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CANADIAN OIL SANDS SUPPLY COSTS AND DEVELOPMENT PROJECTS (2014-2048)

Canadian Oil Sands Supply Costs and Development Projects (2014-2048)

Study Released July 17, 2014

Study No. 141

Production and capital investment forecasts for the oil sands industry are estimated to continue to increase well into the future, and there are some major projects still to be constructed, but currently many producers are reporting a bit of a pause in new contract awards and backlog. However, this may be a function of the change of the pace of development more than an indication of downward pressure on the sector. The nature of new project development in the oil sands has changed. Ten years ago the industry was dominated by megaproject mines and upgraders each built by several thousand people; the sector is now transforming into more manageable phased in situ growth. Albeit uncertainties around market access and competition from the US tight oil projects, oil sands production is expected to reach three million barrels per day (MMBPD) around 2017. This means the industry is expected to add approximately 1 MMBPD of production in less than 5 years, from both mining and in situ operations. In addition to several in situ projects/phases currently underway or expected to get the necessary approval in the near term, at least three mining projects are considered for major growth. This includes the 100,000 barrel-per-day second phase at Kearl, which is under construction, the staged integrated mining/upgrading expansion at Horizon to 250,000 barrels per day, and the long-awaited 190,000 barrel-per-day greenfield installation at Fort Hills. Each year the Canadian Energy Research Institute (CERI) publishes its long-term outlook for Canadian oil sands production and supply in conjunction with an examination of oil sands supply costs. This is the ninth annual edition of CERI’s oil sands supply cost and development projects update report. Similar to past editions of the report, several scenarios for oil sands developments are explored. In addition, given the assumptions for the current cost structure, an outlook for future supply costs will be provided.

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