Canada

High crude oil prices, uncertainties about the consequences of climate change and the eventual decline of conventional oil production raise the issue of alternative fuels, such as non-conventional oil and biofuels. This paper describes a simple probabilistic model of the costs of non-conventional oil, including the role of learning-by-doing in driving down costs. This forward-looking analysis quantifies the effects of both learning and production constraints on the costs of supplying bitumen, which can then be upgraded into synthetic crude oil, a substitute to conventional oil. The results show large uncertainties in the future costs of supplying bitumen from Canadian oil sands deposits, with a 90% confidence interval of $7–12 in 2030, and $6–15 in 2060 (2005 US$). The influence of each parameter on the supply costs is examined, with the minimum supply cost, the learning rate (LR), and the depletion curve exponent having the largest influence. Over time, the influence of the LR on the supply costs decreases, while the influence of the depletion curve exponent increases.

Published in: Energy Policy, Volume 36, Issue 11, November 2008, Pages 4205-4216
Available from: ScienceDirect

A critical exposé of the open-pit mines that have made Canada one of the worst environmental offenders on earth.

While the world goes green, Canada has elected to go black into the tar. The frenzied development ($100 billion and counting) of the tar sands in Fort McMurray, Alberta, in the last six years has made Canada the world’s fifth greatest global exporter of oil and turned the country into “an emerging energy superpower.”

Combining extensive scientific research and compelling writing,

Andrew Nikiforuk takes the reader to Fort McMurray, home to some of the world’s largest open-pit mines, and explores this twenty-first-century pioneer town from the exorbitant cost of housing to its more serious social ills. He uncovers a global Deadwood, complete with rapturous engineers, cut-throat cocaine dealers, aimless bush workers, American evangelicals, and the largest population of homeless people in northern Canada. He also explains that this micro-economy supplies gasoline for 50 percent of Canadian vehicles and 16 percent of U.S. demand. Readers will learn that tar sands:

• burn more carbon than conventional oil,
• destroy forests and displace woodland caribou,
• poison the water supply and communities downstream,
• drain the Athabasca, the river that feeds Canada’s largest watershed, and
• contribute to climate change.

The book does provide hope, however, and ends with an exploration of possible solutions to the problem.

Available from: Amazon Online

Approximately 2000 billion barrels of conventional oil may ultimately be extracted. We have soon consumed half of it. Global oil production may peak around 2010. It is claimed that non-conventional oil production, including Canadian oil sands production, may bridge the coming gap between the world’s oil demand and global oil supply. In 2003 the oil sands reserves were included in Canada’s estimated proven reserves, thus increasing from 5 to 180 billion barrels. The objective of this report is to investigate and analyse the production of heavy oil/bitumen from Canada’s oil sands deposits and its future impact on global oil supply.

The report shows that the Canadian oil sands industry’s dependence on natural gas is unsustainable. Extensive use of bitumen for fuel and upgrading seems to be incompatible with Canada’s obligations under the Kyoto treaty.

The Canadian oil sands industry should be viewed as two separate forms of oil production, in situ production (similar to conventional oil production) and mining. The long-term future of the Canadian oil sands industry is the in situ production, although great uncertainty is associated with its potential.
If a massive effort is made to put the whole oil sands mining area into production, a plateau production and a following decline are expected for the oil sands mining industry. The declining oil sands mining production may cause a peak production for the Canadian oil sands industry as a whole, since it is uncertain if the in situ production may compensate for the declining mining activities.

The future Canadian oil sands production cannot even compensate for the combined declining conventional oil production in Canada and the North Sea. The most optimistic scenario will not manage to compensate the decline by 2030. Canada’s oil sands resources cannot prevent a global peak oil scenario.

Published in: Uppsala University,
Available from: Global Energy Systems

The report Peaking of World Oil Production: Impacts, Mitigation and Risk Management, by Robert L. Hirsch et al., concludes that Peak Oil is going to happen and that worldwide large-scale mitigation efforts are necessary to avoid its possible devastating effects for the world economy. These efforts include accelerated production, referred to as crash programme production, from Canada's oil sands. The objective of this article is to investigate and analyse what production levels that might be reasonable to expect from a crash programme for the Canadian oil sands industry, within the time frame 2006–2018 and 2006–2050. The implementation of a crash programme for the Canadian oil sands industry is associated with serious difficulties. There is not a large enough supply of natural gas to support a future Canadian oil sands industry with today's dependence on natural gas. It is possible to use bitumen as fuel and for upgrading, although it seems to be incompatible with Canada's obligations under the Kyoto treaty. For practical long-term high production, Canada must construct nuclear facilities to generate energy for the in situ projects. Even in a very optimistic scenario Canada's oil sands will not prevent Peak Oil. A short-term crash programme from the Canadian oil sands industry achieves about 3.6 Mb/d by 2018. A long-term crash programme results in a production of approximately 5 Mb/d by 2030.

Published in: Energy Policy, Volume 35, Issue 3, March 2007, Pages 1931-1947
Available from: ScienceDirect
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