Outcomes in two areas of critical uncertainty can mean a difference in Canadian bitumen production in 2030 of 1.7-1.8 million b/d, according to a study published by the Canadian Energy Research Institute.
Of the two crucial variables, social license and market access, the latter more strongly influences bitumen output.
In collaboration with ICF International and Scenarios to Strategy, CERI modeled production under four scenarios defined by those variable. The models accounted for expectations of growing production from Canadian tight-oil plays and from the US.
Problems are growing in the area of social license, which is crucial to securing project approvals, the study notes.
“Approval in many areas has become increasingly difficult as approval processes have been transformed from relatively contained and well-defined issues and regulatory processes to more-open consultation processes with increased input from increasingly diverse stakeholders,” it says.
It cites the Enbridge Northern Gateway pipeline proposal, which would carry production from the oil sands region of Alberta to the Pacific Coast in British Columbia and has “evolved from a regulatory review to a public inquiry that has lasted for more than 5 years” and for which “approval is by no means assured.”
The Northern Gateway project, like the politically stymied Keystone XL pipeline border crossing, are crucial to market access for growing supplies from the oil sands and tight-oil plays of western Canada.
“The lack of new pipeline capacity will increase price discounts [of Canadian bitumen] and ultimately reduce investment, production levels in western Canada, and economic benefits across Canada,” the study says.
For its reference case, CERI assumes “increased and timely access to markets” coupled with “trust and high public acceptance” of industry work and products.
Under those conditions, production continues to grow from the oil sands, reaching slightly more than 5.5 million b/d in 2030, compared with slightly below 2 million b/d last year.
Under assumptions of increased and timely market access but low trust and public acceptance, bitumen production in 2030 slightly exceeds 5 million b/d in the CERI projection.
Under assumptions of constrained and delayed market access, production in 2030 reaches only about 3.75 million b/d, regardless of the degree of trust and acceptance, according to the study.