CERI: Alberta oil sands development faces challenges to reach full potential

Jim Stott
Special Correspondent-Calgary

CALGARY, Apr. 1 -- Alberta's oil sands, with remaining established reserves of 174 billion bbl of crude bitumen, is a supply powerhouse to help meet North America's oil demand. But the region faces numerous development challenges to reach its full potential.

That was the consensus view of industry experts at a Canadian Energy Research Institute (CERI) oil conference near Calgary. Areas of concern include natural gas prices and high gas usage in bitumen processing, shortages of skilled labor, and substantial cost overruns on several recent projects.

Increasing pressures and public concern over water supply and industry use of water for processing, injection and other purposes, as well as the need for effective planning and research and development efforts to develop new technology and reduce costs also top the list of issues.

Alberta currently is producing close to 1 million b/d of oil sands, about one-third of Canadian oil production. A recent CERI study forecast that production, based on a moderate growth scenario, would reach 2.2 million b/d in 2017 at a price of $25/bbl (West Texas Intermediate, at Cushing, Okla.).

Development pros, cons
John LeGrow, general manager, oil sands, for ConocoPhillips Canada, said pluses for the oil sands industry include proximity to the world's largest energy market, a skilled labor pool which needs to be expanded, regulatory certainty, and access to capital for development.

On the downside, he said, oil sands are one of the highest-cost sources of oil in the world. Also, there are long timelines for the regulatory process and development, cost overruns on projects, and the need for more skilled workers.

LeGrow said for the industry to succeed it must develop new technology and a skilled work force to compete in a global marketplace. Managing environmental impact and ensuring that all stakeholders are part of the development process also is an essential policy.

"If the oil sands industry is to grow, it must be competitive and efficient," the ConocoPhillips executive said.

Len Flint, a consultant to the Alberta Chamber of Resources, said that identifying technologies and focusing on future R&D activity beyond 2010 are essential to future development. He said the supply costs for bitumen mining have been reduced by half but there has not been the same gains in refining.

Flint said the industry "must kick the natural gas habit" and develop alternatives for processing. Oil sands in situ thermal recovery operations use large volumes of natural gas and are sensitive to gas prices.

The consultant added that additional upgrading to offer markets a range of value-added products is necessary.

Water use concerns
Dave Pryce, a vice-president for western operations for the Canadian Association of Petroleum Producers, said that there is increasing public concern over the oil sands industry's use of water. He said the industry is hearing from the public and other water consumers that the industry injects water and it is lost. Also, Pryce said that he's heard that because the oil sands industry is a large water user, which is contributing to water shortages, it should pay for the water it uses.

Pryce said the industry is bumping into the agricultural community on water issues. Pryce said water use is becoming a high-profile public issue. Public concern is good and should lead to a debate in which industry use can be put in context, he said, adding, water is used extensively in oil sands operations and also in enhanced recovery in a maturing basin.

The CAPP executive said the industry is putting emphasis on alternatives to water use, has substantially reduced water for injection, is making greater use of saline groundwater, is recycling water faster, and is looking at the possible uses of municipal waste water.

Pryce said companies can expect greater scrutiny of their water use licenses.

Contact Jim Stott at stottj@telus.net.

Related Articles

Inhofe, Lankford say new BIA rules threaten Osage oil operations

07/10/2015 New US Bureau of Indian Affairs regulations that increase production expenses on tribal lands could put the Osage Nation out of business, Oklahoma’...

BHI: US rig count continues upward creep

07/10/2015 Although the overall US drilling rig count only edged up 1 unit to 863 rigs working during the week ended July 10, it represented the third consecu...

Chevron Phillips Chemical makes executive appointments


Chevron Phillips Chemical Co. LLC has made several executive appointments, all effective Aug. 1.

Lukoil taps new blending technology for Russian refinery

07/09/2015 OAO Lukoil has selected Honeywell Process Solutions (HPS), a division of Honeywell International Inc., to provide process control technology design...

PDO to use solar to displace gas in thermal EOR work


Petroleum Development Oman (PDO) plans to use a solar plant to displace natural gas in enhanced oil recovery (EOR) efforts in Amal oil field.

Ending crude export ban would help rural US areas, House panel told

07/09/2015 Rural US communities generally have benefited from the nation’s crude oil production renaissance, and potentially could be helped more if restricti...

Husky Energy reports unplanned maintenance at Lloydminster upgrader


Husky Energy Inc. reported unplanned maintenance at its Lloydminster heavy oil upgrader in Saskatchewan.

Stone confirms oil pay with Cardona development well in deepwater gulf

07/08/2015 Stone Energy Corp., Lafayette, La., encountered 288 ft of net pay in two intervals with its Cardona No. 6 development well on Mississippi Canyon Bl...

ORPIC lets contract for Sohar refinery expansion

07/08/2015 Oman Oil Refineries & Petroleum Industries Co. (ORPIC), through a contractor, has let a contract to Metso Corp., Helsinki, to supply valve tech...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Emerson Micro Motion Videos

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