Sands on Time

The world's first commercial oil production from bituminous sands, or "tar" sands as they are mistakenly but more commonly called, opened on schedule in 1967. Early in 1968 it is expected to advance from 50 percent capacity operation, to which power plant problems have initially held it, to full capacity.

There is nothing moderate or average about the installation near Fort McMurray in eastern Alberta, owned and operated by Great Canadian Oil Sands, Ltd. (GCOS). Temperatures can hit 60 below zero, though they tend to stay around 20 below during most of the long winter. The bucket wheels used to scoop up the oil-bearing sands—there are two of them, said to be the biggest ever made—measure nearly 30 feet in diameter, and each of the ten buckets mounted on a wheel has a capacity of 39 cubic feet. In an hour the ten buckets can move 9,000 tons of material. (Half of this capacity will do, though, since the plant needs only about 100,000 tons of material per day to produce the 45,000 barrels of synthetic crude for which it has been designed.) The plant will operate around the clock 330 days a year before stopping for repair and maintenance. At that rate, the bituminous material on the 4,000-acre lease on which the plant operates can keep it going for 30 years.

At first, the oil was collected in tanks then pumped to the Edmonton terminal, 266 miles to the south, by way of a new pipeline from the plant. By the end of the year, the liquid had reached and undergone processing in the refineries to which Edmonton normally ships via existing pipelines. Chances are that if

sand operations a larger slice than the 5 percent of the market that is now the standard? Several new ventures, bigger than GCOS, are already anxious to try out different techniques. Will they be given a green light that would permit technological competition and advance? Will GCOS want to contemplate enlargement after they have accomplished a year's operations which they say they need for evaluation? And how will the income from a by-product-250 tons of sulfur per day, that has been greatly boosted by high sulfur prices—affect the cost calculus? An issue of special interest in this country is the effect that the project's successful completion might have on the development of US shale oil resources. Will the first tapping of the Canadian resource discourage the potential shale oil developer, because one more energy source has been added to the present mix? Will it encourage him because of the parallel to be drawn? Oil shales, like bituminous sands, have existed for many years, have faced great technical difficulties, and have experienced many ups and downs in expectation. So impressed has been Canada's Royal Commission on Taxation that, in its recent report, it recommended abolishing the depletion allowance. In view of the vastness of the country's tar sand resources, the commission judges, there is no further need to give tax incentives for exploration. GCOS has been quick to comment that without the existence of the allowance (which in oil and gas ventures amounts to 33 1/2 percent of net income) and the so-called "tax holiday" (an initial three-year grace period for new operations), it would probably not have started its venture, and that its elimination would badly hurt its future profitability. This, too, parallels some of the issues surfacing in the oil shale policy debate. While Sun Oil Company hopes that 1968 will mark the year in which profits from this $235 million investment begin to flow, energy economists might be checking off the year as one more in which a major source of energy, liquid hydrocarbon, the depletion and eventual demise of which has been so frequently and so mistakenly predicted in the past, has had a new lease on life.