CERI updates oil sands production, cost outlook

The realistic scenario in the latest Canadian Energy Research Institute outlook expects Alberta oil sands production to increase to 1.7 million b/d by 2015, 2.5 million b/d by 2020, 4.5 million b/d by 2030 before reaching a peak of 5.3 million b/d in 2041.

Nov 4th, 2009

Guntis Moritis
OGJ Production Editor

HOUSTON, Nov. 4 -- The realistic scenario in the latest Canadian Energy Research Institute outlook expects Alberta oil sands production to increase to 1.7 million b/d by 2015, 2.5 million b/d by 2020, 4.5 million b/d by 2030 before reaching a peak of 5.3 million b/d in 2041. Oil sands production was 1.3 million b/d in 2008.

The scenario assumes crude oil demand starting to increase in 2010 as the world recession ends and crude prices reaching $200/bbl for West Texas Intermediate in 2043.

CERI's outlook notes that during the past year oil sands projects have seen construction costs decline by 15% and operating costs decline by 13%.

It estimates that oil sands project will have a rate of return of 23% for steam-assisted gravity drainage, 11% for mining and upgrading, and 18% for mining without upgrading. Total capital required during its 35-year realistic scenario period is $309 billion.

CERI points out, assuming no technology changes, that by 2043 oil sands natural gas requirements will be three to four times more than current levels, leading to US gas exports into Canada.

In addition, greenhouse gas compliance may cost the industry $130 billion during the next 35 years, CERI says.

Contact Guntis Moritis at guntism@ogjonline.com.

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