The Uppsala Hydrocarbon Depletion Study Group, Uppsala University, Sweden, has made a study of a crash program scenario for the Canadian Oil Sand Industry. Even in a very optimistic scenario Canada’s oil sands will not prevent Peak Oil. If a crash program were immediately implemented it may only barely offset the combined declining conventional crude oil production in Canada and the North Sea. The article has been accepted by the magazine Energy Policy.
Summary of the article “A Crash Program Scenario for the Canadian Oil Sands Industry” [PDF] by Bengt Söderbergh, Fredrik Robelius and Kjell Aleklett:
The report Peaking of World Oil Production: Impacts, Mitigation and Risk Management [PDF], 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 program 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 program for the Canadian oil sands industry, within the time frame 2006-2018 and 2006-2050. The implementation of a crash program 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 program from the Canadian oil sands industry achieves about 3.6 mb/d by 2018. A long-term Crash program results in a production of approximately 5 mb/d by 2030.
Unfortunately, while the theoretical future oil supply from the oil sands is huge, the potential ability for the Canadian oil sands industry to meet expectations of bridging a future oil supply gap is not based on reality. Even if a Canadian crash program were immediately implemented it may only barely offset the combined declining conventional crude oil production in Canada and the North Sea. The more long-term oil sands production scenario outlined in this report, does not even manage to compensate for the decline by 2030. Today, world wide, there are many oil producing areas in decline whose productions have to be offset by new production. With the exception of ultra-deep off shore fields, of the world’s 65 oil-producing countries, 54 have passed their peak production and are in a state of continuous decline.
There are some areas that need the immediate attention by the world’s energy planners. Firstly, the future for the Canadian in situ oil sands production. How much can these activities grow without serious fuel costs problems as well as accelerating CO2E-emissions arise?
Secondly, how effective will large scale SAGD in situ projects be for reservoirs of lower quality?
Thirdly, is it realistic to include the construction of nuclear facilities for input energy for oil sands projects when making production forecasts? If not, how is the energy going to be provided and how much additional energy supply will be needed in order to extract the bitumen at the required high production levels? The Hirsch report has shown that the Canadian oil sands resources play a vital role for future energy planning, thus it is of outmost importance that these questions are thoroughly investigated as soon as possible.
Finally it may be of interest to recapitulate that the International Energy Agency claims that 37 mb/d of unconventional oil must be produced by 2030. Canada has by far the largest unconventional oil reserves. By 2030, in a very optimistic scenario, Canada may produce 5 mb/d. Venezuela may perhaps achieve a production of 6 mb/d. Who will be the producers of the remaining 26 mb/d? It is obvious that the forecast presented by the IEA has no basis in reality.