Alberta Oil Sands Output Estimated to Increase Almost 2.5x by 2017
06 June 2008
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| The ERCB is projecting the production of synthetic crude oil from bitumen to almost triple over the forecast period. Click to enlarge. |
Annual production of non-upgraded bitumen and synthetic crude oil from Alberta’s oil sands will increase almost 2.5 times by 2017 from 2007 levels, according to the just-published report Alberta’s Reserves 2007 and Supply/Demand Outlook 2008-2017 by the province’s Energy Resources Conservation Board (ERCB).
In 2007, Alberta produced 209,900 m3 (1.32 million barrels) per day of bitumen from the oil sands, a 5% increase from 2006. Alberta raw bitumen production is expected to increase to 513,000 m3 (3.2 million barrels) per day by 2017, based on announced expansions of existing projects and new projects.
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| Increase in production of synthetic crude oil. Click to enlarge. |
In 2007, 62% of bitumen produced was upgraded in Alberta, yielding 109,300 m3 (687,000 barrels) per day of synthetic crude oil (SCO). Bitumen upgrading is expected to reach 70% by 2017. This will yield 317,800 m3 (2 million barrels) per day.
According to the forecast, Alberta’s export of SCO produced from bitumen will increase from 68,400 m3 (432,000 barrels) per day to 266,000 m3 (1.673 million barrels)—an almost four-fold increase. Export of non-upgraded bitumen will increase from 76,900 m3 (484,000 barrels) to 145,000 m3 (912,000 barrels).
Crude bitumen is a viscous mixture of hydrocarbons that in its natural state does not flow to a well. In Alberta, crude bitumen occurs in sand (clastic) and carbonate formations. The bitumen and the material it is found in are called oil sands. The quality of an oil sands deposit depends primarily on the degree of saturation of bitumen within the reservoir and the thickness of the saturated interval.
Two methods are used for recovery of bitumen, depending on the depth of the deposit. Near-surface deposits of bitumen are mined, while the deeper deposits are recovered in situ by one of three methods: primary production, cyclic steam stimulation (CSS), and steam assisted-gravity drainage (SAGD).
Once produced, the bitumen is either upgraded into synthetic crude oil, or shipped out without upgrading. Upgraders chemically alter the bitumen by adding hydrogen, subtracting carbon, or both.
Most of the upgraders use coking as their primary upgrading technology and achieve volumetric liquid yields (SCO / bitumen feed) of 80 to 90%, while the projects that employ hydro-conversion for primary upgrading can achieve volumetric liquid yields of 100% or more.
Alberta’s current three upgraders produce a variety of synthetic products: Suncor produces light sweet and medium sour crudes plus diesel, Syncrude produces light sweet synthetic crude, and the Shell upgrader produces intermediate refinery feedstock for the Shell Scotford Refinery, as well as sweet and heavy SCO. The ECRB expects production from new upgraders to align in response to specific refinery product requirements.
Demand for Alberta SCO [synthetic crude oil] will come primarily from existing markets vacated by declining light crude supplies, as well as increased markets for the future growth of refined products. The largest export markets for Alberta SCO and non-upgraded bitumen are the US midwest, with a refining capacity of 570,103 m3/d, and the US Rocky Mountain region, with a refining capacity of 95,103 m3/d. The refineries in these areas are capable of absorbing a substantial increase in supplies of SCO and non-upgraded bitumen from Alberta. Other potential market regions could be the US east coast, with a refining capacity of 273,103 m3/d, the US Gulf Coast, with a refining capacity of 1,328,103 m3/d, the US west coast, with a refining capacity of 506,103 m3/d, and Asia.
The ERCB report is an independent, annual source of information on the state of reserves and the supply and demand for Alberta’s diverse energy resources: crude bitumen, crude oil, natural gas, natural gas liquids, coal, and sulphur. The report also notes:
In 2007, raw bitumen production surpassed conventional oil production by over 250%. Bitumen production of 482 million barrels averaged 1.32 million barrels per day (an increase of 5% over 2006), compared to conventional oil production of 191 million barrels, or 524,800 barrels per day (a decrease of 3.5% from 2006).
Alberta’s total remaining established bitumen and conventional oil reserves totaled 174.2 billion barrels, consisting of bitumen (172.7 billion barrels) and conventional oil (1.5 billion barrels). About 82% of the total remaining established bitumen reserves is considered recoverable by in situ methods, and 18% by surface mining methods.
The ERCB is basing its analysis on the expectation that the crude oil price in North America, measured by West Texas Intermediate (WTI) crude oil, will continue to be volatile, averaging US$105 per barrel in 2008 and rising steadily to an average of US$138 per barrel by 2017.
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It is impressive how much oil they get extract from dirt with a heavy environmental cost. It makes you wonder how much they could get out of Orinoco Belt with someone other then H Chavez at the wheel.
Posted by: Paul | 06 June 2008 at 10:23 AM
Good financial news for Alberta, my employer and my country ... but somehow I don't get much comfort out of this announcement.
Posted by: Neil | 06 June 2008 at 10:36 AM
The money earned is totally not worth the environmental problems the project causes.
There are much better ways to make money, and far less damaging sources of power.
Posted by: | 06 June 2008 at 11:35 AM
They don't tell where they will get the natural gaz they need to extract and upgrade this dirty bituminen. Again Syncrude is made by adding hydrogen to bituminen and it requires a hell of natural gaz for this. We are running out of natural gaz in North America, so I am not sure this projection are really confirmed.
Posted by: Treehugger | 06 June 2008 at 11:56 AM
wow, what a scam turning gold into lead
Fools
Posted by: M king H | 06 June 2008 at 12:21 PM
This is not good news for the evironment or the country, it seems for ethanol or hybrids or plug in hybrids there's always a 'total life cycle' analysis where every aspect is looked at to see if it's worth it!!! When will be do a total impact life cycle analysis of refined gasoline? Especially from Oil sands? We simply hide the costs and the impact. The amount of electricity, gas and water needed to produce this oil is huge. It is not good for the economy either for a few reasons: first as a major oil exporter it makes our $ stong against the $US, our major trade partner; companies in Ontario, the west and Quebec are closing by the bucketload and laying off thousands because of two reasons: our strong $$ making our products too expensive and the high cost of gas. (Pumping more doesn't make it cheaper.) Manufacturing jobs do not spring back easily. Another factor is labour, I live in B.C and companies struggle to get trained staff because they have to compete with the oil sands for people both skilled and non skilled, this prevents companies from growing or makes them expensive operations to run and - they close.
We can't all work in the oil business.
Shortages of oil will drive innovation and creativity and it's about time we started down that road.
Posted by: Mark M | 06 June 2008 at 12:32 PM
Treehugger, all upgraders have added equipment to reduce NG usage and some (e.g. OPTI/Nexen) are eliminating it entirely by gasifying asphaltenes.
Posted by: doggydogworld | 06 June 2008 at 12:35 PM
Good news. Bad news?
Extracting oil from tar sands is some dirty business.
Much more resources should be put aside to repair environmental damages and decontaminate the huge toxic ponds (if ever possible) after oil producers have mined wide areas.
Cleaning up may take decades and cost as much as the value of oil extracted. Who is going to pay for it?
Posted by: | 06 June 2008 at 02:39 PM
i'd rather buy tar-oil from canada then petro-oil from a bunch of terrorists in the middle east.
that's just the plain truth of it. people are going to keep using fossil fuels (face it, most people can't afford the $40k a chevy volt will cost) and we might as well get it from our northern neighbor. at least then we know that a portion of it isn't going to al-qaeda.
and a good way to mitigate some of the damage is to require CCS and use nuclear energy to generate power. btw the transportation costs are significantly less to move crude from canada to the US..it could also lead to a bit more stability in the market when less of our crude passes through the strait of hormuz (which most people forget could be easily closed up by an iranian torpedo..)
Posted by: marc | 06 June 2008 at 02:48 PM
...Extracting oil from tar sands is some dirty business...
There are many ways to skin a cat. So to, there is many ways of extracting oil out of tax sand. Some methods are more dirty than others. Consider Toe to Heel Air Injection (THAI)
http://www.theoildrum.com/node/2907
The cleanest is coking the asphalt under ground using air. This uses combustion of the asphalt to burn, setting up a combustion front, heating and liquefying it, were it flows to a collection point for extraction. The resultant product is similar to light sweet crude. This is called in ground refining. The Co2 that results stays underground.
All dirty methods should be suspended in favor of clean extraction. That includes surface deposits that can only be processed by dirty, land destroying technology.
Posted by: Axil | 06 June 2008 at 05:41 PM
Mark M, what are you saying?
“It is not good for the economy because it makes our $ strong against the $US” ??
“Companies are closing and laying off thousands “ … and “companies struggle to get trained staff because they have to compete with the oil sands for people both skilled and non skilled”.
“Shortages of oil will drive innovation and creativity and it's about time we started down that road” Exactly, but you don't get to close the roads you don't like.
Posted by: ToppaTom | 06 June 2008 at 05:45 PM
marc:
I must agree with you that USA is in very precarious position with regards to oil. Many events could upset the cart. Canada has always been a better supply source, that USA can turn on and off as it did with lumber, steel etc.
However, USA should pay the real total cost to get access to a steady source of oil. In the case of oil from tar sands, the total cost may be closer to $200/barrel than $100. Alberta will need at least $1000 and up to $5000 billion (equivalent to 2 or 3 oil wars) to clean up the mess created by 50+ years of tar sands extraction. Where will the money come from? A clean up fund should created now at the rate of $20++/barrel extracted. You cannot and should not rely on oil producers to do it. They will just move away and leave the mess behind, as they usually do. Even in Alberta, they have not kept their engagements, over 98% of the agreed clean up has not been done.
Should the multi trillion dollars clean up fund be Provincial or Federal, or both? Since some of the mess will flow outside Alberta's borders, the Federal government should be involved.
Posted by: HarveyD | 06 June 2008 at 06:08 PM
HarveyD
You cannot and should not rely on oil producers to do it.
The Oil producer is totally responsible for the damage that they cause.
They selected the extraction method. They bear the burden for the resultant cleanup.
If the producer pays for the results of his extraction method, he might pick a clean one.
Posted by: Axil | 06 June 2008 at 06:51 PM
doggydog...thing
You are right gazeification of asphltene can be a solution (though not cheap), but the doubling of the current production just represent an increase of just 1 million Bdp, that is clearly a drop in the bucket, in the same time the North-sea together with Mexico will have lost 2 to 3 million Bdp...
it is consensus in the oil industry that Canadian Tar Sand will not delay the Peak Oil. But it will pollutes Alberta and the amtmosphere, and contribute to global warming, and destroy the boreal forest for sure...
Let's continue the "happy motoring" and the "bigger the safer" the "SUV look is cool"
Posted by: Treehugger | 06 June 2008 at 07:40 PM
Axil: I think what HarveyD is saying is that the oil companies should pay for cleanup, but you'd better make them pay up-front because companies have a habit of running away from their pollution, leaving the taxpayer holding the bag.
Posted by: Neil | 06 June 2008 at 08:19 PM
Neil:
Thanks Neil, your correct. Yes, an up front bond is the solution. The strip mine industry has that requirment in the USA and it works.
Posted by: Axil | 06 June 2008 at 10:03 PM
Oil producers will leave destroyed and poluted environment in Alberta as they did in Ecuador (by Texaco and Occidental).
Agree completely with HarveyD on this issue, if producers don't pay during destruction period, they'll never pay.
It's a responsibility of Canadian government to ensure that, and they don't seem to care much about it.
Anyway why Americans need so high percentage of heavy and gas guzzling vehicles for everyday driving, that on average probably consume 50% more than European vehicles?
An effective way of reducing gasoline/diesel consumption for passenger cars (in any country) would be to allow every vehicle owner to buy certain reasonable monthly amount of fuel at lower prices (redeemable after purchase). Anything above that would be taxed at a significantly higher rate. This would be more effective than some European systems where they charge extra based on CO2 emission and engine size (for registration).
Why would somebody pay more annually for a big engine car that is driven maybe just twice a month (and uses public transportation regularly) than somebody with a small car that consumes too much fuel driving excessively, causes traffic congestion (and so indirectly makes many others consume more)?
Part of higher fuel taxes would be used for subsidized purchase of HEV/EV and for public transport.
Posted by: MG | 07 June 2008 at 12:44 AM
Axil:
How can you be sure that Oil producers will clean up the mess they have agreed to? Look around where they have been and you will see a lot of abandoned rigs, tanks, pipes, contaminated ponds, drums, vehicles etc . Most of the time the land is so highly contaminated that it is unfit to use for many centuries.
Oil people don't believe that oil extraction pollutes. They certainly don't put much efforts and resources to clean up the mess they created.
An independant clean up fund, financed by every barrel of oil extracted, may be a better way.
Posted by: HarveyD | 07 June 2008 at 08:14 AM
The U.S. had a similar problem with strip mines. Many states instituted a strip mine bond. These bonds are usually an up front payment per acre for ever acre that is permitted to be mined. After the mine is closed the bond is used to restore the land. Previously despoiled strip mined land is reclaimed by using a severance tax established by various state strip mine laws. Here is a description of the Ohio reforestation program as follows:
http://www.mcrcc.osmre.gov/PDF/Forums/MarketBasedReforest/2-3.prn.pdf
This network of laws took a long time to pass and perfect. It was the outrage of the affected residence that push there implementation and perfection.
Oil Sand processing is more varied than strip mining since there are various degrees of resultant damaged for each associated method. For example, above ground oil sand removal is far more damaging to the land then in- ground oil extraction. So the bond structure should be responsive this. My previous post touched on this.
Posted by: Axil | 07 June 2008 at 09:47 AM
If there had been a gradual transition from oil to biofuels over the course of 15-20 years AND CAFE was increased 20 years ago AND the "bigger safer" concept was flagged for being foreign oil influenced - tar sands would remain at current levels or less. But it's easy to whine after the fact eh?
Posted by: oildweeb | 08 June 2008 at 07:06 AM
"All dirty methods should be suspended in favor of clean extraction. That includes surface deposits that can only be processed by dirty, land destroying technology."
Should? Yes. Will? No. As always, the dirtiest methods are the cheapest - or, rather, enable the greatest cost externalization. Why pay for clean extraction now when "somebody else" will pay for cleanup later?
Lemon socialism at its worst.
Posted by: Snark | 08 June 2008 at 01:37 PM
Topper:
Shortages of oil will drive innovation and creativity and it's about time we started down that road” Exactly, but you don't get to close the roads you don't like.
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No we don't get to close the roads we don't like, that's why we are in this mess, when it's not good for society, humanity or the environment, why not??
We need a 'sustained' shortage to drive alternative innovation, short term shortages only drive innovation in oil extraction and recovery delaying the inevitable. Increasing oil output in Alberta only produces more oil but at what cost?
Posted by: Mark M | 09 June 2008 at 01:23 PM
Mark makes a good point. The result of rapid increase in oil Pricing has led to rapid increase in extraction - now with the added urgency of national calamity. And sacrificing ecologically sensitive areas. Sometimes the wisdom of the forced hand turns out to bite the arm that moves it.
Posted by: youaskedfor it | 09 June 2008 at 07:20 PM
Axil:
Guaranteed Bank Bonds are almost like a cleanup fund. Who would set the appropriate minimum Bond value?
How can you pre-evaluate, health, natives claims, air, water, land, downstream, forest, wildlife, toxic ponds and other pollution and damages total repair cost? Bonds would have to be for many $$ billions and adjusted upward as repair cost goes up. Natives living downstream (north in this case) will be suiing all levels of government for $$$ millions for failing to protect their environment and way of life. They normally win.
Posted by: HarveyD | 11 June 2008 at 01:17 PM
I haven't seen the mining involved with this extraction; but I can imagine that the land can be replanted to trees following reclamation. Perhaps large areas can also be left suitable for other economic development unless it is just too cold.
Posted by: dan | 01 October 2008 at 01:09 PM