Non-conventional oil

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

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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