“How much bitumen and synthetic crude oil will Canada be producing from the oil sands, and how much will it cost to supply it?” 

This is one of the predominant questions being raised by industry and governments in Canada and the United States, as it concerns itself with energy security. 

CERI provides an up-to-date evaluation of the likely production volumes from announced development projects (mining extraction, in situ recovery and bitumen upgrading), their energy requirements, and the associated supply costs of crude bitumen and synthetic crude oil streams, given recent market price changes. The analyses were conducted for two types of in situ recovery—CSS and SAGD—and for surface mining and extraction, for integrated mining, extraction and upgrading, and for stand-alone upgrading.

Natural gas production in western Canada keeps plugging along at near-record levels—despite looking like a rapidly quickening treadmill at times. And there’s plenty more to come down the pipe—from Canada’s Mackenzie-Beaufort basin, Alaska’s North Slope, and Canada’s High arctic.

Despite this, supply remains tight compared to the strong demand both in the Alberta market and beyond in central Canada and the US Lower-48.

Tight supply plus strong demand means high prices. How long will this last?

Once pipelines from the North are built, will the system here be able to handle it?

Can we get the gas to the markets where it needs to be here in western Canada itself or to the key markets in the United States?

Understanding the capacities of the transportation corridors that connect supply sources to demand centres is crucial.

We can’t just look at the Western Canada pipeline system in isolation—it operates in an integrated North American marketplace. The North American natural gas pipeline network has developed over time to move gas primarily from three major supply areas—western Canada, the Gulf Coast and Mid-Continent—into the major consuming regions of Ontario and the US Northeast, Midwest and California.

In addition to new northern frontier supply regions that will become increasingly important, local traditional flows patterns are changing—taking on more characteristics of hubs and networks. This has already occurred in the Midwest; and is developing in western Canada.

The CERI research team leader—Peter Howard—believes that “the performance of the pipeline system into and out of Western Canada is critical to efficient operation of the North American natural gas marketplace.” He also comments that “it is critical for companies to understand the economics of the various possible alternatives routes, and just when they will be needed under different supply scenarios.”

Ultimately, significant additional pipe entering and exiting Alberta will be necessary.

When? How much? Under what circumstances?

These are questions to which organizations along the entire supply chain—as well as policy makers and regulators—need answers. The companies that understand the issues that CERI examines and analyzes will be better equipped to take advantage of the business opportunities presented—and government organizations will be better able to facilitate operations.

Contact CERI for more information:
George Eynon, Vice-President Business Development
1 (403) 220 2388 or geynon@ceri.ca

Alberta's oil sands operators are an independent breed - the less they have to rely on anyone else the better. They need lots of steam and some electricity to produce the bitumen and/or synthetic crude oil - and would prefer their operations to be self-sufficient if at all possible.

Whether it is steam assisted gravity drainage (SAGD) or cyclic steam stimulation (CSS), in situ operators use large quantities of steam to reduce the bitumen viscosity to get it out of the ground.  In surface mining operations, steam is needed to separate the bitumen from the mined oil sand.  Then more steam is needed in the various upgrading processes.

They could build their own steam plants and get power from the grid, or they can cogenerate steam and power in a single facility - and the latter is just what many of them are opting to do.  Co-generation of steam and electricity holds a potential benefit to Alberta's oil sands operators by both lowering energy costs and ensuring reliable supplies of electricity.

The various oil sands development plans announced to date would build to 4.2 million barrels per day (MMbpd) of bitumen and SCO production by 2020, if they were all to proceed.  Even in CERI's more likely reference case, production reaches 3.2 MMbpd.

Some of the cogeneration projects built to produce steam generate more electricity than needed by the oil sands projects - and the surplus would go into the Alberta grid system.  Oil sands operators, the grid system operator (AESO), merchant transmissions companies, electricity utilities, and large end-users alike need to understand the implications of all this cogeneration capability.

The CERI research team believes that cogeneration of steam and electricity for oil sands developments "significantly impacts the availability of power in ALberta and the plans for other merchant generation facilities", as well as "AESO's responsibility for providing sufficient electrical transmission infrastructure to ensure that supply meets demand."

Significant oil sands co-generation capacity impacts all the players along the supply chain.  Those organizations that understand the issues that CERI has examined and analyzed can position themselves to identify the business opportunities presented.

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Geopolitics of Energy (GOE) is the leading monthly journal on geopolitical developments affecting global energy markets. It provides analysis, information, perspectives and fresh ideas on the political and economic factors affecting energy and their impact on national energy policies, the international environment and prices. Geopolitics of Energy reports on developments in producer and consumer countries and provides critiques and analyses of current events as they affect these countries now and in the future.

Sponsor organizations receive the GOE publications as one of the benefits of CERI membership.  For more information, contact Megan Murphy at (403) 220-2370 or email.