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Canada Oil & Gas News
Introduction
- Canada has been a significant component of the global energy trade due to its proximity to and trade with the largest energy consumer in the world, the United States. Canada maintains a surplus in all sellable energy commodities, exporting crude oil, natural gas, coal and electricity. The country is the most significant source for U.S. energy imports. The United States has traditionally provided the markets for Canada's energy exports. However, Asian countries are seeking greater access to Canada's natural resources to fuel Asia's own long-term economic growth.
Regulation
- Canada has a privatized oil sector that has seen consolidation and specialization in the wake of the global economic downturn. International participation has risen rapidly in Canada's oil sector, although this has been for non-controlling stakes in projects.
- A recent regulation of foreign investment in Canada titled the “Invest Canada Act” outlines that any large investment in Canada must be of “net benefit” to Canada, indicating a limit on foreign control of strategic commodities.
- Numerous Canadian oil firms went through significant strategic corporate restructuring in the past two years. In August of 2009, Suncor completed its acquisition of Petro-Canada, the former state oil firm, creating Canada's largest oil and gas firm. In December 2009, Encana completed its plans to spin-off its oil and traditional gas assets into a new, wholly independent firm, Cenovus.
- Other Canadian firms, such as Talisman Energy and Petrobank, have sought increased specialization by creating separate entities to focus on specific areas, such as shale gas in British Columbia or shale oil in Saskatchewan and Manitoba. Asian firms have also been buying up Canadian assets through corporate acquisition.
- Canada's regulatory framework is one in which federal and provincial bodies coordinate policy and regulation. Provincial authorities handle most of the oversight in the sector. The national regulatory body is the National Energy Board (NEB). The largest and most influential of the provincial regulators is the Alberta Energy Resources Conservation Board (ERCB)
Upstream
- Oil and Gas Journal (OGJ) revised Canada's proven reserves of crude oil downward by over 1.5 percent in 2010, which remained constant for January 2011. Despite the decrease from a previous estimate of 178.1 billion barrels, Canada's 175.2 billion barrels of proven reserves of crude oil places Canada third globally, behind Saudi Arabia and Venezuela. Canada is the only non-OPEC member among the top five reserve holders. Approximately 170 billion barrels (97 percent) of Canada's reserves are unconventional, mainly from bitumen deposits. These unconventional deposits place Canada as one of the central sources of non-OPEC production growth in the coming decades.
- Oil production in Canada currently comes principally from three sources: the oil sands of Alberta, the Western Canada Sedimentary Basin (WCSB), and the offshore oil fields in the Atlantic. Additional reserves are known to be under the Beaufort Sea in the Arctic, off the Pacific coast and in the Gulf of St. Lawrence. Alberta provides the bulk of oil production and encompasses the major share of Canada's hydrocarbon resources. Moreover, production from the conventional offshore reserves off the eastern provinces comes from mature oilfields, with few opportunities to replenish depletion rates. As such, western provinces will comprise an increasing proportion of overall Canadian oil production in the future.
Total oil production in Canada amounted to 3.46 million bbl/d in 2010, of which 2.65 million bbl/d was crude oil. Canada consumes around 2.3 million bbl/d, with consumption rates for petroleum relatively flat over the long-term, with a 0.1 percent expected average growth rate through 2035, according to the Energy Information Administration (EIA). This trend allows for any increase in production to be exported; Canada thus comprises a major source of non-OPEC oil production growth in the medium to long-term.
Oil Sands
Of the 2.7 million bbl/d of crude produced in Canada in 2009, 1.35 million bbl/d of that derived from the oil sands of Alberta. These volumes and growth from the oil sands will make them the largest single source of U.S. crude imports, the additional conventional Canadian exports notwithstanding.
Oil sands consist of a mineral called bitumen, an unconventional petroleum which is naturally found blended with sand, clay, and water. Once extracted, bitumen is a heavy, viscous type of crude oil. The bitumen must be “upgraded” through a complex process which yields a light, sweet “synthetic” crude. The technically sophisticated process by which bitumen is processed requires a separate facility known as an “upgrader” and utilizes significant amounts of water and diluents (a light hydrocarbon that aids the transport of the heavy crude).
There are two different methods used to extract petroleum from the oil sands: traditional pit mining and in-situ. Pit mining has been the dominant technique, but it results in residual toxins, called tailings, in addition to issues of severe alteration of landscapes and ecosystems. The other method, in-situ extraction, involves various uses of steam injection, softening the bitumen so that it can travel to the surface. It is estimated that the vast majority of bitumen deposits (135 billion barrels) are only accessible by way of in-situ techniques.
Concerns over the environmental impact of producing petroleum from bitumen have now transformed into political pressure. Environmentalists are concerned with three main aspects of extracting oil from bitumen: the toxicity of the tailings ponds, greenhouse-gas emissions during production, and water usage. Environmental groups have gone so far as to call on Alberta's Energy Resources Conservation Board (ERCB) to cancel approvals for development. In 2009, the ERCB sanctioned environmental standards for oil sands management of tailings created during production and land reclamation, called Directive 74.
The largest projects in the oil sands are currently mining operations. Suncor runs its own large-scale operations and has a stake in the Syncrude Canada project. The Athabasca Oil Sands Project (AOSP) is operated by Shell Canada, which produces 155,000 bbl/d. The Horizon Oil Sands Project, operated by Canadian Natural Resources, Ltd. (CNR) achieved initial capacity in September of 2010, adding an initial 110,000 bbl/d to output from the region.
- For details of Tar Sands Projects: Canadian Tar Sands Upgrader Projects
Active Companies
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Crude Oils
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Midstream
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Downstream
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Relevant Links
- EIA Country Profile
- The Canadian Association of Petroleum Producers (CAPP)
- Canadian Society for Unconventional Resources
