Canadian Oil Sands Industry to 2015 - Oil Price Recovery Providing Momentum

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GlobalData’s new report “Canadian Oil Sands Industry to 2015 - Oil Price Recovery Providing Momentum” provides a detailed analysis of the reviving Canadian oil sands industry. The report analyzes the current and future prospects of the Canadian oil sands industry until 2015. It details about major factors influencing the growth of Canadian oil sands industry including the critical correlation with oil prices. The report covers the forecasts for the bitumen produced from oil sands. It also details about the oil sand projects by region and process technology used. It provides a comparison between the capital expenditure for various projects based on the extraction technique and location. The report deals with planned and upcoming oil sand projects. In addition, it also covers the major M&A activities and asset transactions and increasing NOC investments in oil sands. The report deals with the market share of various companies participating in oil sands operations.

Rise in Oil Demand in Emerging South East Asian Nations will Drive Oil Prices and Hence the Canadian Oil Sands Industry

The steady growth in crude oil consumption in Brazil, Russia, India and China (BRIC) will continue to drive crude oil prices. Crude oil consumption in the BRIC countries is expected to increase at an AAGR of 2.7% during 2008-15. The rise in demand in South East Asian countries due to internal demand and infrastructure expenditure will drive the oil prices. China, the world's most populous country and the second largest oil consumer after the US, has witnessed an increase in crude oil consumption to 8.09 million barrels per day in the second quarter of 2009, up from 7.53 million barrels in the first quarter. It is expected that it will reach 8.32 million barrels in the fourth quarter. The economic recovery is expected to maintain the growth trajectory of China, hence increasing the oil demand and prices. The rise in prices will influence the growth of Canadian oil sands industry.

Canada, Oil Sands Production in Million Barrels Per Day, 2002-15

Source: GlobalData

Oil Sand Companies’ Focus towards Eco-friendly Processes Optimize the Resource Consumption and the Environmental Footprint of Oil Sand Operations

Several companies employ different techniques to extract bitumen from oil sands. The projects such as Foster Creek, Firebag, Mackay River, Surmont, Jackfish, Christina Lake-EnCana, Hangingstone - Jacas, Great Divide, Joslyn - In Situ, Tucker, Christina Lake- MEG Energy, Orion/Hilda Lake, Meadow Creek, Lindbergh, Sawn Lake and Germain, and Leismer (Kai Kos Dehseh) use SAGD (some of these projects are in planned phase).

Other novel technologies are being considered to reduce the water consumption and a case in point is Suncor Energy's Firebag. The project employs recycled water to generate steam and this will reduce water usage.

New technologies such as Solvent processing, Electro-Thermal Dynamic Stripping Process (ET DSP TM), Toe to Heal Air Injection (THAI), N-SOLV and Vapor Exchange Process (VAPEX) are being considered to reduce water, natural gas and other environmental impacts. Popular Creek project in Athabasca will use ET DSPTM. The project is in experimental stage and is expected to begin by 2011.

THAI unites a vertical injection well with a horizontal production well and is used in proposed projects at Axe Lake in North West and White Sands in Athabasca.

VAPEX is similar to SAGD but it employs hydrocarbon solvents instead of steam, hence reducing the water footprint. EnCana will use VAPEX in a new project at Christina Lake.

Canadian Oil Sands, Reservoir and Process Technology Matrix by Company, 2008

Resource Type AOS ELE NPE BQI PTCH STP Athabasca Sunshine OSUM Laricina

McMurray SAGD SAGD SAGD SAGD SAGD SAGD SAGD SAGD SAGD
Clearwater
Wabiskaw SAGD CSS
Grand Rapids SAGD SAGD
Bluesky CSS
Carbonates

Source: GlobalData

Effective Understanding of Geology and Proper Selection of Process Drives down the Capital and Operating Costs of Oil Sands

The capital and operating expenditure depends on the type of reservoir, its homogeneity and level of bitumen saturation, the porosity of the reservoir, vertical permeability, narrowness or depth of channel sands and presence of water or gas or any other material above or below the reservoir. These determine the optimum bitumen extraction process that needs to be employed. A proper understanding of reservoir geology and appropriate selection of extraction process decides to a major extent the capital and operating expenditure.

Canadian Oil Sands, Historic Capital Expenditure by Process Technology, 2004-08

Source: GlobalData/ CERI

Global Economic Slowdown and Revival Drives Industry Consolidation and Deals in the Oil Sands Industry

The global financial crisis has slowed down financial investments worldwide and Canadian oil sands are no exception. However, the slight revival in economic conditions this year has shown a consolidation trend in the oil sands industry.

Suncor Energy and Petro-Canada have merged and the evolving company is expected to be the largest company in the Canadian oil sands. The merger is aimed at optimizing the duo’s gas network stations, resources and hence overall costs. The merger will help both companies reduce their capital spending through consolidation and help focus their resources towards oil sands.

In August this year, the merger of Parkland Energy Services and Blue Horizon Energy was announced.