Alberta’s oil sands cash cow

Feeding off a recovery in crude oil demand and prices, the Alberta oil sands could attract spending of more than C$2 trillion on new projects over the 2010-35 period — C$1.85 trillion in operation, maintenance and sustaining capital and C$253 billion in initial strategic capital for construction — says the Canadian Energy Research Institute.

The impact could contribute C$2.11 trillion to Canada’s gross domestic product and C$521 billion to the United States GDP, although CERI said these figures should not be seen as the total economic contribution of the oil sands.

The investment would boost related employment in Canada (direct, indirect and induced) to 905,000 jobs in 2035 from 75,000 in 2011 and in the U.S. to 465,000 jobs from 21,000.

CERI Chief Executive Officer Peter Howard said the post-recession revival of projects and the introduction of new ventures has resulted in production targets of 2.1 million barrels per day by 2015 (up 400,000 bpd from current output), 4.8 million bpd in 2030 and 4.9 million bpd by 2035.

The Canadian Association of Petroleum Producers is about to revise its own forecast last spring of 3.5 million bpd, or 81 percent of Canada’s total crude production, by 2025.

CERI predicts in-situ bitumen production will match mined production by 2025 and rise to 2.8 million bpd or 57 percent by 2035.

By 2035, natural gas requirements for oil sands operations are expected to reach 4.3 billion cubic feet per day — double today’s consumption — although new technology and efficiency improvements will lower per-barrel gas needs.

CERI forecasts greenhouse gas emissions will rise to 89 million metric tons per year by 2035.

Under the scenario, the Canadian government will collect C$311 billion in taxes from new oil sands projects over the next 25 years, while Alberta will receive C$105 billion in taxes and C$350 billion in oil sands royalties. Annual royalties in Alberta are targeted at C$10.3 billion in 2023 and C$36 billion in 2035.

—Gary Park