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Oil sands profitable and promising


Oil sands projects remain highly profitable for operators and governments and highly promising as a source of oil supply, according to an annual study by the Canadian Energy Research Institute.

The study estimated the constant-dollar oil price needed to recover all capital expenditures, royalties, and taxes calculated at a real discount rate of 10%/year, which it called equivalent to a nominal return of 12.5%/year based on an inflation rate of 2.5%/year.

For hypothetical projects in the study, that price, which CERI calls supply cost, is $44.75(Can.)/bbl of bitumen for steam-assisted gravity drainage, $89.62/bbl for mining integrated with upgrading, and $61.05/bbl for mining alone.

The supply costs, in prices equivalent to West Texas Intermediate crude oil after adjustments for blending and transportation, are $64.62/bbl for SAGD, $91.07/bbl for integrated mining and upgrading, and $81.51/bbl for stand-alone mining.

The study said the province of Alberta receives an average royalty of $8.50-12.20/bbl over the life of an oil sands project.

It projected bitumen production in three scenarios.

In the high case, production from mining and in situ operations increases from 1.5 million b/d in 2010 to 3.9 million b/d by 2020 and to 6.2 million b/d by 2045.

In the reference case—“a more plausible view,” according to CERI—production grows to 3.3 million b/d by 2020 and 5.4 million b/d by 2045.

And in a low case, bitumen production is 4.1 million b/d by 2030 and 4.6 million b/d by 2045.

Oil Gas Journal

10 Comments on "Oil sands profitable and promising"

  1. armageddon51 on Wed, 28th Mar 2012 12:07 am 

    Great new. Americans will have all suck up Canadian oil then and West Canada will look like the surface of the moon with water, air and land poisoned. Nice move from the internationals oil companies while my stupid, bought up government realize too late that it should have nationalize this resource and keep it for the next generation of Canadians, not Americans.

  2. TIKIMAN on Wed, 28th Mar 2012 1:03 am 

    Oil sands are only profitable with high oil prices. It takes a huge amount of energy just to refine tar sands into a heavy low quality crude which is harder to refine into gasoline.

    Because of the difficulty of processing tar sands, it will never reach more than a few million barrels a day.

  3. pete on Wed, 28th Mar 2012 2:04 am 

    Avatar, I remember my stint as a 18 wheel driver and making deliveries of pipe into the area during the mid 90s. When I saw the movie the connection was immediate. The only thing that I don’t understand is there is a new system of removing the oil cheaper, easier and environmental called the THAI system. It even upgrades the oil some. no strip mines no water poisoned for SAGD and less carbon emissions. Why 50 year old tech that kicks the -hit out of the earth and the populations around it?

  4. Ham on Wed, 28th Mar 2012 2:17 am 

    Removal of pristine boreal forest and creation of a toxic wasteland not mentioned. The aesthetic increase in numbers gives one hope. At least it can be seen from space too.

  5. MrEnergyCzar on Wed, 28th Mar 2012 3:04 am 

    The Tar Sands will always need higher and higher oil prices because all the other resources needed are tied to the price of oil…


  6. SilentRunning on Wed, 28th Mar 2012 5:59 am 

    The corporate model that allows companies to privatize gains and socialize losses comes to its logical conclusion with a business that poisons the planet, destroys habitat, and then trumpets itself as a solution to human needs.

  7. DC on Wed, 28th Mar 2012 7:47 am 

    Of course the tar-sands are profitable, how could they not be? 400-600billion dollars a year (global) in subsidies going to oil companies ensures even the most toxic and crappiest net-energy project can make money. Cant much in way of new net energy, but money…sure.

    And the tar-sands has gotten more than its share of public subsidies. And of course, the Canadian govt has completely discounted the future. Those tar-ponds will breach one day(there allready leaking now). No provision has been made for that, and the funds to help repair(it will be impossible in any event) just wont be there.

  8. Cam on Wed, 28th Mar 2012 2:19 pm 

    Nothing in there about the $ per barrel being set aside to eventually clean up the mess. Guess they don’t add that cost in!

  9. tubaplayer on Wed, 28th Mar 2012 9:40 pm 

    @Cam: You reckon they will ever to manage cleaning it up?

  10. PrestonSturges on Wed, 28th Mar 2012 11:33 pm 

    Wikipedia says “THAI” is controlled mine fire. What could possibly go wrong there?

    “…..Toe to Heel Air Injection (THAI)This is a very new and experimental method that combines a vertical air injection well with a horizontal production well. The process ignites oil in the reservoir and creates a vertical wall of fire moving from the “toe” of the horizontal well toward the “heel”, which burns the heavier oil components and upgrades some of the heavy bitumen into lighter oil right in the formation. Historically fireflood projects have not worked out well because of difficulty in controlling the flame front and a propensity to set the producing wells on fire. However, some oil companies feel the THAI method will be more controllable and practical, and have the advantage of not requiring energy to create steam.[34]

    Advocates of this method of extraction state that it uses less freshwater, produces 50% less greenhouse gases, and has a smaller footprint than other production techniques.[35]…..”

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