United States Oil Industry and Liquid Supply/Demand to 2022
CERI Study 137
Conventional Oil Supply Costs in Western Canada
CERI Study 135
Conventional oil production in Western Canada has experienced a resurgence in the past few years thanks to new drilling and completion methods. Since 2010, light and medium conventional oil production has increased, reversing the downward trend that had been in place since the 1970s.
This renewed production growth was underpinned by strong drilling activity, especially in horizontal wells combined with multi-stage hydraulic fracturing technology. Technological advances, cost reductions in drilling technologies and recent oil price levels have helped to unlock resources that were once considered too expensive to commercialize.
This report assesses the economic viability of oil production across each of the study areas of Western Canada by examining the supply costs of new wells drilled in 2012.
Canadian Oil Sand Supply Costs and Development Projects (2012-2046)
CERI Study 133
Another year has passed and 2012 was a year of growth for the oil sands amid transportation issues, lack of market diversification, increasing production of tight oil in the US and Canada, and on-going skilled labour shortages and rising project costs. It is clear that among all these hurdles, one dominated the most – transportation challenges. While the skilled labour shortage remains a significant concern, the new oil sands projects will not come online due to pipeline constraints regardless of whether or not there are enough skilled personnel to work on these projects. Hence, when the US government rejected TransCanada’s Keystone XL project, originally intended as a 700,000-900,000 barrel per day (BPD) line to carry mainly oil sands streams from Hardisty, Alberta to the Gulf Coast via Cushing, it was a major impediment for the industry and provincial economy and has become a focal point of the political and environmental pro- and anti-oil sands debate in the US. In the meantime, the future of Enbridge’s Northern Gateway project that would initially take 525,000 BPD of heavy oil sands streams west to British Columbia’s port of Kitimat – and then to markets mainly in Asia – has become the centre of heated support and intense resistance in Canada. Given current constraints and opposition to expansion of existing pipeline capacity and new pipeline developments, companies have been proactive at exploring other transport options such as rail. While rail is emerging as a serious option to pipeline transportation, it is subject to limited availability of rail cars, terminals, and storage capacity, not to mention that rail, as pipelines, has a finite capacity along with safety and environmental concerns.
Last year’s report concluded that collaboration within the industry as well as with other stakeholders is of paramount importance to see this industry flourish. This year we would like to add that the future growth of provincial and federal economies as well as the industry’s growth may become increasingly uncertain if market opportunities are seized or strained, social license to operate is revoked, and the debate over the future of oil sands among Canadians, governments and industry is unproductive.
This is the Canadian Energy Research Institute’s (CERI) eighth annual oil sands industry update, examining production, supply costs, and constraining factors for oil sands development. CERI monitors and reviews all the oil 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 stems the projections of production, investment, royalties, natural gas requirements, GHG emissions and demand for diluent, as well as supply costs for primary recovery, SAGD, surface mining recovery, and bitumen upgrading.
Pacific Access: Part I - Linking Oil Sands Supply to New and Existing Markets
CERI Study 129
As consumption of oil-derived products in North America is dwindling, the demand for crude oil and its products in Asia-Pacific countries is forecast to increase at a significant rate. If Canadian oil producers have access to this region, it is believed that they will be able to secure higher returns on their investments and minimize the risk that growth in Canadian oil production could be inhibited due to US opposition for new pipelines. The production from conventional oil sources in Canada and the US is growing as technology is able to unlock resources that were once thought to be difficult to extract. Nevertheless, oil sands will continue to dominate the future production growth in Canada. This report presents the economic impacts of current and future oil sands development, broken down into four separate cases, which represent the pipeline capacities of existing infrastructure, as well as capacities of pipelines that are not yet operating. The report shows significant economic benefits of oil sands development for Canadian and provincial economies.
Pacific Access: Part II - Asia-Directed Oil Pathways and Their Economic Impacts
CERI Study 129
Alternative transportation networks are emerging in the North American market to relieve constraints at Cushing and at rapidly developing shale oil plays. However, these options are more expensive than pipeline alternatives and serve markets that are shrinking. Moreover, these markets have ready access to alternative supplies from either imported or shale oil crudes. As such, it has become increasingly important to find alternative markets for oil sand’s bitumen. A pipeline to tidewater on the Pacific Coast is the most economic way of reaching Asian refineries which are capable of accepting both bitumen and synthetic crude oil (SCO). Part II of CERI’s Pacific Access report examines the available alternative transportation modes in North America and the impacts of accessing the Pacific markets. CERI’s Regional Input- Output (I/O) model is introduced and used to calculate the potential economic impacts of construction and operation of two major proposed crude pipeline projects in Western Canada: the Trans Mountain Pipeline Expansion (TMX) and the Northern Gateway Pipeline.
The Enbridge Northern Gateway pipeline project offers a classic example of the controversy that increasingly attaches itself to energy infrastructure projects: how to balance economic development with environmental conservation. Consequently, discussions surrounding the development of Northern Gateway have become controversial. Many stakeholders claim the economics overwhelmingly favour pipeline construction, while others favour a risk-averse approach towards anything that may potentially contaminate a pristine area. To further complicate matters, British Columbia First Nations land claims are not well established, and it is these lands which the pipeline would traverse; these are the areas that would be damaged if an oil spill were to happen. This report addresses many of the environmental issues, providing insight into Enbridge’s Environmental Impact Assessment; it also explores the recent history of aboriginal land claims and the degree to which First Nations retain traditional land rights in contemporary Canadian society.
Pacific Access: Part V - Overview of Transportation Options
CERI Study 129
Pacific Access: Part VI - Foreign Investment in the Oil Sands and British Columbia Shale Gas
CERI Study 129
Development of Alberta’s oil sands and shale gas resources in British Columbia will not occur if financial capital is not available to pay for these projects. More recently, this capital is coming in a form of foreign direct investment from various companies around the globe. Countries, such as but not limited to the US, Europe, China and Korea are active either in the merger and acquisitions activity or complete take-overs. This paper gives a detailed overview of all the recent foreign investment deals that took place in the last few years within Alberta oil sands and BC shale gas regions.
Canadian Oil Sand Supply Costs an Development Projects (2011-2045)
CERI Study 128
In 2011, global economies experienced some growth, albeit not at the rates that were predicted. Prices of oil were in a range where new oil sands projects became economic again. However, producers remained anxious about future oil price estimates and were proceeding at a more balanced pace in order to better control costs. This approach should help them avoid a repeat of the high cost inflation environment that resulted from peak investment spending in 2007 and 2008 associated with the concurrent development of several large oil sands projects.
The industry’s challenge today is to manage this “second boom” more efficiently and in a more sustainable manner than the “first boom”. Costs have to be better managed and environmental performance has to improve continuously. It is the year 2012, and the debate on how the oil sands industry should develop continues to dominate the news. The debate is polarized and emotionally charged. The recent rejection of Keystone XL may seem like the worst and the biggest hit against Canada’s oil sands yet, but it is likely that similar protests will become the new norm. As the hearings continue for Enbridge in its quest to build the Northern Gateway pipeline to start shipping bitumen to the West Coast, industry should prepare itself for a new myriad of attacks. The time has come for the industry to engage in oil sands discussions that are factual and balanced and not sprinkled with exaggerations and/or myths. Collaboration among industry players and with various agencies – government and environmental – is the key to moving forward and breaking the fear and hostility among environmentalists, NGOs and the general public.
This is Canadian Energy Research Institute’s (CERI’s) seventh 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 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.
There has been a recent renewed interest in onshore hydrocarbon development in the provinces of Quebec, Ontario, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador due to the region's significant potential. However, a host of issues including regulatory initiatives, public opposition, a lack of large scale commercial projects, and the infancy of the petroleum industry in this region, makes it difficult to establish an outlook for potential development over the long term. Meanwhile, offshore projects in Nova Scotia and Newfoundland and Labrador have become the most relevant developments outside the Western Canada Sedimentary Basin (WCSB) over the last couple of decades and are expected to continue to be the focus of the industry over the coming decades.
This report presents an overview of the petroleum industry in Eastern and Atlantic Canada, while it also presents CERI's outlook for production and investment associated with offshore projects in Nova Scotia and Newfoundland and Labrador over the 2010 to 2035 time period. Finally, this report presents the economic impacts across Canada and the United States associated with continued operations and new developments offshore Atlantic Canada including value added gross domestic product, employment and employment compensation impacts, as well as taxation and royalty revenues.
In an increasingly greenhouse gas (GHG) conscious environment, Alberta has faced criticism for its heavy emissions within the oil sands industry and its utilization of coal-fired generation. Oil sands development is an expanding industry with production expected to approximately triple in the coming decades; consequently, emissions will rise markedly and if left unhindered, the oil sands will be a significant emitter of GHGs in the future. Simultaneously, the higher emissions from coal power generation compared to other forms of electricity generation have incited a largely uncertain future for coal generation. Furthermore, the advent of a carbon tax in Alberta and Canada’s commitment to the Copenhagen Accord, have endorsed the proliferation of lower GHG intensity technologies. Consequently, under the aforementioned pressures, various stakeholders have hastened to devise schemes and promote technologies that reduce emissions in order to avoid significant future costs (both social and financial) that could hinder development. This has resulted in a myriad of technologies which range from improvements in efficiency, to deep-cuts in emissions through sequestration.
CERI has evaluated these emerging technologies to determine applicability, and has attempted to provide context over the advantages and disadvantages of implementing such technologies. Furthermore, a projection of a business-as-usual scenario and emission factors for different technologies were developed in order to determine the potential abatement of emerging technologies. CCS was also examined in detail as a front runner for a potential renaissance of “clean-coal” technologies and applicability within the oil sands.
This study is primarily geared towards readers seeking to understand the sources of GHG emissions in the oil sands industry and the role of emerging technologies. It is also intended to update the reader on the state of CCS, the requirements for implementation, and potential barriers.
Economic Impacts of Staged Development of Oil Sands Projects in Alberta (2010-2035)
CERI Study 125
A Decade of Staged Oil Sands Growth (2010-2020)
CERI Study 125a
Study not available at this time.
Economic Impacts of New Oil Sands Projects in Alberta (2010-2035)
CERI Study 124
Energy is at the core of the US-Canadian bilateral relationship. There is no more secure supplier of oil to the United States than its northern neighbour, and continuation of this secure supply depends in large part on the further development of oil sands projects.
This study focuses directly on the economic impacts of the Alberta oil sands between 2010 and 2035. Using Input-Output (I/O) economic modeling, the report quantifies the economic impacts of the oil sands on GDP, employment, employee compensation, and government revenues. The model incorporates the economic interrelationships between the Canadian federal, US federal, Canadian provincial, and US state economies. Therefore, it is able to capture the direct, indirect, and induced effects of oil sands infrastructure investments and ongoing operational expenditures on all of the above-mentioned economies.
CERI is noted for its expertise in I/O modeling, having completed numerous major studies for government and industry. This study represents yet another advance: the I/O tables have been updated, the trade-flow matrix between provinces and the US has been calibrated to allow for more accurate mapping of trade relations, and the model formulation and approach have been enhanced to capture with increased precision the relations among various sectors and local economies of different regions.
Canadian Oil Sands Supply Costs and Development Projects (2010-2044)
CERI Study 122
The oil sands development exhibited moderate growth in 2010 relative to prior years, reflecting the resumption of the many oil sands projects that were deferred during the 2008-2009 economic recession. The world’s major economies are starting to rebound (oil demand is increasing), credit is becoming available to oil sands proponents, and mergers and acquisitions are ramping up. The future outlook for potential export markets for bitumen could be expanded beyond the US borders. New oil sands technologies are emerging in pilot stages that promise to reduce the environmental impact while maintaining economic growth and the creation of high value employment.
This is the Canadian Energy Research Institute’s (CERI) sixth annual oil sands industry update, examining production, supply costs, and constraining factors for oil sands development. CERI monitors and reviews all the oil sands projects (used in the unconstrained case), and also develops a more realistic assessment—the CERI Realistic Scenario—based on likely timing conflicts, contingencies, and project delays and deferrals. From the Realistic Scenario stem the projections of production, investment, natural gas requirements and GHG emissions, as well as supply costs for SAGD, surface mining recovery, and bitumen upgrading.