|Projected growth in natural gas consumption in oil sands production.|
The production of Alberta oil sands could nearly triple by 2015 to three million barrels per day, according to a new report by Canada’s National Energy Board (NEB): Canada’s Oil Sands—Opportunities and Challenges to 2015: An Update. Oil sands production output was 1.1 million barrels per day in 2005. The new report increases the NEB’s 2004 oil sands production estimate by almost 40%.
With the rapid increase in production come a number of increasingly significant challenges: availability and cost of resources required for production (natural gas and water), the environmental impact, distribution infrastructure (pipelines), labor constraints, and rising capital and operating costs, according to the report.
Greenhouse gases. Oil producers have reduced their greenhouse gas emissions through improvements in technology, but higher overall production output is causing total emissions to rise.
The production of bitumen and SCO [Synthetic Crude Oil] emits higher GHG emissions than the production of conventional crude oil and has been identified as the largest contributor to GHG emissions growth in Canada.
In the best case scenario, greenhouse gases emitted will drop to 0.073 tonnes per barrel by 2015 from a current level of about 0.076 tonnes GHG per barrel. In that same best case scenario, total GHG emissions will increase to about 67 megatonnes (Mt) in 2015, up from a current level of about 40 Mt.
Although carbon dioxide capture and sequestration, including its use for Enhanced Oil Recovery, is a possibility, according to the report, there is uncertainty over long-term storage policies, technologies, and transportation infrastructure (i.e., pipelines for the gas).
Water. Water is both a supply and an environmental concern. Oil-sands mining operations use large amounts of water, and a variety of regional multi-stakeholder groups agree that the Athabasca River does not have sufficient flows to support the needs of all planned oil-sands mining operations.
Both mining and in situ operations use large volumes of water for extracting bitumen from the oil sands. Between 2 to 4.5 barrels of water are withdrawn, primarily from the Athabasca River, to produce each barrel of synthetic crude oil (SCO) in a mining operation. Currently, approved oil sands mining projects are licensed to divert 370 million cubic metres (2.3 billion barrels) of freshwater per year from the Athabasca River.
Planned oil sands mines would push the cumulative withdrawal to 529 million cubic meters (3.3 billion barrels) per year. Despite some recycling, almost all of the water withdrawn for oil sands operations ends up in tailings ponds.
Stakeholders agree that the Athabasca River does not have sufficient flows to support the needs of all planned oil sands mining operations. Adequate river flows are necessary to ensure the ecological sustainability of the Athabasca River. In winter, river flows are naturally lower with low rates of precipitation, and therefore, water withdrawal during this period is of particular concern.
Natural gas. Natural gas is used both for electricity generation and for the processing of the sands. For integrated mining projects, the intensity of use (natural gas per barrel) increases as the upgraders move to producing higher-quality product—the processing of which requires more hydrogen.
Efficiency improvements in SAGD and CSS operations are also anticipated through technological innovation, such as low-pressure SAGD or solvent aided production. However, going forward, as existing projects expand and new projects are initiated, it is likely that operators will be facing declining quality of bitumen reservoirs, with a resultant increase in energy required.
Ongoing efficiency improvements, technological innovation and gas substitution (gasification of bitumen or coke), will result in an improvement in average gas intensity (factoring in both mining, with lower requirements, and in situ production) to about 0.9 thousand cubic feet (Mcf) per barrel by 2015, down from a current 1.1 thousand cubic feet. However, total use will climb to about 2.1 billion cubic feet per day in 2015, up from about .7 billion cubic feet per day in 2005, and about 1.1 billion cubic feet this year.
The NEB is an independent federal agency that regulates several aspects of Canada’s energy industry. As part of its mandate, the NEB monitors the supply of all energy commodities in Canada and publishes reports on energy, called Energy Market Assessments.