increasingly cognizant of the impact of the fossil fuel lifecycle on the natural and human world, be it in the form of social and environmental costs of fossil fuel development or the climate change debate.
Despite heightened awareness, global energy demand grows.1 The U.S. Energy Information Administration (EIA) forecasts a 49% growth in world marketed energy consumption by 2035 (compared to a 2007 pre-recession baseline).2 In short, "[f]ossil fuels are expected to continue supplying much of the energy used worldwide."3 Strikingly, the EIA also notes that unconventional fossil fuel energy resources will grow at approximately 4.9% per annum through to 2035.4
Two unconventional fossil fuel sources that are currently garnering considerable attention are the oil sands of northern Alberta, Canada, and the Marcellus Shale natural gas play under the Appalachian Mountain range in New York, Pennsylvania, West Virginia, Ohio, and Maryland.5 Both sources represent significant fossil fuel deposits in terms of potential energy extraction. For example, the Alberta oil sands are estimated to be the second largest reserve for crude oil in the world, second only to Saudi Arabia.6 Statistically, the Canadian Association of Petroleum Producers confirmed in June, 2011, that Alberta's oil sands deposits contain an estimated 170 billion barrels of crude oil equivalent, of which "34 billion barrels can be recovered by surface mining" and 130 billion barrels by in situ extraction.7 The oil sands have recently received considerable attention in the United States as the proposed extension to the TransCanada Keystone XL pipeline has been the subject of political and legal attention and closely followed by the media. With respect to the Marcellus Shale gas play, recent estimates by the U.S. Geological Survey indicate that there are 84,198 billion cubic feet of natural gas and 3,379 million barrels of natural gas liquids that will ultimately be recoverable.8 These considerable reserves are attractive to companies who stand to benefit from their development and governments who stand to gain a measure of energy independence and a new export resource.
These fossil fuel resources are not as easily developed as their conventional counterparts. The oil (technically called bitumen) in the oil sands is chemically bonded to sand grains and the process of separating the bitumen and turning it into a consumable petroleum product requires considerable energy, water, and advanced technological processes. …