In spite of a slew of setbacks to the oil industry of late, the Canadian Association of Petroleum Producers (CAPP), Canada's largest oil and gas lobby, has predicted a significant increase in tar sands production going into the next decade.
In their annual outlook report, released on Wednesday, CAPP predicted a jump in tar sands production even greater than previously touted. The organization is forecasting that Canadian crude oil output will increase to 6.7 million barrels of bitumen per day by 2030, half a million barrels higher than last year’s prediction. Production from Alberta’s bitumen reserve is expected to jump to 2.3 million barrels a day by 2015—a 26 percent increase—and again to 5.2 barrels per day by 2030.
The report also predicts tar sands capital spending will hit $23 billion in 2013, the same number as last year. But the optimism of this announcement seems to be at odds with a few key realities in Canada right now.
First is the ongoing issue of transportation infrastructure, something the report says could lead to what the industry calls “chronic apportionment,” which would limit pipeline real estate and make it even more difficult for oil companies to get their product to market.
In their final argument to the National Energy Board’s Joint Review Panel on the Enbridge Northern Gateway pipeline, the BC Liberals finally took a strong position on the project and came down against it, citing safety concerns as their primary reason.
Greg Stringham, CAPP’s vice-president of oil sands and market, sounds convinced Enbridge will be able to satisfy the BC Liberals five conditions for approving oil pipelines, which include providing a stronger spill response plan, addressing Aboriginal rights and offering BC a financial stake commensurate with the level of risk its citizens would be taking on.
“We do need transportation capacity to be able to get this to market, and clearly, as the forecast shows, in the next couple of years that is very tight,” he told the National Post on Wednesday, just days after Christy Clark announced her party’s opposition to Northern Gateway.
The prediction of such drastic production increase is also at odds with the recent actions of investors. Numerous companies are finding it next to impossible to sell off their tar sands assets due to the industries uncertain future. Dropping oil prices and the precarious state of the northern leg of TransCanada Corp’s Keystone XL pipeline could mean the loss of billions of dollars in tar sands investment in addition dearth of pipeline real estate. With major oil companies trading at the lowest levels in nine months and investors unwilling to put up the capital, it’s unclear how CAPP plans to bridge the gap.
Even if the United States wasn’t on its way to becoming energy self-sufficient, the demand for oil in all of North American wouldn’t be enough to account for all the oil CAPP expects to see coming out of the ground. The report also seems at odds with recent estimates by the world-renowned International Energy Agency (IEA). The group announced last year the tar sands contain more oil than a world fending off a 2 degree Celsius rise in global temperatures will want.
The report makes brief mention of one of the ways in which companies will increase production: they will continuing the growing shift from conventional extraction techniques to in situ techniques, decreasing production via strip mining and increasing the use of steam-driven methods. In in situ projects, instead of dredging up the tar-filled sand and separating out the oil, steam is pumped directly into the ground to melt the bitumen out in place.
While this may seem like an improvement—fewer unsightly strip mines destroying the surface of the land—steam-driven methods actually release more greenhouse gases than strip mining. And the technique releases two and a half times more greenhouse gas than conventional mining.
Carbon emissions from the tar sands rose 1.7 percent in 2012 and has risen 26 percent in the last four years.
Keith Stewart, climate and energy campaigner with Greenpeace Canada, said that in spite of appearances, in situ is more damaging than conventional strip mining in more ways than one.
“In situ has a huge impact in wildlife and eco systems because it fragments the ecosystem,” he told DeSmog.
Clear-cutting for plant construction and seismic testing destroys habitat and leaves species such as caribou more vulnerable to predators. The loss of caribou in Alberta due to tar sands production is what led to the government’s controversial wolf cull last year.
The Department of Fisheries and Oceans has always expressed concern about potential changes in water levels caused by in situ projects.
Stewart added that recent changes to the Environmental Protection Act mean in situ mining isn’t on the list of projects that will trigger an environmental assessment.
“This is the main form in which tar sand expansion will occur so it’s a way of reducing regulatory oversight of these projects.”
Though Alberta has spent more than a billion dollars on carbon capture and storage technology, that technology hasn’t yet been applied to in situ extraction techniques.
Image Credit: Kris Krug via flickr.
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