TORONTO (miningweekly.com) – Canada is expecting a boom in oil production from its prolific Alberta oil sands deposits; however, production from the world’s third-largest proven oil reserves, after Saudi Arabia and Venezuela, is hampered by a lack of sufficient transport to markets, resulting in lower prices for Canadian crude.
In much the same way as the transcontinental railroads of the 1880s acted as economic enablers and opened up the Canadian hinterlands of Manitoba, Saskatchewan and Alberta to settlement and agriculture, so new oil pipelines transporting crude to coastal refineries and markets, and refined petroleum products back inland, are expected to have an enormous economic impact on Canada, driving economic growth.
Canada is desperately seeking alternative oil transport networks to its inadequate rail infrastructure to boost an industry that last year accounted for C$100-billion in exports of oil and natural gas, Al Monaco, the country’s largest pipeline operator Enbridge’s president and CEO, said at a recent Bloomberg Canada Economic Summit, in Toronto.
“It’s a very exciting time to be in the pipeline business. It’s not too often that you get the supply fundamentals and the demand fundamentals lining up extremely well. So, at this point, you’ve got a producer push of volume that wants to get to market. You’ve also got a market pull,” he said.
MARKET PUSH AND PULL
The Canadian Association of Petroleum Producers’ (CAPP’s) ‘2013 Crude Oil Forecast, Markets and Transportation’ report expects Canadian crude oil production to more than double to 6.7-million barrels a day by 2030, up from 3.2-million barrels per day in 2012. This includes oil sands production of 5.2-million barrels a day by 2030, up from 1.8-million barrels per day in 2012.
CAPP VP for markets and oil sands Greg Stringham told Mining Weekly that conventional tight oil production was increasing owing to new technology, allowing the industry to produce oil from formerly uneconomic resources and reversing a significant declining production trend over the last decade.
He said oil sands production growth reflected Canada’s supply potential and the growing international demand for oil. In 2012, the country produced 1.8-million barrels a day, including 800 000 bbl/d from mining operations and one-million barrels per day from in situ operations. By 2030, in situ production is forecast at 3.5-million barrels a day and mining production is forecast at 1.7-million barrels a day.
Canada’s Athabasca oil sands are large deposits of bitumen or extremely heavy, tarry crude oil, located in north-eastern Alberta, roughly centred on the boomtown of Fort McMurray.
These oil sands, hosted in the McMurray formation, consist of a mixture of crude bitumen, silica sand, clay minerals and water. The Athabasca deposit is the largest known reservoir of crude bitumen in the world and the largest of three significant oil sand deposits in Alberta, along with the nearby Peace river and Cold Lake deposits, where crude production majors such as Suncor Energy, Syncrude, Shell Canada, Nexen and Canadian Natural Resources have set up major operations.
“Increasing Canadian oil supply is aimed at markets in Eastern Canada, traditional and new markets in the US (displacing imports from less secure foreign sources) and growing markets in Asia. Our industry is focused on energy security and reliability, economic growth and environmental performance,” Stringham said.
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