Canada's proven oil reserves were estimated at 179.2 gigabarrels (billion barrels) as of January 2007, placing it second only to Saudi Arabia.[1] Over 95% of these reserves are oil sands deposits in the province of Alberta. [2] Although Alberta contains nearly all of Canada's oil sands and about 75% of its conventional oil reserves, several other provinces and territories, especially Saskatchewan and offshore Newfoundland, have substantial oil production and reserves.[3]
Total Canadian oil production was about 1.2 gigabarrels in 2006, giving Canada about 150 years of reserves at current rates. Over 99% of Canadian oil exports are sent to the United States, and contrary to popular belief, Canada and not Saudi Arabia is the United State's largest supplier of oil. The picture is complicated by the fact that Canada is both an importer and exporter of oil and refined products. In 2006, in addition to producing 1.2 gigabarrels, Canada imported 0.44 gigabarrels, consumed 0.8 gigabarrels itself, and exported 0.84 gigabarrels to the U.S.[2] The excess of exports over imports was 0.4 gigabarrels.
The addition of 174 gigabarrels of the vast Alberta oil sands deposits, mostly in the Athabasca Oil Sands, to proven reserves by the Alberta Energy and Utilities Board (AEUB),[4] was controversial at the time because oil sands contain a semisolid form of oil referred to as bitumen by Canadian government authorities, rather than conventional crude oil.[4]. The existence of the deposits (historically referred to as "tar sands") has been known for centuries since major rivers cut through the sands to reveal the bitumen in the river banks, but their development had to wait for high prices and the invention of new technology. In recent years technological breakthroughs have overcome the challenges of producing it and most Alberta oil is now non-conventional production from oil sands rather than conventional oil fields. The AEUB estimates that by 2016 Alberta oil sands production will triple to amount to 86% of the province's total oil production, and Alberta will by then be one of the largest oil producers in the world.[4]
The difference between crude bitumen and crude oil is somewhat arbitrary since bitumen is really just an unusually thick and viscous grade of crude oil, and many U.S. oil refineries have been modified to handle it in recent years as domestic U.S. oil production declines. The main problem is that it must be heated or diluted with solvents before it will flow through pipelines.
A problem for companies trading on U.S. stock markets is that outdated U.S. Securities and Exchange Commission (SEC) rules do not allow them to report oil sands production as an oil and gas activity, so they cannot report their oil sands reserves as oil reserves.[5] This can produce a seriously underestimated value for the assets of companies with large oil sands operations such as Petro-Canada. [6]
Analysts estimate that a price of $30 to $40 per barrel is required to make oil sands production profitable,[2] but with oil prices rising to over $80/bbl, oil sands production has become profitable enough to trigger over $100 billion worth of new oil sands projects. The biggest constraint on oil sands development is a serious labor and housing shortage in Alberta as a whole and the oil sands center of Fort McMurray in particular. According to Statistics Canada, by September, 2006 unemployment rates in Alberta had fallen to record low levels[7] and per-capita incomes had risen to double the Canadian average. Another problem was that Canada was running out of pipeline capacity to ship rapidly increasing exports of oil to U.S. markets, and the National Energy Board warned that exporters could face pipeline apportionment by the third quarter of 2007.[8]
An indicator of how the economics of oil sands had changed became apparent in July 2007 when Royal Dutch Shell stated in its annual report that in 2006 its Canadian oil sands unit made an after tax profit nearly double its worldwide profit on conventional crude.[9] A few days later Shell announced it was going to build a $27 billion oil sands refinery near Edmonton, one of a string of oil sands upgrader announcements that could boost Canada's synthetic oil production to 3.46 million barrels per day by 2015.[10]
As of 2006, Canada was the only major OECD (Organisation for Economic Co-operation and Development) producer showing an oil production increase. The other major OECD producers (the United States, United Kingdom, Norway and Mexico) were all in decline. According to the Conference Board of Canada, total crude oil production in Canada is projected to increase by over 10 per cent in 2007, following an increase of 5 per cent in 2006. As a result of new nonconventional oil projects, total crude oil production is forecast to increase by an average of 8.6 per cent per year from 2008 to 2011.[11](wikipedia)
Total Canadian oil production was about 1.2 gigabarrels in 2006, giving Canada about 150 years of reserves at current rates. Over 99% of Canadian oil exports are sent to the United States, and contrary to popular belief, Canada and not Saudi Arabia is the United State's largest supplier of oil. The picture is complicated by the fact that Canada is both an importer and exporter of oil and refined products. In 2006, in addition to producing 1.2 gigabarrels, Canada imported 0.44 gigabarrels, consumed 0.8 gigabarrels itself, and exported 0.84 gigabarrels to the U.S.[2] The excess of exports over imports was 0.4 gigabarrels.
The addition of 174 gigabarrels of the vast Alberta oil sands deposits, mostly in the Athabasca Oil Sands, to proven reserves by the Alberta Energy and Utilities Board (AEUB),[4] was controversial at the time because oil sands contain a semisolid form of oil referred to as bitumen by Canadian government authorities, rather than conventional crude oil.[4]. The existence of the deposits (historically referred to as "tar sands") has been known for centuries since major rivers cut through the sands to reveal the bitumen in the river banks, but their development had to wait for high prices and the invention of new technology. In recent years technological breakthroughs have overcome the challenges of producing it and most Alberta oil is now non-conventional production from oil sands rather than conventional oil fields. The AEUB estimates that by 2016 Alberta oil sands production will triple to amount to 86% of the province's total oil production, and Alberta will by then be one of the largest oil producers in the world.[4]
The difference between crude bitumen and crude oil is somewhat arbitrary since bitumen is really just an unusually thick and viscous grade of crude oil, and many U.S. oil refineries have been modified to handle it in recent years as domestic U.S. oil production declines. The main problem is that it must be heated or diluted with solvents before it will flow through pipelines.
A problem for companies trading on U.S. stock markets is that outdated U.S. Securities and Exchange Commission (SEC) rules do not allow them to report oil sands production as an oil and gas activity, so they cannot report their oil sands reserves as oil reserves.[5] This can produce a seriously underestimated value for the assets of companies with large oil sands operations such as Petro-Canada. [6]
Analysts estimate that a price of $30 to $40 per barrel is required to make oil sands production profitable,[2] but with oil prices rising to over $80/bbl, oil sands production has become profitable enough to trigger over $100 billion worth of new oil sands projects. The biggest constraint on oil sands development is a serious labor and housing shortage in Alberta as a whole and the oil sands center of Fort McMurray in particular. According to Statistics Canada, by September, 2006 unemployment rates in Alberta had fallen to record low levels[7] and per-capita incomes had risen to double the Canadian average. Another problem was that Canada was running out of pipeline capacity to ship rapidly increasing exports of oil to U.S. markets, and the National Energy Board warned that exporters could face pipeline apportionment by the third quarter of 2007.[8]
An indicator of how the economics of oil sands had changed became apparent in July 2007 when Royal Dutch Shell stated in its annual report that in 2006 its Canadian oil sands unit made an after tax profit nearly double its worldwide profit on conventional crude.[9] A few days later Shell announced it was going to build a $27 billion oil sands refinery near Edmonton, one of a string of oil sands upgrader announcements that could boost Canada's synthetic oil production to 3.46 million barrels per day by 2015.[10]
As of 2006, Canada was the only major OECD (Organisation for Economic Co-operation and Development) producer showing an oil production increase. The other major OECD producers (the United States, United Kingdom, Norway and Mexico) were all in decline. According to the Conference Board of Canada, total crude oil production in Canada is projected to increase by over 10 per cent in 2007, following an increase of 5 per cent in 2006. As a result of new nonconventional oil projects, total crude oil production is forecast to increase by an average of 8.6 per cent per year from 2008 to 2011.[11](wikipedia)
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