Canadian Oil Sands Production Update
Posted by Khebab on October 30, 2006 - 11:51am in The Oil Drum: Canada
Topic: Supply/Production
Tags: alberta, bitumen, canada, oil sands, synthetic crude oil [list all tags]
This is the first version of a monthly post about the last production numbers from Canadian oil sands (also called Tar sands).
Various forecasts for Synthetic Oil Crude (SCO) and Non-Upgraded Bitumen (NUB) derived from oil sands.
Oil Sands Production in a Nutshell
I won't go into too much detail about oil sands. I invite people to read the excellent stories previously posted on TOD by Dave and Heading Out:
Oh, Canada -- Natural Gas and the Future of Tar Sands ProductionMining Canadian Oil Sands into the future
The raw material of the oil sands industry is crude bitumen:
Crude bitumen means a naturally occurring viscous mixture, mainly of hydrocarbons heavier than pentane, that may contain sulphur compounds and that, in its naturally occurring viscous state, will not flow to a well.
The raw crude bitumen is recovered either by surface mining or by In-Situ technologies for deeper deposits (THAI, SAGD, etc.). The crude bitumen is not the final product and has to go through Upgrading:
Bitumen is deficient in hydrogen, compared with typical crude oils, which contain approximately 14 percent hydrogen. To make it an acceptable feedstock for conventional refineries, it must be upgraded into higher quality synthetic crude oil (SCO), through the addition of hydrogen or the rejection of carbon, or both. (National Energy Board, 2000) Upgrading bitumen utilizes natural gas as a source of heat and steam for processing, and also as a source of hydrogen for hydroprocessing.In the following I will only consider two crude oil categories:
- Non Upgraded Bitumen (NUB).
- Upgraded Bitumen or Synthetic Crude Oil (SCO).
The main reason for this choice is that more data is available for these two categories, which is not the case if you consider the total raw bitumen production usually split into In-Situ and Mining productions. There is also a loss factor when upgrading Bitumen to SCO of about 30%, hence one has to be careful when comparing total production figures of bitumen and SCO+NUB. According to the Canadian Energy Research Institute, the average ratio of SCO to bitumen input for upgrading has varied between 0.69 to 0.75 between 2000-2004. From the same report, I derived a correction factor of 0.8835 to account for both the partial upgrading of the crude bitumen production and the losses during upgrading.
Fig. 1- Observed and predicted ratio of SCO+NUB production to the total Bitumen production (derived from CERI document). Click to enlarge.
Production Data
There are several data providers available:- Statistics Canada has monthly time series for NUB and SCO production up to 1985 (not free, CA$3.42 per dataset, financing kindly provided by TOD).
- Monthly data from the National Energy Board (NEB) up to 1998
- The (EUB) also publishes monthly estimates up to 2001.
Most of the data are in Cubic Meters and the conversion factor I used to convert production figures in barrels is 1M3= 6.2929 barrels. The different datasets are shown on Fig. 2, we can observe that they all agree on the total production (SCO+NUB) but that there are some discrepancies on the SCO production levels (I don't have a definitive answer on why).
Fig. 2- Various monthly production estimates for Synthetic Crude Oil (SCO) and Non-Upgraded Bitumen (NUB). Click to enlarge.
Forecasts
There are a lot of forecasts out there on oil sands production, most of them being for the total bitumen production. For now, I considered only the following references:
- National Energy Board of Canada (NEB):
- Alberta Energy and Utilities Board (EUB):
Alberta's Reserves 2004 and Supply/Demand Outlook 2005-2014
Alberta's Reserves 2003 and Supply/Demand Outlook 2004-2013
- Canadian Association of Petroleum Producers (CAPP):
Canadian Crude Oil Production and Supply Forecast, 2005 - 2015
Canadian Crude Oil Production and Supply Forecast, 2004 - 2015
- Canadian Energy Research Institute (CERI):
- Uppsala University (Professor Kjell Aleklett, member of the ASPO):
Söderbergh et al., A Crash Program Scenario for the Canadian Oil Sands Industry, to appear in Energy Policy, 2006
- Purely for the fun of it, I fitted a Logistic curve on the young oil sands production history assuming prior knowledge of the URR at 179 Gb. Of course, it gives me an unrealistic production profile peaking in 2050 at more than 9.7 mbpd.
Fig. 3- Various forecasts for Synthetic Oil Crude (SCO) and Non-Upgraded Bitumen (NUB) derived from oil sands.
| Forecast | 2005 | 2006 | 2007 | 2010 | 2015 | Peak Date | Peak Value |
|---|---|---|---|---|---|---|---|
| Observed (Statistic Canada) | 991.28 | 1048.88 | NA | NA | NA | 2005-11 | 1220.77 |
| CAPP* (2006) | NA | 1074.30 | 1260.71 | 1900.34 | 3087.73 | 2020 | 3531.23 |
| CAPP constrained* (2005) | 877.29 | 1104.34 | 1230.67 | 1559.33 | 2139.76 | 2015 | 2139.76 |
| CAPP moderate* (2005) | 877.29 | 1119.36 | 1248.34 | 1664.46 | 2378.30 | 2015 | 2378.30 |
| CAPP* (2004) | 972.70 | 1178.55 | 1323.44 | 1772.24 | 2281.12 | 2015 | 2281.12 |
| NEB* (2006) | 974.60 | 1077.45 | 1252.58 | 1742.38 | 2636.36 | 2015 | 2636.36 |
| CERI* (2004) | 951.24 | 1120.68 | 1307.05 | 2333.33 | 3383.81 | 2020 | 3746.88 |
| EUB (2006) | 979.80 | 1157.89 | 1277.46 | 1824.94 | 2573.80 | 2015 | 2573.80 |
| EUB (2005) | 925.06 | 1195.65 | 1315.22 | 1755.72 | NA | 2014 | 2322.08 |
| EUB (2004) | 1050.91 | 1227.12 | 1327.80 | 1636.15 | NA | 2013 | 2076.66 |
| Logistic (URR= 179Gb) | 969.61 | 1045.51 | 1126.98 | 1408.21 | 2021.70 | 2050 | 9731.72 |
| ASPO* (2006) | NA | 1251.37 | 1534.73 | 2427.70 | 3082.43 | 2018-01 | 3178.40 |
Table I. Production estimates (in thousands of barrels per day (kbpd)) for SCO+NUB derived from different forecasts (* indicates forecasts that were originally for total bitumen production and that have been corrected using the factor 0.88 explained earlier).
In summary, we can see that most forecasts are in agreement with each other and are predicting a doubling of the current production within 6 years. However, we can observe than the older forecasts have a tendency to be a little bit over optimistic and have been revised downward afterward (see for instance EUB-2006 and EUB-2004).
This is a first draft and there is a lot of work to do. Many important aspects have not been addressed here, for instance: 1) How the decline in conventional oil production will affect the total Canadian production; 2) How domestic demand will evolve; 3) The dependence on Natural Gas. I will attempt to explore these different problems in my future posts.
The different datasets used in this post will be put together in a public spreadsheet, probably next month.
I meant to ask David Hughes at ASPO that if the price per BTU differential gets high enough if there would be a switchover in policy to save the NG (gold) and curtail production of tarsands (lead). Clearly at some price this would happen.
But using the CAPP forecast of 3500kpd in 2020, how much nat gas will that use, assuming no nuclear plants have been built in the meantime and that the US miraculously can meet their NG needs from LNG and allow canada to use her gas to steam tar sands to turn into oil to sell to the US.
Based on your charts; laundry, poker rooms, and liquor stores are still great investments in Fort McMurray (and brothels, but those require assets other than dollars)
I guess my basic question about bitumen production is economics. What does it cost per bbl to set up the production facilities? Is it still around $500k per barrel per day? How much does it cost per bbl for raw materials and energy to process the bitumen? Is this still around $30/bbl not counting amortisation of the capital costs? How does this stack up with coal to liquids? With redrilling and using tertiary development of depleted fields? With, perish the thought, conservation?
My best arguement for dealing with the cornucopians is agree with them that the oil is there, its just uneconomic compared with nuclear, wind and other renewables and conservation. This allows them the dignity of being right, just there are more practical solutions for our country and the planet.
I think its of the utmost urgency for all of us to begin dealing with the problems now so that our society can survive and prosper and we need to convince as many folks as possible that their own actions will make a difference.
Your cost numbers look high. At the ASPO conference David Hughes pegged the NG use as 3/4 mcf per barrel of oil produced from mining operations. His 2006 capital cost estimate was $131,000 per bbl/d up from $78,000 in 2004. His EROI estimate is 2. Others peg EROI at 4 or 5 which looks more accurate to me. Look at Canadian Oil Sands Trust latest financial results. For the third quarter operating costs were $19.68 per barrrel of syncrude produced. This is a very profitable enterprise. I think it is a mistake for people to say it is uneconomic or it is turning gold into lead from an energy balance standpoint. For natural gas use you are getting 8 x more energy back than you put in. The real problems with tar sands are they waste gas on heat instead of using it solely for hydrogen production, they produce large amounts of CO2 and the regional environmental degradation. The reason they aren't a long term energy solution to peak oil is the limits of production based on water and natural gas availability.
There are a few things that would be interesting to look at vis a vis Alberta oil sands production forecast reliability:
In effect, they value multicriteria analysis POST-investment, not PRE-investment.
_Joe Hill, Industrial Workers of the World song writer , organiser and martyr.
For some reason it is an American characteristic to act without any forethought and with a strong denial of all evidence, sort of like a religeous crusade.
Let's burn the mothership first and ask questions later.
I know that the production of these stats and charts are the work of a dedicated creator of charts and stats, perhaps a scientist, and certainly one who believes that science will lead us all from the dark cave to the brilliant light of reason.
And I understand the mantra of the scientific community that we must know what we are facing before we can fix it, but I fear this slow moving beast, which stomps blindly on people with impunity, consoling itself with the platitude that it is helping people in the short term.
That's the problem. Short-term thinking. Everyone seems to only be concerned with keeping the oil flowing, no matter the cost. And the scientists who are putatively trumpeting the concerns of the peak oil crowd are unwittingly contributing to the downfall of humanity by advocating the go-slow approach. They would have us try to find other destructive methods to fuel our anti-nature lifestyle, to create dubious technologies to mitigate our short-sighted ruinous rush to embrace technology (think CO2 sequestration, Methane Clathrate mining and other potentially disastrous technologies), and finally they would have us believe that this is the only way, asking us not to look too far into the future.
The basis for our technological civilization is flawed at its core: perpetual growth and the injection of human values into a non-humancentric natural system. Therefore, I have come to the conclusion that nature will strike the balance, effectively killing off all but a few hundred million humans in the next two hundred years. No amount of rational thinking, strident pleading, careful individual preparation, or scientific humbug will stop this immense catastrophe.
This site has become like a club of Aeronautical Engineers holding court on the Hindenberg. While they head for their doom, they debate and trade memos and laud each other their efforts, inscribing beautiful colored charts that in fact describe their doom, but at the same time counseling calm, letting us know that they take certain measures to keep the balloon aloft. Though we all know it will all end in tears and recriminations.
You will undoubtedly ask, "So, what do you want us to do?"
Fair enough.
Make peace with your invisible sky being of choice.
All your base are belong to us.
There is nothing you can do. You are a mere 6.8 billionth of the social mass on this planet. You are but a speck on the backside of a massive survival engine that has evolved to seek the way of Paleolithic man, to survive day to day, no matter how destructive that short-term survival impulse coupled with high tech may be to future generations. Our natural inclination is to put individual over family, family over clan, clan over tribe, tribe over nation, nation over humanity. We are the selfish, thinking species and think we do. Witness this page.
So...Go on thinking. Go on chatting. Go on drawing charts. I'm going to trade my Prius for a Hummer and start drag-racing through the wilderness preserves. I hope, by speeding up the destruction of the environment, we can kill off this most perniciously self-centered species post haste.
The smoldering ruin that will mark post oil earth will be barren and wounded, its species decimated, the remnants of humanity doomed to live on the polar margins, scraping a living, learning to forget and forgetting to learn, and, with luck, the polar bears will eat those last survivors.
Homo sapiens is no different from yeast or any other organism, it will reproduce and consume its environment to the point of overshoot and collapse. If space aliens had beamed all the inhabitants of the OECD (developed) nations away, the end result would be the same. If all monotheists were raptured away, it would make no difference. The great majority of people everywhere love having children and love a motor. On Rarotonga, where it never drops below 20C, and the only road is just 32km in circumference (no place is more than 16km away), no adult will walk or ride a bicycle. In Shanghai, bicycles are banned from the CBD to make room for cars.
People will not powerdown willingly. Only collapse and dieoff can humble humanity. Therefore, both are inevitable because people will keep on with their monkey business (tar sands, oil palm plantations) until Gaia stops them.
Here I think a mini-collapse and a mini-dieoff might cause people to be aware of the situation in time to mitigate a total collapse and dieoff, and choose a better path. Then they will choose the powerdown path because they will have internalized (by learning) that that path is better for them. Powering down, and being happy and healthy about it, will be a new target for relative fitness. But not from being told that, only from experiencing it. At our DC conference Governor Schweitzer offered the challenge to be 'cool' about energy conservation with the slogan "How low can you go?" This might work in the framework of our evolved neural pathways, but not while profligate energy users still have more access to better mates and more stuff.
Hard times for sure, but end of times I doubt.
Of note, Niue and the Cook Islands have only avoided collapse by exporting their excess population growth to New Zealand and importing food. If the planes and boats stopped coming, they would have to revert to the old method of sustainability - warfare.
As long as someone is allowed to make money mining tar sands or destroying rainforests to grow biofuels, it will continue. I just can't see nature lovers ever outnumbering auto lovers or becoming more powerful.
Of course, just by being alive I am part of the problem. How else could it be? I am a self serving yeast just as is Jay Hanson, James Lovelock, Al Gore, and David Suzuki, none of them has committed suicide either. The only non yeasty thing I ever did was decide not to have children. Beyond that, I am following the AMPOD path of not trying to save the world, but just trying to use the mechanisms of our society to build a lifeboat for extended family and friends so I can finish my days as a (relatively) comfortable yeast while the world continues to burn up.
= www.lifeaftertheoilcrash.net
If someone wants to make a difference then use all your resources to burn as much fossil fuel as possible. The growth of food production must be halted to limit the human race to its current numbers. :-)
There is still too much slack in the system and vastly higher numbers could be supported by all 6.5 billion becoming vegetarians for example. So eat as much meat and dairy as possible.
BTW I do not blame the poor countries for their problems; these countries and great civilizations were destroyed by the two destructive "Semitic Religions" Islam and Christianity.
- 3 - Judaism, Christianity, Islam
(you can't have Christianity and Islam without Judaism, a point explicitly recognised by Islam 'people of the book' to describe Christians and Jews)
- human beings of other religions (see various Chinese civil wars since 500 BC, Genghis Khan etc.) have contrived to destroy each other without help from Christianity
What you can say is the explosion of Christianity across the face of the planet 1500-1900 was an absolute ecological and human disaster for the peoples of the New World, Australia, Polynesia. Population collapses of as much as 90% and enormous loss of life. Let's not mention the Slave Trade (international, there already was one from Africa to the Arabs), the Opium Wars, the Indian Wars etc.
But I am only 50% inclined to blame Christianity. it wasn't the religion of Northern Europeans, it was a combination of technological revolution (that gave them a decisive military and political advantage), demographic explosion and a transformation of the economy.
And of course, our old friend the smallpox virus, which did more for the domination of the planet by Western Europeans than anything else.
That's 0.75%, or, as reported earlier this year: 50 cents in tax per $70 barrel of oil.
How long will that last? Even Albertans down the line are smart enough to see they're being ripped off royally.
And if the tax becomes 25%, how will that affect investment and production?
The whole scheme feels like ethanol subsidies: the taxpayer pays.
I still feel the most likely option for the oilsands is implosion. Hard to predict which factor will be the decisive one, but there's plenty choice. The pressure to develop too fast is enormous.
PS Nuclear has far too long a run-up time to mitigate the sharp drop in available natural gas, so much seems clear. Where oh where will the power come from?
Before ASPO, I spent the last 5 months traveling around Canada looking for land, hiking etc. Given global warming, increase in energy prices, decrease in energy availability, increase in societal special interest chaos, etc, my thought was canadian land and canadian girlfriend(wife) would be good long term thinking. During this search, I witnessed 2 VERY passionate rallies against local coal bed methane developments - as we pass the best first spots for fossil fuels, the places left are increasingly on native lands, or environmentally valuable areas and the public animosity towards increasing energy supply will be high. My guess is that oil companies are underestimating this, among other things.
Of course, 99% of those opposed to these projects arent doing much to reduce their own usage, they just want their cake and be able to eat it too.
And 'on average', I have found Canadian women prefer Canadian men (though on the value scale, I am probably more Canadian than American)
Did you know that Canadians use more fossil fuels than their US counterparts? I guess it makes sense given colder winters, and further distance between cities.
Canada is relatively highly industrialised compared to the whole of the US. Particularly in the area of raw materials: pulp and paper, mining, basic chemicals, oil sands, etc.
An example, California only uses 40% more electricity at peak than Ontario-- 50GW v. 30ish GW. But California has 30 million people (plus say 2 million illegals?). Ontario has about 11 million people. GDP per head in California is 50% higher than Ontario (roughly).
California summers are a lot hotter (but less humid, generally). Most people in Ontario heat with gas, so the winter peak is less relevant.
I think the main difference is Ontario is a major manufacturing centre: mining, automobile manufacture, basic industries like chemicals (the Sarnia belt opposite Detroit), pulp and paper. Also California electricity prices are a lot higher whereas Ontario has had perverse incentives to consume power.
Canadian women? Complex subject. The analogy to California is apt. Canadian women tend to be feminist (in both a small f and a Capital F sense). There are some quite good books out there about Canadians (Mondo Canuck, The Xenophobes Guide to Canadians, etc.)-- Canadians are in some ways very like Australians by which I mean very egalitarian, very 'PC' (perhaps that is less like Australians ;-), and tend to be quite collectivist relative to Yanks-- standing out is admired but also criticised. Also fairly straightforward.
And a Newfoundlander is not a Bluenoser (Halifax) is (of course) not a Quebecoise is not a Torontonian is not an Ontarian is not a Prairie Dog (Winnipeg) is not a Calgarian is not an Edmontonian is not a Vancouverite... regional differences matter in a country that is 3000 miles wide.
The Economist put it well (travel guide to Toronto)-- 'Canadians have a complex inferiority and superiority complex with regard to Americans. Tread carefully'.
As an American woman once said 'I would have had a lot easier time in Canada if someone had told me at the beginning that to a Canadian, I am YELLING every time I speak' ;-).
Your best route to living in Canada is actually the Immigration Canada points system. Trying to marry a Canadian, if you don't have a permanent work permit, is hard work.
Calgary is the destination du choix of the ambitious Peak Oiler. Edmonton is closer to the production, but oil industry HQ is Calgary. Sadly the city itself is absolutely not geared up for PO etc. A big urban sprawl of very large homes, spreading up the highways into the mountains. Traffic jams everywhere. Think Denver North.
I could never live in Calgary. Dead ecosystem from my perspective - I need contrast, water, and trees.
I know Eastern Canada much better than Western. Vancouver is a fantastic place, but expensive (not enough land for housing) and the career opportunities can be surprisingly restricted (big companies tend to HQ in Toronto, Montreal, Calgary). Also it rains pretty solidly from November through to April-- much more than London, say.
Toronto is urban sprawl personified and quite ugly for that-- the 401 Highway has 22 lanes at one point (11 each way) and at 4pm they are completely blocked with traffic. I love the place (because it is home) but I have heard it described by outsiders as 'cold, insular, smug, New York without the class'-- socially a very hard city to break into (quite London-like in that regard). Some of the downtown neighbourhoods are really cool.
Montreal is about learning French-- there are lots of successful immigrants in Montreal, but only the dying Anglo old guard doesn't speak French well enough to do business there. Probably the most European city in North America, though.
Edmonton is a nice place but is cold and comparatively bleak. Mountains and forests not so far away. And 'entertainment' can be as meaningful as spending time in the West Edmonton Mall (the world's second largest indoor mall, with its own fleet of submarines). Nice people, though. Taxes are way lower in Alberta than anywhere else in Canada.
Ottawa is a somewhat dull national capital. A great place for outdoors (skating on the canals, skiing in Quebec, cycling in summer etc.) and for families. Main industries are government and some hi tech (Nortel has seen tough times though).
As for 'implosion' of the sector - I highly doubt it.
Royalty/subsidy redress, NatGas usage, plus growth and environmental concerns are all factors that will culminate in a call for a moratorium on further production as has already been proposed.
I agree with you -the natives are restless- however so are the farmers and the latter represents a disproportionate chunk of the electorate and if they mobilize on water... watch out.
Farmers scream a lot, but they are driven by money like everyone else. My cousins lived their life selling off bits of the family farm to become new subdivisions in the fastest growing entity in Canada (Barrie, Ontario)-- such was Toronto urban sprawl.
Sure hope the folks at Alberta Sulphur Research Ltd. in Calgary are right in suggestinging that all of that stranded sulfur will be used for non carbon based energy before it is sequestered as liquid sulfur dioxide in sour gas fields along the Alberta foothills. The advantage will be that the SO2 will react with the H2S in situ to refor