CERI: Costs up for oil sands production

The costs of producing bitumen and synthetic crude in the Albertan oil sands have increased over the past year, says the Canadian Energy Research Institute in an annual report that projects steady growth in output.

Compared with last year’s report, estimated costs of production before blending and transportation are up 4.4% for steam-assisted gravity drainage, 1.6% for mining without upgrading, and 5.9% for integrated mining and upgrading (OGJ Online, May 29, 2013).

The new estimates of plant-gate supply costs: $50.89/bbl (Can.) for SAGD, $71.81/bbl for stand-alone mining, and $107.57/bbl for integrated mining. CERI estimates the cost of stand-alone upgrading at $40.82/bbl.

When the price of West Texas Intermediate crude is $100/bbl, the only economic production technology when blending and transportation are included in the estimate is SAGD, CERI points out.

After those adjustments, the WTI-equivalent supply costs at the Cushing, Okla., pricing hub are $84.99/bbl (US) for SAGD, $105.54/bbl for a stand-alone mine, and $109.50/bbl for an integrated mine and upgrader. CERI estimates the WTI-equivalent cost of a stand-alone upgrader at $41.44/bbl.

Production outlook

Average total production from the Albertan oil sands rose 10.9% last year to 2.1 million b/d. Of that, 1.9 million b/d came via in situ techniques and mining, and 300,000 b/d was from primary production and enhanced oil recovery in the oil sands area. Under CERI’s reference-case assumptions, oil-sands production via mining and in situ thermal and solvent extraction will increase to 3.4 million b/d by 2020 and 4.8 million b/d in 2048. Last year’s reference-case forecast was for 3.1 million b/d by 2020 and 5.6 million b/d by 2046.

The study’s scenario assumptions relate to global economic recovery and therefore demand for oil, emissions legislation, and the possible effects of technology on the rate of growth in oil demand.

In CERI’s high case, oil sands production excluding output by primary methods rises to 3.8 million b/d by 2020 and 5.7 million b/d 2048.

In the low case, production rises to 4.2 million b/d by 2030 and 4.3 million b/d by 2048.

CERI expects cold production from primary methods and EOR in the oil sands region to increase from 270,000 b/d in 2013 to a peak of 350,000 b/d by 2020 and slip to 200,000 b/d by 2048.

Capital and emissions

Total capital requirements during 2014-48 in the oil sands, excluding those for primary production and EOR, are $597.9 billion (Can.) in the reference case, $636.6 billion in the high case, and $590.2 billion in the low case.

CERI estimates an increase in natural-gas requirements for oil sands production from 1.474 bcfd in 2013 to 3.17 bcfd in 2046 in the reference case, 3.753 bcfd in the high case, and 3.87 bcfd in the low case.

Greenhouse-gas emissions in CERI’s projection rise from 55 million tonnes/year (tpy) of carbon dioxide-equivalent in 2013 to 144 million tpy in 2048 in the reference case, 165 million tpy in the high case, and 129 million tpy in the low case.

CERI forecasts cumulative emissions under the reference case during 2014-48 at 4.587 billion tonnes, 3.3% above the 35-year projection it made last year.

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