Canadian Oil Sands: Six Constraints to Growth
After many years of being dismissed as a high-cost fringe activity, Canadian oil sands have been embraced by the oil industry as a mainstream approach to achieving reserve growth and energy security. Canadian oil sands represent one of the earth's largest oil reserves, attracting an estimated US$80 billion of new investment over the next ten years. This Decision Brief examines some of the critical constraints that producers face. It will be followed by a Private Report that analyzes the innovations under way to address them.
* Opportunity is coupled with challenges, and the rapid growth of oil sands projects presents the industry with six critical constraints that may limit their development.
* Shortages of skilled labor and escalating capital costs are eroding project economics and frustrating potential investors.
* Critically needed regional condensate supplies and facilities to upgrade bitumen are affecting the growth of new oil sands in-situ projects.
* Natural gas is the largest component of heavy oil operating costs. Prices have exhibited high volatility and increased by 150 percent, eroding profit margins and increasing economic risks.
* As Canadian production has increased, the traditional downstream markets in the US Midwest have become saturated.
