The future of Canadian oil sands production amidst regulation, egress, cost and price uncertainty

Though the Canadian oil sands may have been overlooked in recent years, due to the impressive story of North American tight oil growth, their massive bitumen deposits still comprise a major portion of the world’s crude resources. With an estimated 170 billion barrels of economically proven reserves (amidst the 1.7-2.5 trillion barrels of oil in place in this northern region in the province of Alberta), the oil sands region itself represents approximately 10% of global reserves. Oil sands are among the world’s sources of ‘difficult oil’ and are comparable in some respects to deep water, ultra-deep water, Arctic, and light tight oil (LTO). What difficult oil plays have in common are high supply costs (often above $60 per barrel) and an undeniable dependence on technological advances to remain economically attractive. Though Canada’s oil sands, like other unconventional plays, will likely play an increasingly prominent role in meeting future global demand to 2035 and beyond, substantial improvements in production and processing technologies, or a return to sustained high crude prices (or likely both), are required to deliver similar capacity additions as the last decade. This research examines Canadian oil sands production economics, long term growth forecasts, and how the outlook could change when confronted with regional and global trends in price, transportation, environmental policy, and production technology.