August 20, 2024
The Alberta oil sands is one of the largest oil deposits on earth with reserves estimated to be around 165 billion barrels. Coupled with conventional oil reserves, Canada ranks 3rd largest in the world in terms of oil reserves. There are three main oil sands deposits in Alberta: Athabasca (the largest), Peace River, and Cold Lake regions.
Oil is extracted from oil sands using 2 different methods:
- Surface mining is used when deposits are nearer the earth’s surface.
- In situ is used to access deeper deposits where wells are drilled, and steam is injected to make the bitumen fluid enough to pump to the surface. There are also 2 types of in situ: Steam Assisted Gravity Drainage (SAGD) and Cyclic Steam Stimulation (CSS).
After posting a 2.6% per year growth rate from 2019 to 2023, Incorrys forecasts Canadian oil sands growth to slow with the completion of new large scale mining projects. The noticeable drop in 2020 was due to the impact of the Covid pandemic. Incorrys forecasts oil sands to grow 1.5% annually to 2030 from about 3.1 million barrels per day (MMBbl/d) to 3.4 MMBbl/d. This represents nearly 80% of total Canadian oil production in 2030.
In 2023, oil sands production was almost split equally between mining and in situ (SAGD and CSS) with mining accounting for just under 1.5 MMBbl/d and in situ production just over 1.5 MMBbl/d. The majority of growth to 2030 is expected from in situ projects, which are scalable with lower up-front capital costs. In situ production grows to almost 1.8 MMBbl/d in 2030, a 2.3% annual growth rate, while mining production increases at a slower rate of just 0.7% annually to almost 1.6 MMBbl/d.
The top 3 in situ producers in 2022 were:
- Suncor Energy, involved in both mining and in situ extraction operations, had production of almost 490 thousand barrels per day (MBbl/d).
- Cenovus Energy, heavily invested in in situ extraction methods, is a close second with production of 480 MBbl/d.
- Canadian Natural Resources Limited (CNRL), involved in both mining and in situ, ranks third with production of about 340 MBbl/d.
Syncrude Canada, a joint venture between Suncor (59%), Imperial Oil (25%), Sinopec (9%), and CNOOC (7%), had annual production from mining of 300 MBbl/d prior to Suncor assuming the role of operator. In 2022, only three producers were mining oil sands:
- Canadian Natural Resources Limited (CNRL) with production of 540 Bbl/d.
- Suncor Energy at about 530 MBbl/d.
- Imperial Oil whose production is about 240 MBbl/d.
Incorrys expects the strong historical growth in oilsands production to slow going forward and is forecasting production to peak in 2029 before flattening out. Although production will likely begin to decline sometime post 2030, Incorrys expects production from both mining and in situ to continue for many years to come.
References:
Alberta Oil Sands Royalty Data, 2022