Page 5 - NorthAmOil Week 09

NorthAmOil COMMENTARY NorthAmOil
reduce the volumes of greenhouse gas (GHG) emissions they generate.
All of these factors put them in a stronger position to proceed while mining increasingly falls out of favour. In addition, around 80% of Canada’s oil sands reserves are at such depths that they cannot be mined, leaving in situ devel- opment as the only option in many places.
“It seems like the in situ ones have an easier timegettingoverthegoalposts,”anEightCapital oil sands analyst, Phil Skolnick, was quoted by the Canadian Press as saying. “With the mining projects, the economics are tougher to make work, especially in light of how the oil price out- look has been dramatically reduced ... since late 2014.”
Indeed, Frontier was the last major greenfield oil sands mining project to have been proposed, and its withdrawal may contribute to economic considerations that are already discouraging other mining proposals.
“I think the era of multi-billion dollar oil sands projects is definitely over,” Benjamin Israel, a fossil fuels analyst at the Pembina Institute, an environmental think-tank, was also quoted by the Canadian Press as saying. “You should be looking at more nimble and agile oil sands pro- jects – in situ expansions fit that definition.”
What next?
Such comments are in line with the Canada Energy Regulator’s (CER) expectations that in situ projects will drive oil sands growth over the next 20 years. The regulator has forecast that oil sands output will grow from 3.28mn bpd this year to 4.46mn bpd in 2040.
This forecast assumes there will be sufficient takeaway capacity to accommodate production growth, and indeed progress on various pipeline projects out of Alberta backs this up. Further delays to the Line 3 replacement, Trans Moun- tain expansion and Keystone XL projects can- not be ruled out, however, given outstanding regulatory hurdles and legal attempts to block pipelines.
Nonetheless, the takeaway capacity picture for the oil sands looks slightly brighter than before. And further mining projects cannot be fully ruled out just yet, given that Canadian Nat- ural Resources Ltd (CNRL) has approval to build a 100,000 bpd mine, while Suncor Energy is expectedtofileanapplicationsoonfora250,000 bpd mine.
Meanwhile, Alberta Premier Jason Kenney has made comments suggesting his government may be considering financing oil sands develop- ment. Alberta is “prepared to do what is neces- sary” for the provincial economy, Kenney said in a speech to the Edmonton Business Associ- ation, days after Teck withdrew its application for Frontier. “I just say, stay tuned on that,” he added.
This would not be the first time in recent years that a government took over from the private sector in the country, with Ottawa hav- ing bought the Trans Mountain pipeline and expansion project from Kinder Morgan in 2018. Given the importance of energy develop- ment to Alberta’s economy, it would not be sur- prising if the provincial government decided to follow suit in stepping in where the private sector is struggling.™
Alberta Premier Jason Kenney has made comments suggesting his government may be considering financing
oil sands development.
Oil sands mining has a considerably larger footprint than in situ development.
Week 09 05•March•2020 w w w . N E W S B A S E . c o m
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