An Interdisciplinary Model for the Development of Alabama Oil Sands
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AN INTERDISCIPLINARY MODEL FOR THE DEVELOPMENT OF ALABAMA OIL SANDS by DANIEL EDWARD SMITH III RICHARD A. ESPOSITO, COMMITTEE CHAIR BENNETT L. BEARDEN SCOTT BRANDE MICHELLE V. FANUCCHI BERRY H. (NICK) TEW, JR. A DISSERTATION Submitted to the graduate faculty of The University of Alabama at Birmingham, in partial fulfillment of the requirements for the degree of Doctor of Philosophy BIRMINGHAM, ALABAMA 2018 Copyright by Daniel Edward Smith III 2018 AN INTERDISCIPLINARY MODEL FOR THE DEVELOPMENT OF ALABAMA OIL SANDS DANIEL EDWARD SMITH III INTERDISCIPLINARY ENGINEERING ABSTRACT In July 2013, a memorandum of understanding (MOU) was signed by the Governors of the states of Alabama and Mississippi to jointly conduct a comprehensive geologic, engineering, and legal assessment of oil sands resources associated with the Hartselle Sandstone formation including the identification of environmental best practices associated with developing these resources. Pursuant to the MOU, the Geological Survey of Alabama (GSA) began a limited geological evaluation of the potential development of Alabama’s oil sand resources. This dissertation compliments those GSA efforts by identifying and assessing environmental and social sustainability risks associated with the potential development of Alabama’s oil sands within the International Organization for Standardization (ISO) 31010 risk management standard framework to provide an interdisciplinary sustainability risk management strategy that considers the inter-related disciplinary aspects of regulation, technology, and sustainability to address the environmental best practices component of the MOU. The bitumen extraction technologies currently being used to recover bitumen from geological formations that are most like the Hartselle Sandstone are proprietary and confidential. Furthermore, currently available bitumen extraction technologies have not been tested on Hartselle Sandstone oil sand deposits. iii In 2013 when the MOU was signed, West Texas Intermediate (WTI) oil prices exceeded $100 per barrel. Since the MOU was signed, WTI oil prices dropped below $30 per barrel and are now around $60 per barrel. While the economic aspect of oil sands development is not the focus of this dissertation, it is important to point out that interest in the potential development of Alabama’s oil sands has diminished with the price of oil. Nonetheless, this dissertation provides an interdisciplinary model for the sustainable development of Alabama’s oil sands when and if oil prices rise to incentivize such development. The interdisciplinary approach provided within this dissertation can be applied to the sustainable development of other oil and gas formations. Keywords: Hartselle sandstone, oil sands, sustainability, risk management iv DEDICATION This dissertation is dedicated to my wife, Elizabeth Perry Smith, without whose encouragement I would not have been able to complete this project. v ACKNOWLEDGEMENTS I am especially thankful to Cumberland School of Law and Samford University student Mary-Thomas Hart who provided the dissertation section on the regulation of Canadian Oil Sands Development as an independent research project under my supervision towards the completion of her joint Juris Doctor – Master of Science in Environmental Management degree. I am thankful to Auburn University Geology student (now recent graduate) Benjamin D. Smith, my son, who accompanied and assisted me with the field observations of Hartselle Sandstone outcrops with bitumen deposits in Alabama. I am also thankful to have been blessed with an outstanding PhD Committee that can be appropriately referred to as “The Dream Team”. I decided to embark on this path to purse a PhD because my Committee Chair, Dr. Richard Esposito, recommended I do so and he provided wise counsel and encouragement throughout the process. Committee member and State Geologist, Dr. Nick Tew, helped me understand oil sand development issues and focus my work to best support state efforts under his oversight to evaluate the potential development of Alabama’s oil sand deposits. Dr. Bennett Bearden is a world- renowned expert in water policy and his wisdom on the interplay of potential oil sands development and state water policy issues was invaluable. Many of the top environmental consultants in our region were trained by Dr. Scott Brande. His influence on the vi environmental quality of Alabama cannot be overstated and I was honored that he brought that expertise to my committee. Lastly, but certainly not least, I want to thank Dr. Michelle Fanucchi who balanced out the geologists on my committee with her public health experience and leadership. I am indebted to each of you. Finally, I am thankful to the American National Standards Institute (ANSI) who provided me with access to ISO standards via their University Outreach Program. vii TABLE OF CONTENTS Page ABSTRACT ....................................................................................................................... iii DEDICATION .....................................................................................................................v ACKNOWLEDGEMENTS ............................................................................................... vi LIST OF TABLES ............................................................................................................. xi LIST OF FIGURES .......................................................................................................... xii LIST OF ABBREVIATIONS .......................................................................................... xiii INTRODUCTION ...............................................................................................................1 GEOLOGIC FRAMEWORK OF OIL SANDS DEVELOPMENT ....................................3 ALABAMA OIL SANDS GEOLOGIC SETTING ................................................3 CANADA OIL SANDS GEOLOGIC SETTING ....................................................7 UTAH OIL SANDS GEOLOGIC SETTING ........................................................10 BITUMEN EXTRACTION AND TRANSPORTATION TECHNOLOGIES .................16 CURRENT OIL SANDS DEVELOPMENT TECHNOLOGIES IN CANADA ..............................................................................................................16 CURRENT OIL SANDS DEVELOPMENT TECHNOLOGIES IN UTAH ........17 POTENTIAL OIL SANDS DEVELOPMENT TECHNOLOGIES IN ALABAMA ...........................................................................................................19 AN OVERVIEW OF SUSTAINABLE DEVELOPMENT ..............................................22 WHAT IS SUSTAINABLE DEVELOPMENT AND WHY IS IT IMPORTANT? .....................................................................................................22 GREEN IMAGING ..............................................................................................24 viii AN APPROACH TO BUSINESS SUSTAINABILITY ......................................25 STRATEGIC PLANNING ...................................................................................26 SUSTAINABILITY INFORMATION MANAGEMENT SYSTEMS ................27 SUSTAINABILITY PERFORMANCE FOOTPRINTS ......................................28 SOCIAL SUSTAINABILITY PERFORMANCE ................................................30 THE INTERNATIONAL ORGANIZATION FOR STANDARDIZATION (ISO) ENVIRONMENTAL MANAGEMENT SYSTEM STANDARD ..................................31 THE INTERNATIONAL ORGANIZATION FOR STANDARDIZATION (ISO) RISK MANAGEMENT STANDARD ..............................................................................35 RISK MANAGEMENT FUNDAMENTALS ......................................................35 RISK MANAGEMENT FRAMEWORK ............................................................36 RISK MANAGEMENT PROCESS .....................................................................36 RISK MANAGEMENT CONTEXT AND CRITERIA .......................................37 RISK ASSESSMENT ...........................................................................................37 RISK IDENTIFICATION ....................................................................................37 RISK ANALYSIS .................................................................................................38 RISK EVALUATION ..........................................................................................39 RISK TREATMENT ............................................................................................40 ASSESSMENT OF SUSTAINABILITY RISKS FROM OIL SANDS DEVELOPMENT ..............................................................................................................42 DEFINITION OF RISK MANAGEMENT CONTEXT AND RISK EVALUATION CRITERIA .................................................................................43 RISK ASSESSMENT SCORING INDICES .......................................................57 SUSTAINABILITY RISKS ASSOCIATED WITH CANADIAN OIL SANDS DEVELOPMENT ....................................................................................60 ix SUSTAINABILITY RISKS ASSOCIATED WITH UTAH OIL SANDS DEVELOPMENT ..................................................................................................72 SUSTAINABILITY RISKS ASSOCIATED WITH ALABAMA OIL SANDS DEVELOPMENT ..................................................................................................72 REGULATION OF OIL SANDS DEVELOPMENT AS A RISK MANAGEMENT STRATEGY .......................................................................................................................77