|
Oil sands a spending magnet
Gary Park Petroleum News Calgary correspondent
Take the International Energy Agency’s word for it, northern Alberta and Saskatchewan will be among the hottest non-conventional oil plays over three decades, attracting 45 percent of the $205 billion investment in oil sands, raw bitumen, extra-heavy oil and gas-to-liquids technology.
The IEA has forecast that about $92 billion, or an average $3.06 billion a year or triple the spending to date, will be invested in Canada in the 2001-2030 period, followed by Venezuela at $52 billion.
Over the same time, non-conventional output excluding GTL will grow to 9.5 million barrels per day by 2003, or about 8 percent of world oil volumes, an IEA report said.
Bitumen and synthetic crude in Calgary is forecast to climb to 1.8 million bpd by 2010 from last year’s 740,000 bpd and race to 5 million bpd by 2030. Prices over $20 per barrel needed But the IEA noted that its forecast expansion of non-conventional projects hinges on oil prices above $20 per barrel over a sustained period, regardless of the technological advances that are reducing costs.
Equally challenging are answers to export pipeline space to the United States, refining capacity, the consumption of water and natural gas in the extraction and processing phases and greenhouse gas emissions — all areas the IEA says Canada is tackling.
GTL — where only South Africa and Malaysia have commercial plants — is expected to make its greatest gains in the second and third decades, reaching $545 billion over the forecast period.
The agency said that upstream capital spending will “decline progressively, as opportunities for profitable investment diminish and drilling is focused more on regions outside North America and on gas.”
It estimates upstream spending in the United States and Canada will average $16 billion a year through 2010, shrinking to $10 billion annually from 2021 to 2030, by when the gas upstream will be consuming $17 billion a year.
But those totals are a dramatic drop from the average $40 billion a year in the decade to 2002, when the peak was $54 billion in 2001.
Globally, the IEA said the oil sector alone will need more than $3 trillion through 2030, starting at $92 billion a year and rising to $114 billion.
Worldwide gas will need similar spending, with about 25 percent targeted at the U.S. and Canada, with cumulative spending on gas supply infrastructure soaring to $855 billion over the 30 years, including $510 billion channeled into the upstream.
The IEA said gas imports from the Middle East and Africa will be an increasingly vital element of supply in North America, which it describes as the “most mature gas producing region in the world” and says faces a drop in traditional reserves after 2020.
The report said “new indigenous sources will help replace these reserves, but they are not expected to be sufficient to meet rising demand. Consequently, imports will grow in importance over the coming decades.” Emphasis must shift to Arctic Faced with an average 1.5 percent annual growth in North American supply, the continental emphasis must shift to the Arctic frontiers in Alaska and Canada, along with non-conventional sources such as coalbed methane and liquefied natural gas, the IEA said, predicting that LNG will cover 90 percent of North American imports by 2030.
However, the forecaster argues that an $18 billion Alaska gas line would be uneconomic based on “wild swings” in gas prices over recent years.
“While the ability of the industry to finance these (major) investments is not in question, there are growing concerns about the level of prices that will be necessary to make investment in large-scale infrastructure projects profitable in the highly deregulated North American market,” it said.
To that end, the IEA said the United States and Canada may “adopt measures to support future mega-projects such as an Alaska pipeline through targeted measures including accelerated depreciation and loan guarantees.” Uphill struggle in North America Net gas imports to the United States and Canada are forecast to make explosive growth from 7 billion cubic meters in 2001 to 109 billion cubic meters in 2010 and 371 billion cubic meters in 2030.
The uphill struggle in North American was captured in IEA statistics that noted:
• U.S. gas output has remained flat despite a 64 percent hike in the number of development wells in 2000-2002 vs. 1997-1999.
• North American reserves edged up only 4.5 percent in 2001 while the number of exploration wells rose 58 percent, the greatest increase since 1985.
• Wells less than three years old contribute more than half of the total U.S. volumes vs. less than 40 percent at the start of the 1990s.
• Decline rates from newly drilled Canadian wells were 50 percent in 2000 compared with 18 percent in 1990.
| 