Report counts on oil sands bonanza
Alberta Chamber of Resources says five-fold increase to 5 million barrels per day is possible from oil sands by 2030; but group acknowledges wide range of technological challenges
Petroleum News Calgary Correspondent
Technology has been the key to achieving production of almost 1 million barrels per day from Alberta’s oil sands and will underpin expansion to 2 million bpd in 2012 and possibly 5 million bpd in 2030, said the Alberta Chamber of Resources.
In an 82-page study released Jan. 30, the chamber predicted that the oil sands will meet 16 percent of North America’s oil demand by 2030 provided innovation remains in the forefront.
After nearly 40 years of commercial production, encompassing two phases of growth, the oil sands sector is “now poised for a third wave of development” that could generate C$40 billion of economic growth in Canada, create tens of thousands of new jobs and produce up to C$90 billion in new investment over 30 years, the report says.
Within less than 10 years, oil sands are expected to account for 2 percent of Canada’s Gross Domestic Product.
Challenges aheadBut those lofty goals will not be reached without meeting a series of challenges.
Chamber Executive Director Brad Anderson said the Athabasca, Cold Lake and Peace River regions form a basin “with a lot of oil in it, but it’s also the most expensive hydrocarbon in the world to produce.”
The chamber’s roadmap is designed to set a course for growth by identifying issues and technology options to overcome hurdles.
“As producers work toward this new vision, they will rely heavily on technology to grow a truly sustainable industry,” the report said.
Building and maintaining momentum requires change on many fronts:
• Product diversity must be expanded.
• Markets in North America and the Pacific Rim must be developed.
• Sustainable development must be apparent in all aspects of operations.
• Economic wealth must be shared broadly across Canada and more narrowly among the communities — aboriginal in particular — likely to be most affected by continued development.
Oil sands could bridge energy gap to futureThe chamber said that as conventional crude and natural gas decline, the oil sands could bridge the gap between non-renewable fossil fuels and cleaner energy options of the future.
Surface mining currently recovers about 90 percent of bitumen and that recovery rate could be improved by 6 percent to 8 percent with new technology.
For in-situ recovery, using techniques such as steam-assisted gravity drainage to extract bitumen too deep to mine, the report estimates ultimate recovery rates of 40 percent to 70 percent.
But if as steam-assisted gravity drainage production is to expand greatly “much of the new production will need to be upgraded to higher value product,” the chamber said.
The industry is put on notice that challenges in managing air emissions will become greater with time and will require attention to community relations.
Although 70 percent to 80 percent of life cycle greenhouse gas emissions come from burning the final fuel products, the 15 percent or so released at the production stage are largely the result of high energy use for bitumen recovery and reducing that use is a major target for overall cost reduction.
The full report is available online at www.acr-alberta.com.
Advances on several oil sands projectsThe findings were released during a week when advances were made on several oil sands projects.
• Having received regulatory approval, Canadian Natural Resources may start work this fall on Alberta’s fourth large-scale oil sands project. Backed by a work force that will peak at about 3,500, the C$8.5 billion Horizon project could come on stream in 2008 and grow to 232,000 bpd by 2012, producing about 5.6 billion barrels over 50 years.
• Nexen and OPTI Canada are scheduled to decide this month whether to proceed with their C$3.2 billion joint venture. The Long Lake project is designed to use steam-assisted gravity drainage to produce 60,000 bpd of refinery-ready light oil. Privately held OPTI is currently working on raising C$300 million-$500 million in private equity and plans an initial public offering in the second quarter for another C$500 million.
• Alberta’s Energy and Utilities Board is on the verge of ruling on an application to expand the Shell Canada-operated Athabasca complex, with Western Oil Sands and Chevron Canada Resources each holding 20 percent. Athabasca is working towards its first stage capacity of 155,000 bpd, but has an ultimate target of 500,000 bpd by 2014 to be achieved in phases.
• A raft of emerging oil sands players are raising funds for start-up projects: Deer Creek Energy has raised C$100 million for a steam-assisted gravity drainage venture and is now drilling on leases south of the Horizon lease; Petrobank Energy and Resources is raising C$30 million to advance work on its Whitesands project; Meg Energy wants to develop a steam-assisted gravity drainage project in the Athabasca region; and privately owned Synenco Energy is targeting C$100 million in private equity along with a public offering to backs its plans for a C$4.5 billion Northern Lights project.