Tar sands oil production expected to grow 17% by 2033

Tar sands oil production expected to grow 17% by 2033
Tar sands oil production expected to grow 17% by 2033

CALGARY — The regulator overseeing Alberta’s oil and gas sector has released a new report predicting the province’s oil sands production will increase by more than 17 per cent by 2033.

In the latest version of its annual forecast, released Monday, the Alberta Energy Regulator (AER) forecasts that production of crude bitumen — the thick, sticky oil found in the Alberta oil sands region Alberta — will reach four million barrels per day in 2033, up from 3.4 million barrels per day last year.

Most of the growth is expected to come not from oil sands deposits, but from in situ operations, which use steam to extract oil deep below the Earth’s surface.

The report paints a picture of a future in which the oil sands will remain the primary driver of Alberta’s energy sector, despite increased growth opportunities for alternative forms of energy such as hydrogen energy, helium, lithium and geothermal energy.

“In our view, conventional forms of energy – I’m talking about oil, gas, bitumen – are expected to persist and will be part of the energy mix during the energy transition,” said Afshin Honarvar, chief economist at the AER, during a webcast organized to mark the publication of the report.

In 2023, bitumen accounted for 66% of Canada’s total oil production, according to AER figures.

The sector is increasingly under scrutiny due to its production methods which cause high greenhouse gas (GHG) emissions.

Towards a ceiling?

The oil and gas sector is already Canada’s most polluting industry, and increased oil sands production over the past decade has led to an increase in the sector’s total emissions, at a time when many other sectors of the economy are successfully reducing their GHG emissions.

The federal government has proposed capping GHG emissions from the oil and gas sector to help slow climate change. The rules would require the industry to reduce its GHG emissions by 35 to 38% compared to 2019 levels by 2030.

Alberta’s official position is that capping emissions would amount to capping production, restricting growth and investment in the province’s energy sector.

The AER believes the oil sands industry can grow while reducing emissions if it deploys carbon capture and storage technology.

A consortium of oil sands companies, called the New Pathways Alliance, has expressed interest in building a massive carbon capture and storage network in northern Alberta to reduce emissions from oil production sites. oil sands, but has not made a final investment decision.

“When it comes to carbon capture, utilization and storage, we believe that this is a very practical and feasible technology that can be used by industry in order to achieve their operational objectives, as well as as its net carbon neutrality objectives,” said Mr. Honarvar.

A recent Deloitte report took the opposite view, concluding that oil sands companies forced to reduce emissions in the face of a federally imposed cap should cut production rather than invest in technology that is too expensive carbon capture and storage.

The AER also forecasts that global oil prices will continue to rise, from a projected average of US$76 per barrel, for the West Texas benchmark for the current year, to US$83.63 by 2033.

Different forecasters have different views on the long-term outlook for oil and oil prices.

The International Energy Agency predicts that oil demand will continue to grow until 2030, but has suggested that increasing global production will lead to a supply glut before the end of the decade, which could bring down oil prices.

Investment bank Goldman Sachs estimated that oil demand would not peak until 2034, and even then it would stagnate for several years rather than decline sharply.

The Canada Energy Regulator has presented different scenarios in which future oil demand varies considerably, depending on whether or not Canada and the rest of the world meet their climate commitments.

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