Future of a oilsands: a good, a bad and a ugly

Since 1999, some-more than $200 billion has been invested in Alberta’s oilsands. That’s a lot of income in a comparatively brief duration of time that fuelled a multi-year bang in Alberta and grew prolongation from around a half million barrels per day in a late 1990s to a projected 3 million bpd in 2020. Investment strike a arise in 2012, but since has depressed off dramatically. 

There are many concerns about a destiny of a oilsands as a outcome of a extreme tumble of oil prices, substantial changes in a North American oil attention and environmental policies.

While a bitumen fields around Fort McMurray, Alta., are substantially not going to be phased out by government, market forces meant a destiny could be good, bad or nauseous over the subsequent few decades. 

Justin Trudeau pronounced a oilsands can’t be tighten down tomorrow, though will be phased out. (CBC)

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The good

During a downturn over a final few years, investigate and enlargement appropriation was cut during many oilsands companies as spending was slashed opposite a board. In prejudiced since of a CO levy, spending on record should arise again as oil prices gradually increase. New record is pivotal to a oilsand’s future.

Companies are looking during new ways to revoke costs and to revoke a environmental impact on land, H2O and air. In addition, there is some thought of relocating divided from building vast multi-billion-dollar oilsands facilities, in foster of smaller projects that are quicker to build and come with a smaller cost tag. 

Energy economist Peter Tertzakian, photographed by CBC cameraman John Badcock, says technological breakthroughs could move some ‘upside surprises’ for a oilsands over a subsequent decade. (Susan Ormiston/CBC )

The common opinion is that the oilsands won’t see many enlargement over 2020, though depending on what new technologies are developed, that could change.

“There is a lot of speak about creation a projects a lot smaller and bringing them online many faster, and prejudiced upgrading and cleaning adult a CO2 and all of that kind of stuff,” said energy economist Peter Tertzakian with Calgary-based ARC Energy Research Institute. “The subsequent 10 years can move some upside surprises.”

Just final week, MEG Energy announced an enlargement plan during a Christina Lake operations. It will use what it calls “enhanced mutated steam and gas push” record to supplement 20,000 bpd to a production. Cenovus Energy and Canadian Natural Resources Ltd. also announced oilsands expansions in a past dual months.

That’s a form of enlargement that experts design in a future, instead of vast multi-billion dollar greenfield projects, during slightest in a deficiency of a vast breakthrough.

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The bad

As the vast enlargement over a final decade slows, enlargement prospects have dampened. Companies are looking elsewhere for investments that can start earning a lapse some-more quickly and won’t be as CO intensive.

The problem with oilsands projects is that they take between 5 and 7 years to accept correct permits, they need another 5 to 7 years to build, and usually afterwards do they start producing oil and creation money.

“The doubt of a final integrate of years has been, ‘Why would we deposit in that when we can deposit in Texas, Oklahoma, North Dakota and now even in other tools of Alberta, Northeast B.C. and Saskatchewan,'” pronounced Tertzakian. “I can get a improved lapse and we don’t have to wait 15 years.”

Both required oil and fracking in locations closer to pipelines are reduction costly than removing oil from oilsands.

The enlargement form for a oilsands is in doubt as it struggles to attract investment dollars. That’s a reason because a attention has lowered a growth predict for uninterrupted years.

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The (real) ugly

In any industry, there is always a possibility extrinsic players will be forced to tighten their doors, even as a categorical players sojourn strong. That’s a conditions that could play out around Fort McMurray.

There is a far-reaching variability in a oilsands region in terms of costs and peculiarity of resources, as some companies were late to a diversion and didn’t have a best geology to entrance bitumen and get it to market. That’s because there is operation of handling costs and CO power among projects. 

Oilsands hothouse gas power per tub (CBC/Government of Alberta)

If commodity prices unemployment again, environmental policies turn some-more difficult and costs rise, some projects might betimes tighten their doors. An early shutdown would be rarely surprising as these vast projects are built to run for during slightest 40 or 50 years, though it could happen.

“If we plan out one or dual decades and some of these projects need augmenting cost and collateral expenditures, I’m certain a proponents will say, ‘hmm, is it improved usually to container it adult or continue,” pronounced Tertzakian. “It’s zero we predict in a subsequent 10 years, though over that, who knows.”

Big investment, prolonged life

While some oilsands facilities have gifted proxy shutdowns, such as Nexen-CNOOC’s Long Lake and JACOS’s Hangingstone projects, those in a attention don’t see any vital comforts shutting down good before their targeted lifespan.

“Oilsands projects are really vast initial investment and there is such inspection in a capitulation routine to get those projects off a belligerent and built, a lot of those, even in today’s environment, those operators in a oilsands are in it for a prolonged haul,” pronounced Patrick McDonald, an oilsands manager with a Canadian Association of Petroleum Producers.

The 3 opposite scenarios are all plausible, with usually a guarantee of technological breakthrough approaching to lead to substantial growth for a oilsands. The many approaching scenario, according to attention watchers, is prolongation increases over a subsequent 3 years, afterwards usually smaller expansions to existent comforts heading to some-more bitumen being taken out of a ground.

Even without poignant innovative breakthroughs that lead to growth, the oilsands is approaching to furnish about 3 million barrels of oil a day by 2020.

“That’s a really long-term bottom bucket apparatus for a world’s appetite needs over a march of a subsequent few decades,” said Tertzakian. “One of a appealing things about a oilsands is that it has a really prolonged haven life, it doesn’t decrease really quickly.”

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Article source: http://www.cbc.ca/news/business/oilsands-future-tertzakian-carbon-bitumen-1.3735773?cmp=rss