CERI: Alberta oil sands industry outlook 'very robust'

Jim Stott
Special Correspondent-Calgary

CALGARY, Mar. 4 -- Canada's oil sands industry in Alberta has a "very robust" future—given a reasonable outlook for oil prices and it can overcome a number of challenges.

That was the conclusion of a new study released Wednesday in Calgary by the Canadian Energy Research Institute (CERI) on the outlook for one of the world's largest oil reserves.

The study, which covered 2003-17, was presented by Robert B. Dunbar, CERI's senior director of research.

Study results
The study stated that supply costs for oil sands are higher than previously reported and that the industry faces many other challenges. It said a number of oil sands projects will proceed but others will require innovative commercial and technological solutions to bring them on stream.

The study noted that the oil sands in northern Alberta now have been recognized as one of the largest oil deposits in the world. According to OGJ, at yearend 2002, there remained 174 billion bbl of crude bitumen established reserves, which places Canada second only to Saudi Arabia in total oil reserves.

The study said that if all proposed oil sands projects proceed on schedule, industry could see a production increase to 3.5 million b/d by 2017, representing 2 million b/d of synthetic crude and 1.5 million b/d of unprocessed crude bitumen.

The study went on to say that while many projects will proceed on schedule, others likely will be deferred. Raw bitumen and synthetic crude oil supply costs are higher than previously published and seem to confirm why some projects are proceeding and others are on hold while pending reviews.

Pricing scenarios
The study presented a number of pricing scenarios for oil, stating that $25/bbl for West Texas Intermediate oil at Cushing, Okla., would produce a reasonable return on investment of 10%.

In addition to economics, the study said the industry is facing challenges associated with environmental impact, capital costs and labor availability and productivity, energy requirements, sources and costs, water requirements, market constraints and supply, infrastructure restraints, and concurrent production of natural gas and crude bitumen.

Solutions to these problems, the study said, will require ongoing industry attention and ingenuity. Dunbar said that Canada's ratification on the Kyoto Protocol for Climate Change is another potential problem.

All of the pricing scenarios presented will offer substantial oil sands production gains over current levels of 1 million b/d. Projects now under construction will add 160,000 b/d of capacity by 2007.

A high-growth scenario with WTI prices of $32/bbl would raise production to 2.8 million b/d by 2017.

A moderate scenario of $25/bbl, viewed by CERI as the reference case, would raise production to 2.2 million b/d by 2017.

A low-growth price of 18/bbl would choke off oil sands growth by 2007. Industry production would peak at 1.16 million b/d by 2007. Operating projects would continue and projects under construction would be completed.

Dunbar said CERI's current view is that future oil prices are more likely to be higher than $25/bbl and that many projects are basing their economics on mid-$20/bbl prices.

Natural gas demand for oil sands by 2017 could reach 1.5-2.2 bcfd, the study said. The study director said the industry and researchers are actively seeking ways to reduce North America's reliance on gas. He said there are a number of alternatives being investigated, including producing gas from bitumen, nuclear energy, and improved technology.

Dunbar said surface mining will remain a mainstay of oil sands production during the study period, but in situ recovery from deeper deposits are the long-term future of the oil sands.

Related Articles

EIA: US proved oil, gas reserves continue to climb

12/15/2014 US proved reserves of oil and natural gas have increased by 9% and 10%, respectively, according a recent report from the US Energy Information Admi...

Falling prices may pose new test for China oil policies, speakers say

12/15/2014 China, which successfully revised its oil strategy in response to new technologies since 2008, could face fresh tests if prices stay low for a prol...

Encana plans to hit the ground running in Permian

12/12/2014 Encana Corp. has announced its second major acquisition in a Texas oil play this year, agreeing in September to acquire Permian basin-focused produ...

Uncertainty lingers about local content rules as Mexico prepares for competitive bid round

12/12/2014 The energy industry around the world has it eyes on Mexico as the country implements constitutional and legislative reforms that are set to open it...

Moody's: E&P spending to dip as crude oil prices slide

12/08/2014 Weakening crude oil prices will cut exploration and production spending by independent producers in the US next year and make integrated oil and ga...

US proved oil, gas reserves continue to climb

12/04/2014 US proved reserves of oil and natural gas have increased by 9% and 10%, respectively, according to the US Energy Information Administration. The 3....

US-African energy moves

12/01/2014 Getting electricity to more Africans is a top priority at the US Department of State's Bureau of Energy Resources (ENR), an official told a House F...

Global reserves, oil production show increases for 2014

12/01/2014 Oil & Gas Journal's annual look at worldwide proved reserves shows increases compared with a year ago. Reserves estimates for crude oil and lea...

Oil & Gas UK rebuts industry-subsidy claim

11/24/2014

Oil & Gas UK has issued a sharp rebuttal to reports that UK producers enjoy generous governmental subsidies.

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected