For the first time in many years, Canadian crude oil production (excluding oil sands) has reversed its downward trend due to technological advancements able to unlock hard-to-produce shale oil resources. With continued innovation and technology, combined production of crude oil (including condensate and pentanes plus volumes) and oil sands for Canada averaged 3.5 million barrels per day in 2013. This growth was impressive given the lengthy list of issues facing the industry: rising project costs, skilled labour shortages, rising tight oil production in the US, offshore competition, shifting demand, transportation infrastructure constraints, pipeline approval delays, the lack of market diversification, widening basis differentials, and the challenges to development from environmental groups and the general public. Although the future for oil production growth in Canada still looks favourable, these and other issues could significantly impact the future of the Canadian oil industry.
Taken together, an array of national, continental and global challenges could limit the growth, profitability and competitiveness of the Canadian oil industry. Looking out to 2030, a key question is: “How can industry, government and others work to understand and address an array of supply, demand, transportation, environmental and social issues with a view to improving the societal value of oil development, which itself provides a significant contribution to the Canadian economy?” The Canadian Energy Research Institute (CERI), in collaboration with ICF International, and Scenarios to Strategy Inc. (S2S) developed four plausible pathways, or narratives, of the future of the Canadian oil industry.
Oil Sands Environmental Impact
The development of the Canadian Oil Sands has a considerable and growing impact on the the environment. This report is an overview of the current environmental impacts of oil sands development and progress and efforts that have been made to mitigate impacts. Current extraction processes are energy intensive, and by year 2020 the oil sands will be the second largest single contributor to Canada’s greenhouse gas emissions after transportation. Absolute greenhouse gas emissions are growing along with increases in production, although some progress has been made to reduce the amount of greenhouse gases emitted per barrel of produced bitumen or synthetic crude oil. Burning of fossil fuels for energy also produces other air pollutants such as criteria air contaminants, the impact of which have been examined in the region. Use of fresh water is another concern in oil sands development, and efforts to reduce reliance on fresh water and increased recycled water use have been particularly successful for in situ extraction. Finally, land use impacts, biodiversity, reclamation, and improvements to environmental monitoring are discussed.