North American Natural Gas Pathways

Natural gas has been viewed as a relatively dense, clean, low-carbon fuel that could play a significant role as a bridging fuel in the transition to a low-carbon future. Game-changing fracturing technology has recently led to unprecedented growth in production and market area supply, which has depressed prices and challenged the Canadian natural gas industry. As the next 5 years will be pivotal in the future of the industry, the key question is: Looking out to 2030, in the face of robust supply, how will industry, government and others work together to understand and grow the demand for natural gas and improve the competitiveness of the Canadian Natural Gas Industry?

The Canadian Energy Research Institute (CERI), in collaboration with ICF Marbek, whatIf? Technologies and Scenarios to Strategy Inc. (S2S), will collaboratively design, promote and deliver a project that will explore the future of natural gas supply and demand to 2030. The project will develop multiple North American supply perspectives and explore future pathways to grow natural gas demand within North America and to accelerate liquefied natural gas (LNG) exports from North America.

Potential Transportation Options for Alberta Land-locked Oil

Assuming Keystone XL moves forward, but Northern Gateway and TMX Expansion are blocked, what options exist for moving incremental volumes (bitumen, SCO, products) to new (or enhanced) markets?

In this study CERI will focus on examining:

1. Enbridge mainline system for incremental volume capacity and small additions for small increments (100,000 b/d);
2. TransCanada’s  northern Ontario gas pipe conversion  to oil service for Ontario and Quebec markets;
3. Alberta’s oil-on-oil competition from unconventional sources such as Bakken, Niobrara, Eagle Ford, etc.;
4. rail as a transportation option and what size of volumes could be handled by rail?  Does the possibility exist to build new fit-for-purpose rail system?
5. other water access points of Churchill, Manitoba, Portland, Maine or the Saint Lawrence Seaway.  And do these offer access to global markets?

With the development of new drilling and completion techniques over the last number of years, resources that were once considered uneconomic are now receiving attention from producers in the oil and gas industry. Producers are also finding vast new potential resources in non-traditional areas all over North America, as is the case in Quebec. The Utica shale has made headlines as a large potential resource for natural gas in the region. Estimates for the reserves per section (one square mile) are in the range of 100-150 billion cubic feet in the Utica Shale.  Given the size of the basin, the total reserves in place for the Utica shale could be several hundred trillion cubic feet of gas.

This report will examine two potential scenarios of developing the Utica over the next twenty years.  The first development scenario deals with a production outlook enough to meet Quebec's current natural gas demand of 500 mmcf/d (million cubic feet per day). The second adds an additional 1000 mmcf/d of production that is assumed to be exported. This report presents the economic impacts across Canada and the United States associated with development of the Utica shale in Quebec, including value-added gross domestic product, employment and employment compensation impacts, as well as taxation and royalty revenues.

Look Forward to the North American Oil Industry to 2022

Crude oil production in the United States is closing in on 6 million barrels per day, and growing, while oil imports are retreating from a high of 10 million barrels per day, in 2005, and currently sit at 8 million barrels per day. The political buzz in Washington is all about oil self-sufficiency within the next 10 years. Is this possible and if it does happen what could this mean for Canadian production?

As the next 5 years will be pivotal in the future of the Canadian oil industry, the key question is: “Looking out to the year 2022, in the face of the development of significant tight oil domestic barrels entering the market, and the potential for strong political efforts in oil product conservation, what does the North American oil market look like, and of more importance, what role does Canada play in this picture.” Understanding the market today will result in a development pathway for the Canadian oil industry.

CERI will develop a set of narratives that explore the future of the North American oil industry in the year 2022.  The report will examine:

• the effort and success required in the various tight and shale oil plays to bring on new barrels totalling 2, 3, 4 and 5 million barrels per day;
• the effort needed to encourage energy conservation in the transportation sector with a view to reduce consumption of oil and oil related products;
• the potential change in the transportation sector needed to connect future supplies of new crude with existing and potentially new refinery operations.  Connection could be either by rail or pipeline;
• the potential change in the Mexican Myan production with a view to an increasing or decreasing supply;
• the potential change in the Canadian domestic supply of both conventional light/heavy and oil sands bitumen and synethtic crude oil (SCO);
• the potential change in the Canadian domestic market with respect to access to eastern Canadian markets and the involvement of east coast offshore developments;
• the potential change in North American reference prices as a result of decreasing non North American imports.

This will be Canadian Energy Research Institute’s (CERI’s) eighth annual oil sands industry update, examining production, supply costs, and constraining factors for oil sands development. CERI monitors and reviews all the sands projects (used in the unconstrained case), and also develops a more realistic assessment – the CERI Reference Case Scenario – based on likely timing conflicts, contingencies, and project delays and deferrals. From the Reference Case Scenario stem the 35-year projections of production, investment, royalties, natural gas requirements, GHG emissions and demand for diluent, as well as supply costs for SAGD, surface mining recovery, and bitumen upgrading. As part of the 2012 update, CERI will also be addressing the economic benefits of upstream oil sands development.

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