Canada oil sands growth stalled through 2013 -institute

05 February 2009 19:09  [Source: ICIS news]

TORONTO (ICIS news)--The credit credit crunch and plummeting oil prices have hard hit the growth prospects of oil sands production in Canada’s Alberta province, with a recovery unlikely before 2013, Canadian Energy Research Institute (CERI) said on Thursday.

“What is clear to us is that, over the next few years, oil sands production growth will be almost at a standstill, and new capital investment will collapse to levels not seen since before the turn of the century,” the institute said in a research report.

In 2000, oil sands investment was just over Canadian dollar (C$) 4.0bn ($3.3bn).

Canada’s chemicals industry has been looking to Alberta’s oil sands and bitumen production as an important source of future feedstock to expand and build new chemical plants.

While oil prices were expected to rebound to above $70/bbl by 2010, it would take at least another two years after that before oil sands production growth resumed, the institute said.

An oil price of $70/bbl or higher was required for the high-cost oil sands industry to start growing again, it said. Already operating projects should be able to cope with $50/bbl for the short term, it added.

CERI expected total oil sands production in a range of 1.9-2.9m bbl/day by 2015 and 3.7-5.4m bbl/day by 2030, depending on how quickly oil prices and capital market liquidity recover, it said.

This compares with its projection from 2008, when the industry was booming, of over 5m bbl/day by 2015 and over 6m bbl/day by 2030.

For the time being, the slowdown in oil sands production and the delay or cancellation of new projects has hurt not only Alberta’s oil and gas-dependent economy but other parts of Canada as well, CERI said.

However, the slowdown also offered operators and new project project proponents the opportunity to seek out and secure materials and equipment at the lowest levels seen in almost 10 years, the institute said.

“It almost goes without saying that those who source their materials today - or at least in the very near future - will undoubtedly reap the rewards of their forward thinking and actions in the years to come,” it said.

Alberta’s oil sands, with recoverable volumes estimated a 173bn bbl, are one of the world’s largest hydrocarbon deposits, the institute said.

($1 = C$1.22)

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