Technology seen key to oil sands: Chu

Energy Secretary Steven Chu answers questions during the Reuters Energy Summit in Washington, June 1, 2009.

WASHINGTON (Reuters) - U.S. Energy Secretary Steven Chu said on Monday he believes technology can solve environmental problems associated with Canada's oil sands and that the huge nearby resource contributes to U.S. energy security.

Chu told the Reuters Global Energy Summit that the balance between the environmental impact from the huge energy resource in northern Alberta and its importance to U.S. energy supply is a complicated one that will require solutions from the industry.

Environmental groups have mounted major campaigns to get the message out to Americans that the expansion of Canada's oil sands industry threatens to intensify global warming, deforestation and damage to water resources.

"It's a complicated issue, because certainly Canada is a close and trusted neighbor and the oil from Canada has all sorts of good things. But there is this environmental concern, so I think we're going to have to work our way through that," he said. "But I'm a big believer in technology."

Canada is the largest foreign supplier of oil to the United States and its oil sands represent the biggest deposits of crude outside the Middle East.

The Canadian and Alberta governments as well as the oil industry are going to great lengths to ensure that U.S. energy and environmental policies do not put oil sands-derived crude at a disadvantage in its most important market.

The resource is mined in open pits as well as produced in wells with the aide of steam pumped into the ground. Then it must be processed by upgrading plants into light oil that can be fed into refineries.

There is concern about the large amount of energy required to produce oil sands, Chu said. He said Canadian producers point out they are making strides in extracting the crude "more cleanly."

Cutting the energy used to extract a barrel of oil sands crude would be "economically good and it will be environmentally much better," he said.

(Reporting by Ayesha Rascoe, Writing by Jeffrey Jones; Editing by Phil Berlowitz