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

. 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.

Resources

• The Role of Canadian Oil Sands in US Oil Supply