Posted on 08/16/2005 5:39:08 PM PDT by Enchante
Estimates of Canada’s oil reserves jumped from 4.9 billion barrels to 180 billion this year, making the country the second-largest oil reserve in the world, according to an annual survey conducted by the Oil and Gas Journal. The change catapults Canada ahead of Iraq in terms of reserve size, and decreases OPEC’s share of the world’s oil reserves by more than 10 percent.
An electric shovel loads a haul truck with oil sands mined from the surface of the Athabasca Oil Sands Deposit in Alberta, Canada. Syncrude Canada Ltd., the world’s largest producer of crude oil from oil sands, typically mines 155 million tons of sand each year. Photo courtesy of Syncrude Canada, Ltd.
The survey, based on information provided by companies and governmental agencies, characterizes the current state of the oil and gas industry — both in terms of production and reserves. This year the journal included Alberta’s vast oil sands as part of Canada’s oil reserves. “We have known about the oil sands reserves for a while. We decided to incorporate them now because we recognize that they are economically viable,” says Marilyn Radler, economics editor for the Oil and Gas Journal. In order for an oil resource to be termed a reserve, it must be possible to extract it profitably with existing technologies and under present economic conditions.
The riches of the oil sands lie in bitumen, a thick and tar-like hydrocarbon mixed in with sand, water and clay. The most common way to excavate bitumen is to strip-mine large volumes of sand. Processing plants add hot water and chemicals to the sand to create slurries; bitumen floats to the surface while sand settles out.
Traditionally a high-cost endeavor, mining for bitumen has become much more feasible over the past two decades with the cost for producing a barrel of oil now roughly $8. The U.S. Geological Survey estimates that by 2005, 10 percent of North America’s oil production will come from Alberta’s sands (Geotimes, November 2002). One of the main drivers behind reducing costs is a technology called hydrotransport. Rather than hauling oil-laden sands to processing plants by truck or conveyer belt, the new approach mixes the sand with hot water to create slurries that can be transported via pipeline.
Despite technological developments, the Oil and Gas Journal estimate might be overly optimistic, says Naresh Kumar, chair of the American Association of Petroleum Geologists’ Resources Evaluation Committee. “There is a significant potential, no doubt. … But at this point, I would be a little more conservative.”
Investors also appear divided over the short-term promise of the oil sands, especially now that Canada has signed onto the Kyoto Protocol. The protocol commits Canada to reducing its carbon dioxide emissions and could add costs to producing oil from the sands. Koch Industries, a U.S. energy company, recently withdrew from a C$3.5-billion Alberta oil sands project, citing Kyoto as the cause. In contrast, Shell Canada Ltd. recently began a C$5.2-billion project to tap into Alberta’s bitumen.
Whatever the immediate investment climate, the United States has strong long-term interests in the Alberta oil sands. According to the Bush administration’s National Energy Policy, “their continued development can be a pillar of sustained North American energy and economic security.”
Sorry, looks like I omitted the date of publication by accident -- it was the March 2003 issue of GeoTimes.
Shoot, let's make Canada the 51st state and we'll have all the oil we'll need.
40% owned by the Communist Chinese.
The big boys are going to have a hard time maintaining these high prices!
"Shoot, let's make Canada the 51st state and we'll have all the oil we'll need."
Uh,no.
Eastern Canada can go to hell in a handbasket.
Alberta as the 51st es mucho fantastico.
The other Western provinces are a maybe.
The $8 figure might be technically accurate, but I'm not sure that this represents the total cost of producing oil that can be refined into gasoline or other high-quality petroleum products. My understanding of the oil industry is that oil from the tar sands is best suited for use as lubricants, petro-chemicals, etc. -- while the light, sweet crude oil that is found in parts of the Middle East is better suited for gasoline, aviation fuel, etc.
If the sand left over is nice and white, we will also have lotsa beaches!! Screw the turbanites!
Use up the Arab's oil first.
Canada Country Analysis Brief, www.eia.doe.gov
According to Oil and Gas Journal, Canada had a reported 178.8 billion barrels of proven oil reserves in 2005, second only to Saudi Arabia. However, the bulk of these reserves (over 95%) are oil sands deposits in Alberta. The inclusion of oil sands in official reserve estimates is not without controversy, because oil sands are much more difficult to extract and process than conventional oil.
Canada sends over 99% of its crude oil exports to the U.S., and the country is one of the most important sources of U.S. oil imports. During the first eleven months of 2004, Canada exported 1.62 million bbl/d of crude oil to the U.S., the single-largest component of U.S. crude oil imports.
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Oil sands contain deposits of bitumen, a heavy, viscous oil. There are two methods currently used to extract bitumen from the ground: open pit mining and in situ (Latin for “in place”). Open pit mining resembles conventional mining techniques and is effective in extracting oil sands deposits near the surface. However, the bulk of Canada’s estimated oil sands deposits (80%) are too deep below the surface to use open pit mining. The second method, in situ can reach these deeper deposits. In situ extraction involves the use of steam to separate bitumen from the surrounding sands and lift it to collection pools near the surface. To date, Canadian oil sands producers have employed each method almost equally, but future production will likely shift to emphasize in situ extraction. Once extracted, oil sands producers must add lighter hydrocarbons to the bitumen to allow it to flow through pipelines. Upgraders then process the bitumen into “synthetic crude.” In general, it takes about 1.16 barrels of bitumen to make 1 barrel of synthetic crude.
The Athabasca Oil Sands deposit, in northern Alberta, is one of largest oil sands deposits in the world. There are also sizable oil sands deposits on Melville Island in the Canadian Arctic, and two smaller deposits in northern Alberta.
There are four major oil sands projects in Canada, each centered on the Athabasca deposit. The first, operated by Suncor Energy, produced 216,000 bbl/d of synthetic crude in 2003, with plans to upgrade future production capacity. Suncor sends about one-third of its synthetic crude to its refinery in Sarnia, Ontario; one-third to its refinery in Denver, Colorado; and one-third to other customers. An accidental fire at the Suncor plant in early 2005 halved synthetic crude production there for an estimated six months. The second, the Syncrude Project, is a joint venture composed principally of Canadian Oil Sands Limited (32%), Imperial Oil (25%), and Petro-Canada (12%). Syncrude produced 212,000 bbl/d of synthetic crude in 2003, and a planned expansion of the plant would increase production to 350,000 bbl/d by the end of 2005. The third, the Athabasca Oil Sands Project, is a consortium majority-owned by Shell Canada. Athabasca produced about 64,000 bbl/d of synthetic crude in 2003, though a fire at the plant in January 2003 shut production down for three months; the planned, long-term capacity of Athabasca is 155,000 bbl/d. The fourth, Imperial Oil’s Cold Lake, produced 110,000 bbl/d in 2003. The Athabasca deposit is also the focus of most planned expansions of the oil sands industry. Companies with oil sands projects scheduled for 2006 start-up include ConocoPhillips, Nexen and OptiCanada. Imperial Oil and ExxonMobil also intended to build an open-pit mine by 2009, with initial production capacity of 100,000 bbl/d of bitumen.
Despite the considerable excitement surrounding the development of Canada’s oil sands reserves, there are still several difficulties that could impede the future development of the industry. Analysts predict that the production of synthetic crude from oil sands is only economically viable with synthetic crude prices in the $30 range. While further advances in oil sands technology could reduce production costs, it is likely that synthetic oil production will continue to be dependent upon high crude oil prices. Second, the oil sands industry is heavily reliant upon water and natural gas, which is necessary in both the extraction of bitumen from oil sands and the upgrading of bitumen to synthetic oil. Even though there have been some efforts to reduce this dependence on natural gas, any increase in natural gas prices or sharp reduction in natural gas supply would have critical repercussions for the oil sands industry.
Price of crude is taking a nosedive today. 66.60/64.25 64.25 -1.83
Gasoline is down 5 cents
If this keeps up the speculators are going to be looking for high window ledges.
High-Diving Speculators will never bother me. But I doubt it will fall below (insert magic number here $45????) without significant changes in supply and or demand. I read today about supply/distribution problems happening in China and the Philippines. If they need to increase supply to meet demand, it could drive it right back up.
If it gets back to $25 it will be in the range where OPEC can have a say.
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