Chapter 1

Cassie Young kept scanning the horizon from her seat beside the pilot of the black Eurocopter as the engine droned and the rotor blades filled the cabin with the noise of their rapid-fire thumping. To her right she could see the Athabasca River, which appeared to be a muddy gray through the haze that had beset the landscape below. The river was flanked on both sides by the deep green of the great boreal forest, a vast, densely wooded wilderness that encircles the northerly reaches of the earth from Scandinavia through Siberia and from Alaska to the Atlantic seaboard of Canada.

She imagined that bobcats and moose and elk and maybe a grizzly bear or two wandered below her along the forest floor. The scene reminded her of trips she had taken with her father in northern Minnesota in the summertime, just the two of them in the wilderness paddling a canoe across lakes you could dip your cup into and take a drink.

The helicopter was ferrying Cassie from Fort McMurray to the tar sands operations of SandOil of Canada. SandOil was one of the first companies to coax bitumen, a black, tar-like substance, out of sands which sit under 54,000 square miles of forest in northern Alberta, an area the size of New York state. She knew these facts because she worked as an energy analyst who had written many reports that included information on the tar sands, or rather oil sands, as the industry preferred to call them.

With oil prices this high — oil had moved above $100 a barrel earlier in the year — the oil sands were having their day. It was finally profitable to dig them out. Just how profitable was part of what she came to find out. On this June day in 2008 Cassie was visiting the oil sands as an analyst for Energy Advisers International, a prestigious energy consulting firm based in Washington, D.C. At age 31, she was the youngest analyst in the firm.

“Ever been up here before, Ms. Young?” the pilot asked.

Cassie detected a distinct Scottish brogue through the headset she was wearing. “No, this is my first time,” she replied. “But I’ve written a lot of research that included the oil sands.”

“Well, that’s your business, isn’t it?” he replied. “Of course, even though the stuff’s really more like tar, everyone here calls it oil sands…marketing and all that.”

“Of course,” Cassie said. She knew that using the words “tar sands” in Alberta could easily be interpreted as a sign of contempt for those working in the industry.

Cassie pulled a camera from her khaki travel vest, put the strap around her neck, and fired off several shots of the landscape below.

She noticed that her scruffy, black-haired pilot had a rather young-looking face. “When did you arrive here?” she asked him.

“This morning?” he asked.

“No, when did you move to Fort McMurray?”

“About three years ago now,” he said. “I started out working as a chopper pilot in the North Sea.”

“Were you flying Super Pumas out of Aberdeen?”

“Yes, those were the only things we flew. And they were sturdy. But I’d rather fly in a bad snow up here than in a howling storm over the North Sea.”

“So, it was the wonderful weather that brought you here,” Cassie said with a smirk.

The pilot turned toward her and smiled. “Not exactly the weather,” he said. “But after six years in Aberdeen, I could see that the fields were going to do nothing but go downhill. So, I decided to go where the future is. And that’s here. There’s enough oil here to last at least another 40 years, and probably a hundred when they ramp up production of all the stuff that’s too deep to get at from the surface.”

“So, you’re planning on staying?” she inquired.

“Oh, I’m planning on staying as long as the oil lasts, and that’s gonna be long after I’m dead.”

“And you don’t think the environmentalists or concerns about global warming are going to limit the development of the oil sands — at some point, I mean?”

“Ms. Young, there’s more than a trillion barrels of oil down there.” He turned his gaze to her for a moment. “Even if they only get half of it out, that’s enough to last the world — the whole world — for 16 years. Right here!” He was pointing down at the ground. “In this one place!” His eyes returned forward. “Nobody’s gonna stop that. Not with all the people in China and India wanting to live like you and I do…not with big oilfields like the North Sea drying up…not until they’ve done all the digging that can be done.” He looked toward her again with his eyebrows raised and his head tilted at an angle as if to ask, “Do you really think anything can stop it?”

Mirroring him, Cassie raised her eyebrows and tilted her head in his direction. “I suppose you’re right,” she said.

The SandOil site was now coming into view. Cassie could see a vast dark pond streaked with oily stains. Purifying the wastewater from oil sands operations had turned out to be trickier than anyone had anticipated. She had read that some of the ponds had been around for decades waiting for the industry to find a solution. She reached for her camera and started taking photos again.

Just ahead smoke was drifting upward from the tall towers of the upgraders and seemed to blend with the haze in the grayish-white sky. The upgraders were the final processing stage in which the bitumen, now separated from sand and water, was turned into something resembling oil.

“Mr. Weller asked me to take you for a little spin around the site,” the pilot said. “Is that okay?”

“Please do,” Cassie responded.

The helicopter descended until it seemed as if she could almost touch the tops of the circular gray metallic upgrading towers with their long, twisting vertical pipes hugging the sides. Near the top of one tower she could see a man in a blue hard hat standing with his hand on the safety railing of a walkway that ran the circumference of the tower, one of several such walkways at various heights. Closer to the ground the pipes ran so thick and in so many directions that Cassie thought it looked as if someone had deposited a large helping of giant-sized spaghetti there.

“What’s that yellow stack that looks like the beginnings of a pyramid?” she asked.

“That’s the sulfur they extract from the oil,” the pilot said. “They haven’t been able to figure out what to do with it until recently. They’ve finally found a contractor who will haul it away and sell it.”

Now they were over the open pit mine. The sand was deep black. The operation looked more than anything else like a vast strip mine in coal country. Enormous dump trucks were being filled by large hydraulic shovels that scooped tons of sand with each bite. A tangle of makeshift roads crisscrossed the mine surface which now sank deeply into the former forest floor.

As they circled back, Cassie saw several large funnel-shaped vessels. Inside them bitumen was being skimmed off the top of the hot water used to separate it from the sand.

The helicopter was soon hovering over a parking lot and closing in on an adjacent helipad. As the pilot set down, Cassie could see a man and a woman waiting at the perimeter. A half a minute later they were advancing toward her as the pilot reached over, unlatched the door and told her it was now safe to exit.

The man rushed toward the helicopter with his hand outstretched as Cassie climbed out. “Terry Weller, Ms. Young,” he said, wearing a broad smile as he shook her hand. “We’re honored to have you here to review our operation.” Cassie had found during her travels for the firm that whenever EAI came calling, people seemed to stand at attention. She turned back temporarily toward the door of the helicopter, pulled out her burgundy-colored shoulder bag — which she found much handier than a briefcase — and put the strap over her shoulder.

She thanked the pilot and then pivoted to face Weller, a short, stout, middle-aged man with sandy hair combed straight back. He was in shirtsleeves and a tie and wore a blue hard hat. He handed a hard hat to Cassie. “You’ll be needing this,” he said. He looked behind her at the pilot, but his words seemed addressed to her. “Did Gavin take you for a nice look-see of the site like I asked?”

“Yes, Mr. Weller, he certainly did,” the pilot responded.

“Good,” Weller said. He gave the pilot a thumbs-up and with that Weller was back attending to Cassie and guiding her away from the helicopter. “Pretty impressive, isn’t it?”

“Yes, it is,” Cassie said.

“The oil sands are just about the biggest engineering project on the planet right now, and you can see why,” Weller continued. “It takes a lot of equipment and know-how to move enough earth every day to fill Rogers Centre…or, in your case, Yankee Stadium. But that’s what the oil sands operators do on a combined basis every 24 hours.”

They were now at the edge of the helipad. Weller turned and waved as the helicopter roared to a liftoff. The rotor wash caused Cassie’s pants and shirtsleeves to flutter vigorously and stirred up a thin veil of dust. She rubbed her eyes to relieve the irritation. After the helicopter hovered away, Weller introduced Cassie to the woman who was accompanying him. “Ms. Young, I’d like you to meet Kelly Waverly, my assistant.”

Cassie shook hands and exchanged greetings with Waverly, a tall, thin brunette whose face seemed full of sharp edges.

“Let’s all get in the car, shall we?” Weller said.

After everyone was situated in the car and Weller had the vehicle moving, Cassie asked Weller what his position with SandOil was.

“Vice president for public affairs,” Weller answered.

Cassie was hoping for someone other than the company’s public relations people. She resented the way most of them treated her — as if she were part of their image management team instead of an analyst whose job was to gather information and offer objective advice to clients. Still, she was getting the perfunctory tour, and she really did need to understand in a more concrete way how the oil sands projects worked.

“It’s a good thing you came up here in the summer,” Weller said. The car tires began to crackle against the gravel as they moved off the pavement. “In winter it can get down to 30 below and just stay there for weeks.” Shortly, they arrived at the edge of the pit Cassie had seen from the air.

All of them got out of the car. Weller looked over at Cassie and tapped his hard hat.

“Oh yes, of course,” she said and donned the hard hat Weller had given her. Cassie advanced toward the edge of the enormous pit which was guarded by huge bald tires lying on their sides, tires larger than she’d ever seen. A smell like fresh asphalt wafted up from below and completely enveloped her — not surprising, since bitumen is mixed with aggregate to pave roads.

“The tires come from the big trucks you see down there,” Weller said as he approached Cassie. “Those trucks can carry 400 tons each. The tires alone are 13 feet high.”

In the distance the drivers in the cabs of these partially blackened, yellow-orange dump trucks were tiny, shadowy figures. “The trucks cost five million dollars each,” Weller continued. “Way back, you can see a shovel.” Cassie could see the red cab of the huge shovel, but the bucket was temporarily hidden behind it as it scooped up another load of black sand.

Weller began coughing. It was a terrible fit, maybe four or five deep coughs followed by several smaller ones. His assistant extracted a bottle of water from the bag she was carrying and handed it to him. Weller opened it and took a long drink.

“Sorry about that,” he said. Then he continued his narrative. “Our shovels can pick up 100 tons at a time. That one there cost us 15 million dollars.” Weller paused for a moment, and then as he started again, he drew both hands apart to bring attention to the entire expanse of the pit. “All that you see here is surface mining. This mine goes down about 80 meters; that’s about 260 feet for our friends south of the border,” he said smiling and looking toward Cassie. “But surface deposits are only 20 percent of what’s available in Alberta. The other 80 percent are too deep to dig out.”

“SandOil has some SAGD, don’t they?” Cassie pronounced the abbreviation sag-dee. She was referring to a method for mining reserves deep underground by piping in steam to melt the bitumen and then pumping the liquid out via wells drilled for that purpose.

“We’ve got some working SAGD operations already,” Weller responded.

“What do you think of toe to heel air injection?” Cassie queried. This method actually sets some of the bitumen on fire underground. The heat from the fire liquefies the remaining bitumen and also creates gases that push the liquid to the surface through recovery wells.

“We think it’s a very promising technique for underground recovery,” Weller replied.

“And?” Cassie probed. She believed Weller was holding something back.

“And what?” Weller looked down, a sure sign he was uncomfortable with the question, she thought.

“So, you’re not ready to tell me that SandOil is in negotiations for a licensing agreement and joint venture with the patent holders.”

“Well, I can’t confirm that,” Weller said.

“You just did.”

“No, I didn’t,” Weller said with a chuckle even as he wagged his finger at Cassie. Then she knew she was right. She regarded it as a game to try to get anything remotely useful out of public relations people.

“Fine,” Cassie said raising one hand in a conciliatory gesture. “I’m sorry I brought it up. Please continue with the tour.”

Weller’s smile had shifted to a frown, but he caught himself and quickly reverted to smiling. “Over there is the crusher,” he said pointing to where all the trucks filled with the black sand were going. “Everything gets crushed to a size that allows us to more easily extract the bitumen.” He paused. “Would you like to feel a sample of the oil sand?”

“Yes, I would,” Cassie said.

Weller motioned to his assistant, and she produced a small jar with some lumps of blackened sand in it. Weller took the jar from her and opened it, jiggling a lump onto Cassie’s waiting hand.

“Rub it around a little,” he said.

“It’s sticky and much more coarse than I imagined,” Cassie remarked.

“That’s why it wears down those big tires in a year or less,” Weller explained. “And it sticks to the trucks so badly in the summer that we have to wash them frequently. Sometimes the trucks weigh 10 tons less when we get done. And speaking of washing, just throw the sample you have on the ground there, and Kelly will give you some wipes to clean your hands.”

Weller’s assistant handed Cassie some moist wipes ripped from a foil pouch. Cassie wiped her hands, handed the soiled wipes back to Waverly, and then thanked her.

“Let’s get in the car and drive over to the separation facilities,” Weller said. Cassie climbed into the front seat, and Waverly got in back. As they moved slowly toward pavement again, Weller explained that the crushed “ore,” as he called it, is mixed with warm water and caustic soda — what most people know as lye — and piped to separation facilities, the gigantic funnels Cassie had seen from the sky. There the sand, clay and other matter are separated. The bitumen floats to the top and is skimmed off. The sand drops to the bottom. And in the middle, a cloudy mixture of clay, bitumen and water is piped off to be processed further. After all this, the bitumen is moved to an upgrader, one of the tall, metallic towers Cassie had seen from the helicopter. There it is further processed into a flowing synthetic oil, Weller explained. Then it can be refined just like regular crude oil into gasoline or diesel or any number of products, he added.

Soon they pulled up beside one of the huge funnel-shaped processors. A smooth low hum was emanating from it. “No need to get out,” Weller said. “Not much to see. But let me say that we now get 90 percent recovery of the oil out of the sands using advanced technology. That’s up from 75 percent. And after we upgrade it to synthetic crude, we send most of it south to you folks in the U.S.”

“Aren’t you going to build a pipeline to eastern Canada at some point?” Cassie asked.

“Too expensive,” Weller replied. “It’s just easier and cheaper for eastern Canada to import their oil from abroad and for us to send this stuff down to you through the western pipeline system.”

Cassie already knew the answer to her question, but she wanted to see exactly how Weller would handle it. Of course, he was right on purely economic grounds. As a result though, Canada, which could easily be energy independent, had now tied its own energy security to that of the United States.

They drove a bit farther to the upgrader and then got out of the car again. Cassie detected the odor of burning matches which she knew came from sulfur compounds expelled by the upgrading towers.

Weller began explaining in detail the chemistry of SandOil’s particular upgrading process. For the first time, Cassie retrieved a notebook and started writing. This information was new to her since she only had a general idea of the chemistry involved. He said that most of the heat needed for the conversion came from natural gas, but that in the not-too-distant future he expected nuclear power to be the main energy source driving oil sands development. There was talk of perhaps a dozen nuclear plants being built.

Then he added, “Yep, Canada’s going to be the biggest supplier of imported crude oil to the United States from here on out. You can thank the oil sands for that. And we’re doing it without significantly affecting water quality or fish and wildlife.” He looked over at Cassie and emphasized the next point with a shake of his index finger. “That’s been confirmed by all the studies we’ve done in conjunction with the government of Alberta.”

Cassie couldn’t believe that he had had the audacity to say the last sentence to her with a straight face. No one actually believed the phony reports put out by these joint government and industry bodies that were supposedly policing the environment around the oil sands. But she knew it was part of the pitch. And naturally, it was unacceptable to say that the government and the oil industry were colluding to sacrifice northern Alberta for oil. But that’s what they were doing, and everybody knew it. She hated being treated like a simpleton; but, she hated the hypocrisy even more.

Her job, however, wasn’t to judge the wisdom of such projects — only their likely success, their place in the oil supply picture, and any possible technical, financial or environmental obstacles that might prevent them from expanding. From the looks of things, her helicopter pilot was right. Nothing was going to stop the development of Alberta’s oil sands.

With the tour concluded, Weller left his assistant behind and drove Cassie to SandOil’s corporate offices just south of the mine. They entered the parking lot of a sleek, low-slung, glass-faced office building. Weller escorted Cassie into the building and then into a conference room. There two men rose to meet her and Weller as they entered. One was bald on top and had a handlebar mustache. He introduced himself as Randall Taylor, the company’s chief engineer. Taylor was maybe 40 and wore a red plaid shirt but no tie. The other man was SandOil’s chief operating officer, Harrison Cole. Cole had a droopy face and oversized ears and seemed to be in his late fifties. He wore a blue tie over his white dress shirt and a pair of blue dress slacks.

After the introductions, everyone sat down and Cole started. “Ms. Young, we’re pleased you could meet with us. We know you have a very busy schedule. Now what can we tell you?”

“I’m most interested in the cost side of your operations,” Cassie began.

“Wait a minute — you’re the one who wrote the report two years ago on…what did they call it?” Cole was looking at Taylor for the answer.

“The law of receding horizons,” Taylor said.

“But you weren’t working for EAI then?” Cole inquired.

“No, I was working for a brokerage, Atlas Group, out of Chicago,” Cassie replied. At the time her conclusions were not warmly received by the firm. In fact, her boss had to fight to get management to release the report. Brokerage firms simply didn’t like putting out bad news because they felt it might hurt business. Fortunately, her candid style hadn’t caused any similar problems at EAI, at least not yet.

“You pissed off a lot of people up here by saying that our profits would get squeezed.” Cole spoke calmly and with a smile.

“Yeah, I said the price of natural gas and other inputs could rise faster than oil prices,” Cassie said. “And that the cost of capital would go through the roof.”

“Unfortunately, you were right,” Cole said. “Natural gas prices shot up so much in the last six months, it’s been killing us. Right about now I could use those nuclear power plants.”

“Any word on when you’ll get them?” Cassie asked.

“Our CEO is at an industry meeting today working on just that,” Cole responded. “He sends his regrets for not being able to be here.”

“I understand you’re in negotiations for a toe to heel air injection joint venture,” Cassie said.

Cole glared at Weller.

“I didn’t tell her,” Weller said. “She already had it figured out.”

Cole turned back to Cassie. “We’re not quite ready for that to get out.”

“But you’ll let me know, right?” Cassie asked.

“I’ll give you a heads-up when we’re ready to make the announcement,” Weller responded.

Cole and Taylor spent the rest of their time with Cassie discussing in detail their plans for lowering mining and processing costs through management efficiencies and new technologies. Cassie took careful notes. This is what she had really come for. The results, the two men explained, would only accrue over time. But little steps here and there, they assured her, would eventually bring down the cost of producing oil from the oil sands substantially.

As soon as Cassie indicated she was finished with her interview, Cole and Taylor were on their feet making apologies for having to run off right away. “The oil around here doesn’t squirt out of the ground,” Taylor remarked. “We have to do a lot of coaxing.”

That evening as Cassie sat in bed in her hotel room in Fort McMurray watching the news, she noticed that financial forecasters were expecting oil prices to pull back from their record levels. They said the fundamentals couldn’t sustain these prices. She agreed and was astounded that the price had gotten this high. The view of the future from Fort McMurray was one with a lot of new supply. Add to that new oil supplies coming from deepwater drilling off Africa and expanded production in the Middle East, and the price was bound to go back down, she thought.

She switched off the television and began to ponder the last 12 months working for EAI. She thought about all the trips and extra work she had volunteered for, trying to make a good impression, trying to lay the groundwork for a partnership in the firm. Still, she wondered if she was doing enough. Yes, she had a valuable ally, her mentor, Evan, who was a managing partner. But she was taking nothing for granted. She would be in line for a promotion to senior associate in six months. And then, if she were lucky, she’d maybe make partner two or three years after that.

Then she thought about Paul Hendler, the man she’d been seeing for the last four months. She had met him at a party given by an associate at the firm. Paul had tagged along with one of the invitees that night, so he wasn’t really a friend of anyone at EAI. In some ways that was a relief. Cassie never felt obliged to talk shop with him, and so she could leave her work behind whenever she was with him.

But both of them were so busy traveling that it was hard to plan time together. Still, he was such a sweet man really, and that was an almost nonexistent commodity in the cutthroat town of Washington, D.C. Maybe two people with busy careers just weren’t meant to be together. She didn’t know whether to hope that their relationship would somehow work out or that it wouldn’t. If it didn’t work out, she thought she would probably look for someone who was less obsessed with climbing the career ladder than she had to admit that she was.

Enough ruminating, she thought. She was too tired for this. She shut off the light on the nightstand, pulled the covers over her and tried to get some sleep for the long day of travel ahead.


Copyrighted Material

Copyright © 2010 by Kurt Cobb