CALGARY (CP) - Northern Alberta's oilsands are expected to more than double production to 2.2 million barrels per day by 2015 and boost Canada's standing as a major oil producer, but it will likely do little to meet the world's growing energy demands.
A report released by the National Energy Board on Thursday said oilsands production is expected to surpass one million barrels a day this year and then climb to more than 2.2 million barrels in the next 10 years.
Still, with global oil demand around 80.6 million barrels per day, according to the International Energy Agency, Canadian production will remain a fairly small part of the global supply and demand balance.
"A million barrels per year is not insignificant," said Cliff Brown, project manager of the oilsands report for the energy board.
"At the same time, it's probably safe to say that given the world's supply is somewhere between 75 and 80 million barrels per day, it's not going to have a big effect on the world market."
Another factor in producing synthetic crude oil from oilsands bitumen, compared with drilling for conventional oil, is that it requires a large amount of energy to do everything from heating the bitumen reserves to producing electricity to run the complex refining and upgrading systems.
The oilsands currently uses 600 million cubic feet of gas per day, or four per cent of conventional production from western Canada. By 2015, oilsands use will increase to upwards of 1.6 billion cubic feet per day or 10 per cent of gas production.
"Gas supply and its impact on gas prices is a critical issue to the oilsands industry," states the report.
Along with record high prices for crude oil recently, natural gas has also remained at very high levels for this time of year, hovering around $6.70 US per thousand cubic feet.
Canadian gas production, which increased dramatically in the 1990s, is expected to stay relatively flat, producing about 17 billion cubic feet per day until about 2010. Conventional supply from the Western Canada Sedimentary Basin is expected to decline by 2006-2007.
Huge natural gas reserves in Alaska and the Northwest Territories require new pipelines to take the fuel to southern markets. Canada also has large gas reserves trapped in coal seams, also known as coalbed methane, in which the industry has only just begun to try and tap.
Still, future oilsands development is expected to rely more heavily on new technologies that use other fuel sources.
For example, the $3.4-billion Long Lake oilsands plant, being built by Calgary energy producer Nexen Inc. (TSX:NXY) and Opti Canada (TSX:OPC) intends to create its own synthetic gas from the bitumen it produces.
"Producers are looking at other ways to try and get off natural gas and we believe they will be successful in doing that," said Brown. "Technology has played a tremendous role in the oilsands and this is an area where they expect to make a further improvement."
Greg Stringham, vice-president of markets for the Canadian Association of Petroleum Producers, said an extra one-million barrels per day would boost Canada from ninth place to fourth in terms of the world's largest oil producers.
The energy regulator also says about $60-billion worth of projects, pipelines and other supporting infrastructure is slated for development through to 2015, with $20 billion already invested. But it is unlikely that all these projects will go through.
"Ongoing volatility in crude oil prices is expected and suggests that it is unlikely that the entire $60 billion in projects will be constructed within the planned time frame," the report states. "Market conditions will determine the pace of oilsands development."
The report also suggests that Alberta's petrochemical industry, facing tight supplies of feedstock gases from conventional natural gas production, could use the ethane and ethylene produced during the bitumen upgrading process.