July 16, 2008

$50,000 tires just part of the high cost of oilsands extraction

FORT McMURRAY, AB

Todd Dahlman gestures proudly to a 4,900-kilogram tire on display at the edge of Shell Canada’s vast oilsands mine north of Fort McMurray.

The mine operations manager for the Albian Sands project explains that this is not just any ordinary tire — it clocked a record-breaking 9,965 working hours under the weight of the planet’s biggest dump truck before finally being retired last month.

The average lifespan of a tire in the oilsands is 6,000 working hours, or roughly a year. At $50,000 each, it’s clear why Shell would want to make each tire last as long as possible.

From the gargantuan dump trucks used to haul the oil-soaked ore to the thousands of workers needed to get the job done, the oilsands business is mind-bogglingly expensive. So the everyday details on site matter a great deal to companies’ bottom lines.

“For us, tire care is a primary concern. We have a team of people dedicated to it,” Dahlman said.

Each tire, which stands about one storey tall, is inspected daily and the roads are maintained regularly to make sure tires aren’t punctured by debris.

Even so, Dahlman said tires need to be repaired or replaced 10 to 16 times a month.

Aside from tires, Dahlman said fuel ranks among the costliest aspects of oilsands mining.

Each CAT 797B dump truck, which can carry 400 tonnes of ore on one trip, has a 4,540-litre fuel tank and burns through about 114 litres per hour.

To cut down on fuel usage, Dahlman said the trucks are never left idling and the roads are kept smooth to cut down on resistance.

The roads are also constructed so trucks can take the most direct route from the loading point to the dumping point.

The upfront costs of the equipment itself is pricey, with a 797B costing $5 million. That does not include truck’s six tires.

The Bucyrus electric rope shovels, which scoop up the ore and can fill a 797B in four passes, are $18 million each.

The trucks travel from mine to plant 24 hours a day, seven days a week.

“There’s only reason we work 24 hours a day and that’s because we don’t have 25,” Dahlman said.

It takes about seven days for the raw oilsands ore, which has the consistency of chunky peanut butter, to make its way from the shovel to the gas tank.

Once mined, the ore is broken up into small pieces and then sent to a separator, where ultra-hot water causes the bitumen to froth to the top and the sand to sink to the bottom.

The bitumen then travels 500 kilometres south via pipeline to an upgrader near Edmonton, where it is converted into synthetic crude oil.

After that, it is ready to be made into gasoline, diesel and other fuels at an adjacent refinery.

It takes an army of workers to keep the convoluted processes running smoothly, and Shell Canada president David Collyer said the dearth of skilled labour has been among company’s biggest challenges.

“One of the things that we and other companies have done is try and broaden the labour pool, and part of that is accessing people from outside the province and part of it is trying to develop people within the province,” he said.

Shell has even made efforts to recruit from abroad, he said.

“In Venezuela, there are some very highly qualified people who have worked in heavy oil for a long time.”

Much of the oilsands’ costs can be tackled in the planning phase, so that access to equipment and workers does not get stretched too thin, Collyer said.

Upgrading the bitumen near Edmonton as opposed to on site, as is the case in a number of other oilsands projects, helps Shell take the edge off some of the costs.

“By having the project in Edmonton, you spread out the workforce. You don’t concentrate the people in one place and you don’t put as much pressure on the infrastructure in Fort McMurray.”

Canadian Press

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