CERA: Canadian Oil Sands Poised to Become the Top Source of Crude Imports to the US in 2010; Could Contribute Up To 36% of US Oil and Refined Products Imports by 2030
21 May 2010
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| Growth of production of Canadian oil sands. Source: IHS CERA. Click to enlarge. |
The Canadian oil sands are now poised to become the number one source of US crude oil imports in 2010, according to new research from the IHS CERA Canadian Oil Sands Dialogue. In addition, oil sands imports could ultimately increase to a range of 20% to 36% of US oil and refined product imports by 2030 from the 2009 level of 8%, according to the Dialogue’s first report, The Role of Canadian Oil Sands in US Oil Supply.
IHS CERA’s earlier comparison of 11 publicly available life-cycle analysis studies found that fuel produced from oil sands mining has average well-to–retail pump greenhouse gas emissions 1.3 times the average for fuel consumed in the United States. Similarly, fuel produced from oil sands utilizing SAGD (steam assisted gravity drainage, an in situ production technique) has average well–to–retail pump GHG emissions about 1.7 times larger than the average fuel consumed in the United States.
On a well-to-wheels basis the majority of emissions are created when the fuel is combusted in a vehicle, IHS CERA notes. The well-to-retail pump part of the emissions (before vehicle use) accounts for some 20-30% of the total life-cycle GHG emissions, the company says. Its calculations thus point to total well-to-wheels greenhouse gas emissions from oil sands—from extraction and processing through combustion of its refined products—that are approximately 5 to 15% higher than that from fuel from the “average” crude oil processed in the US. (That WTW range is lower than that determined by a number of other studies, IHS CERA notes.)
The Canadian oil sands are not alone as a higher GHG source of crude, IHS CERA points out.
...they are part of a group of higher carbon-intensity crudes consumed within the United States, including Venezuelan heavy crude oil; Nigerian crude oils; and crude oils from mature assets that require steam for enhanced oil recovery such as California heavy oil. Also certain fields in the Gulf of Mexico and the Middle East have comparable GHG emissions.
—“The Role of Canadian Oil Sands in US Oil Supply”
Other environmental footprint concerns associated with oil sands development touched on by the IHS CERA report include water use; land disturbance and reclamation; and tailings.
Water use. Net water use in oil sands production averages four barrels of water per barrel of bitumen for mining operations and 0.9 barrels of water per barrel of bitumen for in situ production. Conventional oil uses 0.1 to 0.3 barrels of water per barrel of oil produced, while oil produced through enhanced oil recovery can use up to 70 barrels of water per barrel of oil.
Oil alternatives can also be water intensive: ethanol from non-irrigated crops is comparable to oil sands mining, and options like coal-to-liquids can use 10 barrels of water per barrel of product, according to IHS CERA.
Land disturbance and reclamation. About 20% of currently recoverable oil sands reserves lie close enough to the surface to be mined. The current footprint of mining operations is about 200 square miles (518 square kilometers). Direct land disturbance from mining results in a total loss of the ecological character of the disturbed land during the period of the mining operation.
Although operators are required to reclaim the lands after mining is complete, to date the rate of land reclamation has not kept pace with the rate of disturbance.
About 80% of the recoverable oil sands deposits are too deep to be mined and are recovered using in-situ thermal processes. Direct land disturbance from in-situ production disturbs about 2 to 3% more land than conventional oil developments. (In this assessment, IHS CERA estimated the extent of disturbed land using aerial photographs and project approval maps for typical sites: SAGD at Devon Jackfish, conventional oil from the Fletcher Leduc-Woodbend, and conventional gas from EnCana Strathmore. The analysis did not include potential indirect land impacts.)
Like conventional developments, land disturbed by in-situ developments must be returned to its predevelopment state. Although the scale of degradation associated with in-situ development is relatively small compared to mining, fragmentation of the forest decreases the populations of some animal species.
Tailings. Oil sands mines produce waste material called tailings; the waste materials have been difficult to reclaim and have grown larger than projected.
In approximately 40 years of commercial oil sands development, the industry has produced nearly 1 billion cubic meters (35 billion cubic feet) of these fluid fine tailings, and the ponds that contain these tailings and other mining waste cover nearly 30% of the area currently affected by mining.
In 2009 the Alberta government introduced a new directive enforcing targets for reductions in tailing accumulations. If the goals of this new directive are met, it would reduce the rate at which future tailing accumulations grow.
Potential growth. Oil sands production, combined with exports of Canadian conventional crude oil, has already put Canada in the position of number one foreign supplier of oil to the United States. Over the past decade, production from oil sands more than doubled from 600,000 barrels per day (bpd) in 2000 to 1.35 million barrels per day (mbd) in 2009, more than offsetting declines in conventional Canadian production. But the potential is much larger and oil sands growth could be three or four times greater than today to a range of 3.1 mbd to 5.7 mbd by 2030, according to the report.
While oil demand in the United States is not likely to return to its 2005 peak, the US will maintain its position as the world’s largest oil market over the next two decades, the IHS CERA report asserts.
Oil sands, like other complex oil projects, face the challenge of high development costs, the report notes. However, a comparison of the economics of some of the largest sources of new supply—ones with the greatest ability to add new productive capacity over the next 5 to 10 years—shows that numerous projects are in the same range as oil sands, according to IHS CERA.
The Role of Canadian Oil Sands in US Oil Supply notes that the pace of technological innovation in the production of oil sands has been substantial in the past, with major technological strides in optimizing resources, innovating new processes, reducing costs, increasing efficiency, reducing GHG emissions, and reducing its environmental impact. However, new techniques and technologies will be needed to continue to grow production sustainably, the report finds.
IHS CERA is a leading advisor to energy companies, consumers, financial institutions, technology providers and governments. IHS CERA is based in Cambridge, Mass., and has offices in Bangkok, Beijing, Calgary, Dubai, Johannesburg, Mexico City, Moscow, Mumbai, Oslo, Paris, Rio de Janeiro, San Francisco, Tokyo and Washington, DC.
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As I was saying earlier...
Posted by: ai_vin | 21 May 2010 at 08:06 AM
This may not be something to be very proud of because it is currently the dirtiest source of liquid fuel. However, it is much safer from a national security point of view. Will it be the same when 50+% is own by China and shipped there?
The In Situ method could make it a much cleaner fuel source but more energy and $$$ would be required. One way to accelerate the change would be with a progressive (offset) double Royalty system, i.e. $10+/barrel for mining and $1 or $2/barrel for In Situ extraction.
Posted by: HarveyD | 21 May 2010 at 08:54 AM
"While oil demand in the United States is not likely to return to its 2005 peak, the US will maintain its position as the world’s largest oil market over the next two decades, the IHS CERA report asserts."
I cannot believe that China will not supercede US oil consumption in 20 years. The US is poised to begin a very steep transition to EVs and as 60% of US oil is in transportation - we will be seeing the drop in demand in the first five years (i.e. 2015)
Posted by: sulleny | 21 May 2010 at 09:52 AM
That is really disturbing. We've sunk to the point where we're going to be dependent on oil sands for our economy...and we'll have to still be getting screwed around by mid east oil because it was only a 2.5% decrease that set of the early 70's oil shocks so it doesn't take much to send our economy into a tizzy.
Great, the best of both worlds..the most polluting oil on the planet and still jerked around by Chavez or the Arabs. Oh happy day.
Posted by: DaveD | 21 May 2010 at 10:29 AM
How long can Canada keep up the production growth of tar sands oil?
Posted by: Dave R | 21 May 2010 at 12:25 PM
Looks like the page they are using to compare against is here (the URL might be split across multiple lines here)
http://www.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_m.htm
On that chart, looks like the top 4 are:
1 - Canada
2 - Mexico
3 - Venezuela
4 - Nigeria
5 - Saudi Arabia
but that page doesn't say exactly how much of the tar sands oil comes to USA. Must be in the report somewhere. We get 2.49mbpd from Cadada right now, so for 'Tar Sands the Country' to bump them to #2, we'd have to get just over half of Canada's number from the Tar Sands... that's 1.25mbpd, (Mexico is 1.134mbpd) so basically we're getting almost all of the tar sands oil?
That line about how much they plan to expand has always been so funny. They plan to expand by 4.35mbpd by 2030. They don't mention that world consumption is projected to grow by 20.2mbpd (http://www.eia.doe.gov/oiaf/ieo/highlights.html), so what they are really saying is that by 2030 the tar sands would account for a fifth as much of the world's consumption as they do right now.
Posted by: Tom Grundy | 21 May 2010 at 06:44 PM
For a few centuries or until we suffocate.
Posted by: HarveyD | 21 May 2010 at 06:46 PM
Dave R,
I've seen claims over and over and over that there is "more oil in the tar sands of Canada than all of the middle east" and I've never heard anyone refute it.
So I guess it's a really big deposit and will last for quite a while. I'm afraid that if the price of oil keeps going up then it will be economical to get more and more of that tar sands oil out of the ground so we might as well settle in and get used to it.
We don't have the intelligence to account for the total cost of oil, including the environmental damage and cleanup, so we'll go on pretending it's ok to dig it up and burn it.
On another note: doesn't that mean that tar sands oil will set the price floor for oil going forward?
It's hard for the Saudi's to vary the price too far if Canada has that much oil and is selling it at price XX/barrel. The tar sands oil can't go below the cost it takes to produce it so they can't compete too low. But they can dump a lot of oil regardless of what others do so there is no reason for the Saudis to do much other than undercut it by a few dollars a barrel to maintain market share yet still make money hand over fist anyway. And they'd certainly have no reason to undercut it by much because they don't have to.
Am I thinking about this wrong?
Posted by: DaveD | 21 May 2010 at 06:51 PM
Good news for my ENCANA investments.
Posted by: Mannstein | 21 May 2010 at 06:57 PM
Doesn't seem like the tar sands have enough of a share of global bpd to be a market driver, and it doesn't look like their share of global bpd will be going up anytime soon - I ain't no economist but it sure seems that way. From the layman's point of view (that's me), the total reserve sizes don't really matter much for now as long as the flow rates are so small - other than to indicate that peak tar sands might come a lot later than the global peak. Of course, they use so much natural gas and water that peak tar sands is a strong function of peak natural gas and peak fresh water! Fun.
If the Gulf could be spewing up to 100kbpd, makes you wonder if it will be a short-term bpd game changer?
Posted by: Tom Grundy | 21 May 2010 at 07:09 PM
This is why we need FFV/PHEV/EV ASAP. We can not continue pushing for harder to get and more expensive oil forever, so we might as well transition now before OPEC pulls the rug out again.
Posted by: SJC | 21 May 2010 at 07:56 PM
I agree. We really need FFV/PHEV/EVs, that people will buy, ASAP.
We can not continue pushing for harder to get and more expensive oil forever - but we should do so now - urgently, so that we can afford to fill the roads with FFV/PHEV/EVs sooner and faster; before we are wholly owned by China.
When the AAB projects that global EV + PHEV market share will be 1.1% of the new-vehicle market 2020, that means there will not be 1.1% of the vehicles ON-THE-ROAD until 2025. No way.
If they right, or even if they are low by a factor of 10, or low by a factor 20 (they BETTER be) that’s EVs/PHEVs are just 20% of the fleet by 2025 - we are doomed if we don't drill baby drill.
And with the billions we save, we all get FFVs,EVs and PHEVs at half price.
Let's stop importing oil from our enemies, and when we've done that let's reduce world wide CO2 by refusing to export oil as we continue to reduce our own use of fossil fuels.
AAB link:
http://www.greencarcongress.com/2010/04/aab-20100429.html
Posted by: ToppaTom | 21 May 2010 at 10:29 PM
Tom Grundy, I'm no economist either, but it seems like something big enough to provide up to 36% of the US totals would have to have a decent impact on world oil prices. Every time I see a gas station lower or raise it's price, all the other stations in the area seem to react to it even though it doesn't represent a big share of the total. Just a pricing observation that may not apply here...but it seems to reflect most things I've seen.
Posted by: DaveD | 22 May 2010 at 07:15 AM
SJC and Toppa, I agree that FFVs are the only way we're going to make a dent in the short or medium term. I'm a huge EV fan and would like to see them dominate, however....
I ran some numbers and looked at how long it would take to make a dent in the total ~250 million US fleet. If EV/PHEV grew even at a 25% rate a year it would still only represent 28% of the entire US fleet actually on the road by 2025! That is discouraging, but it's reality. It takes a long time to get 250 million gas guzzling vehicles retired from the road.
We need FFVs and some types of biofuels or we're going to continue to grow our needs for tar sands oil as well as mid east oil.
Posted by: DaveD | 22 May 2010 at 07:22 AM
The G15 in M85 can be synthesized from natural gas, biomass or coal. Mobil has a method to turn methanol into gasoline and of course the synthesis gas can be turned into gasoline using the F/T process. My point is that M85 can get us where we want to go and reduce oil imports. A new FFV only costs a few hundred dollars more and you can convert newer cars to FFV at a reasonable cost.
Posted by: SJC | 22 May 2010 at 02:34 PM
TT wrote:
"we are doomed if we don't drill baby drill."
With only 3% of the world's oil supply, and 24% of it's consumption, we would be chasing a receding horizon. Even the 'unavailable' portions of the offshore areas only amount to approximately 18 billion barrels - roughly two years supply of US oil demand.
http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html
Posted by: Will S | 23 May 2010 at 05:33 AM
The huge unbalance (3% to 24%) between local supply/reserves and oil consumption in USA is the major problem to be solved. More efficient ICE (60+ miles/gallon instead of 20 miles/gallon) followed by accelerated transition to electrified vehicles may be the only way out. It will take 20+ years to get part of the way there. Meanwhile oil will still be king.
Posted by: HarveyD | 24 May 2010 at 09:03 AM
It seems that oil demand in USA grows and will grow with the economy. If the economy grows at 4% rate for the next 20 years, oil consumption could follow very closely. If the economy recovers as predicted, oil consumption could be as high as 40 million barrels per days by 2030.
However, the number one consumer by 2030 may be China followed by India and USA.
Posted by: HarveyD | 24 May 2010 at 09:12 AM
It is not oil demand that grows an economy but rather energy. It's only true of oil/coal in the US because those are the energy sources of choice. The economy could grow just fine with plentiful supplies of clean energy.
Posted by: ai_vin | 24 May 2010 at 09:29 AM
You're correct but oil (and coal) is still one of the cheapest source of energy.
To make a significant dent in oil (and energy) consumption, 60 miles/gallon ICE or more efficient electrified vehicles may be required. Electrified railroads and more efficient aircraft would also help to reduce both energy and oil consumption. It will come but it may take another 20+ years.
Posted by: HarveyD | 24 May 2010 at 09:36 AM
Oil consumption grows at about 1% per year when the GDP grows at around 3% per year. It is good to get the cause and effect correct. An expanding economy can require more energy, but using more energy does not create and expanding economy.
Posted by: SJC | 24 May 2010 at 11:19 AM
As manufacturing facilities progressively move to other countries, local economic growth had to rely on white collar jobs using less energy, coal and oil. With the current recovery program, many more manufacturing facilities may stay home and even come back in some cases. Three and four large car families may come back while further distance suburbs will be developed creating more daily travels, etc. Energy consumption may soon reach economic growth rate again.
Posted by: HarveyD | 24 May 2010 at 04:47 PM