The development of new technologies may stem and possibly reverse the amount of natural gas used in the production of Canadian oil sands, freeing up more gas to be exported to the United States in the coming decade, the head of a major Canadian producer group said.
“What we see is that with the application of new technologies…we expect to see [a] reduction in the intensity of usage of the natural gas for the extraction” of oil sands, said Gordon Kerr, chairman of the Canadian Association of Petroleum Producers (CAPP), which represents 150 upstream oil and gas producers in Canada.
As a result of alternative technologies, “we’ll be using somewhere in the order of 0.7 and possibly down to 0.4 of an Mcf of purchased gas in the production of [a barrel of oil from] oil sands,” he said recently at a press briefing at the Canadian Embassy in Washington, DC. “Purchased gas is what we would have to buy that isn’t necessarily produced as a result of the whole process,” Kerr noted.
“There is a lot of money being invested in [the] development” of gas-saving technologies, such as the toe-to-heel air injection and multiphase superfine atomized residue processes, he noted.
“Over time it would significantly mitigate the amount of gas that we consume,” Kerr said, adding that there would still be plenty of natural gas for Canada to maintain its position as a reliable supplier of energy to the United States. Canada currently supplies 86% of the United States’ natural gas imports, providing approximately 3.5 Tcf annually, he noted.
Using existing technologies, natural gas purchases for Canadian oil sands production would increase to 2,651 MMcf/d in 2020 from 645 MMcf/d in 2005 under a base-case oil supply scenario, according to a CAPP-commissioned study by Strategy West Inc. In the base-case scenario, CAPP projects that oil production, which currently stands at about 2,400,000 b/d, would double to more than 4,800,000 b/d by 2020. Oil sands production is expected to account for the largest part of the growth, hitting between 3.3 million b/d and 4 million b/d by 2020, according to CAPP.
But by using new technologies, purchased gas consumption for oil sands could be cut by 40% to 1,602 MMcf/d by 2020 under the base case, the Strategy West study said.
Under a constrained oil supply scenario (about 4 million b/d by 2020) with current technologies, natural gas purchases for oil sands development would be 2,102 MMcf/d in 2020, according to the report. But the estimate would drop to 1,298 MMcf/d in 2020 if new technologies are used, representing a 38% reduction from the constrained-case consumption rate with current technologies.
“This study concludes that these [gas-saving] efforts have [the] potential to arrest and reverse the industry’s purchased natural gas consumption” in Canada, Strategy West said.
As for conventional natural gas, “there’s still significant resources to be tapped” in the Western Canadian Sedimentary Basin (WCSB), Kerr said. CAPP estimates that 146 Tcf already has been produced in the WCSB, but another 145 Tcf is left.
Overall Canadian gas production, which currently is about 16-17 Bcf/d, is expected to remain flat through 2020, Kerr noted. For this year, he projects that slightly more than 12,000 gas wells will be drilled at gas prices of nearly $7/MMBtu.
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