Supply Cost of Alberta Oil Sands

Transcription

1 Supply Cost of Alberta Oil Sands Farhood Rahnama, PhD Katherine Elliott Alberta Energy and Utilities Board 26th Annual North American Conference of the USAEE/IAEE Ann Arbor, Michigan, September 24-26, 2006 The authors have the sole responsibility for any error or omission in this paper. The Board may or may not agree with the content of this paper.

2 Regulatory Framework Government sets policy LEGISLATION Other Government Department s Regulators administer policy REGULATIONS Industry develops projects Public

3 The Alberta Energy and Utilities Board (EUB) is a quasi-judicial independent agency of the Government of Alberta. EUB s mandate is to ensure the discovery, development, and delivery of Alberta's energy resources and utilities services takes place in a manner that is fair, responsible, and in the public interest.. to provide for appraisal of reserves and productive capacity..appraisal of requirements for energy resources and energy in Alberta.

4 Resource and Energy Appraisal EUB annual report: Alberta s Reserves 2004 and Supply/Demand Outlook

5 Where are the Alberta Oil Sands? Source: EUB, Alberta s Energy Reserves 2005 and Supply/Demand Outlook , ST

6 Bitumen Extraction Methods Steam Assisted Gravity Drainage (SAGD) Method

7 Bitumen Extraction Methods Cyclic Steam Stimulation (CSS) Method

8 Bitumen Extraction Methods Mining Process Hydrotransport pipeline Truck and shovel Pictures: Syncrude Canada Primary separation vessel

9 Comparison of Alberta Crude Oil and Bitumen Reserves 150 billions of barrels In Situ Bitumen Mineable Bitumen Crude oil Initial established reserves Remaining reserves Cumulative production Source: EUB, Alberta s Energy Reserves 2005 and Supply/Demand Outlook , ST

10 The Supply Cost Calculation

11 Key Economic Assumptions Natural Gas at Alberta plant gate Cdn $7/GJ Electricity pool price Cdn $63/MWh Canadian dollar exchange rate US $0.85 After tax rate of return 10 % Inflation 2 % per year Royalties Alberta oil sand regime Federal and provincial taxes Current rates

12 Challenges Facing the Oil Sands Labour shortages Energy prices Material costs Project cost overruns $ t

13 Oil Sands Bitumen Supply Costs by Production Method Bitumen Supply Cost (Cdn$/bbl) Mining Steam Assisted Gravity Drainage Cyclic Steam Stimulation Capital & Abandonment Royalties & Taxes Non-gas Operating Costs Natural Gas Electricity Revenues Source: EUB, Economics Group

14 In Situ Bitumen Supply Costs Company Project Total Supply Cost Cdn $/m 3 WTI Equivalent (US$/bbl) Athabasca Region Suncor Firebag* $ $39.86 Husky Sunrise $ $34.78 Petro-Canada MacKay * $ $34.87 DeerCreek Joslyn $ $29.52 JACOS Hangingstone $ $28.13 Conoco Surmont $ $29.42 Connacher Great Divide $ $37.25 EnCana Christina Lake $ $28.53 MEG Energy Christina Lake* $ $34.94 Devon Jackfish $ $32.48 EnCana Foster Creek * $ $25.09 Cold Lake Region CNRL PAW * $ $35.21 Imperial Oil Cold Lake * $ $32.67 Blackrock Orion $ $39.82 Husky Tucker $ $35.23 Peace River Region Shell Peace River $ $29.98 * Project includes a co-generation plant Source: EUB, Economics Group

15 Oil Sands WTI Equivalent Supply Costs Sensitivities: SAGD Project Natural Gas Price -/+ 20% Non-gas Operating Cost -/+ 25% Capital Costs -/+ 10% WTI Equivalent Supply Cost (US$/bbl) Source: EUB, Economics Group

16 Oil Sands WTI Equivalent Supply Costs Sensitivities: CSS Project Natural Gas Price -/+ 20% Non-gas Operating Cost -/+ 25% Capital Costs -/+ 10% WTI Equivalent Supply Cost (US$/bbl) Source: EUB, Economics Group

17 Oil Sands Bitumen Supply Cost: Cogeneration versus Steam Generators Bitumen Supply Cost (Cdn$/bbl) Cogeneration Facility Steam Generators Capital & Abandonment Royalties & Taxes Non-gas Operating Costs Natural Gas Electricity Revenues Source: EUB, Economics Group

18 In Situ Bitumen Extraction and Gas Price Limits Blackrock (Orion) Connacher (Great Divide) Suncor (Firebag)* Husky (Tucker) Husky (Sunrise) MEG Energy (Christina)* CNRL (PAW)* Shell (Peace River) Devon (Jackfish) Conoco (Surmont) DeerCreek (Joslyn) Imperial Oil (Cold Lake)* EnCana (Christina Lake) JCOS (Hangingstone) Petro-Canada (MacKay)* EnCana (Foster Creek)* WTI 70% parity $0 $5 $10 $15 $20 Gas Price Limit (Cdn$/GJ) Assumed WTI price at US$40/bbl Source: EUB, Economics Group

19 Oil Sands WTI Equivalent Supply Costs Sensitivities: Mining Project Natural Gas Price -/+ 20% Non-gas Operating Cost -/+ 25% Capital Costs -/+ 50% WTI Equivalent Supply Cost (US$/bbl) Source: EUB, Economics Group

20 Oil Sands WTI Equivalent Supply Costs Sensitivities: Mining and Upgrading Project Natural Gas Price -/+ 20% Non-gas Operating Cost -/+ 25% Capital Costs -/+ 50% WTI Equivalent Supply Cost (US$/bbl) Source: EUB, Economics Group

21 Mining with Upgrading Gas Price Limits WTI 70% parity OPTI/Nexen Shell Syncrude CNRL Suncor $0 $5 $10 $15 $20 $25 $30 $35 Gas Price Limit (Cdn$/GJ) Assumed WTI price at US$40/bbl Source: EUB, Economics Group

22 Alternative Fuel Comparisons WTI Equivalent Supply Costs and Assumed Gas Price 40 WTI Equivalent Supply Cost (US$/bbl) Natural Gas Price (Cdn$GJ) Steam Assisted Gravity Drainage Cyclic Steam Stimulation Mining Mining with Upgrading Alternative Fuel (Case 1) Alternative Fuel (Case 2) Source: EUB, Economics Group

23 Alberta Crude Bitumen Production and Forecast 3000 actual forecast 2500 Thousand barrels per day Synthetic Crude Oil Non-Upgraded Bitumen In situ Surface mining Source: EUB, Alberta s Energy Reserves 2005 and Supply/Demand Outlook , ST

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