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A surging prevalence in the global stage

29th January 2013

Experts from Canada’s leading petroleum association, the Canadian Association of Petroleum Producers (CAPP) talk exclusively to OGT about mounting unconventional oil and gas exploration, R&D driving the environmental sustainability of operations and the future of energy

A surging prevalence in the global stage
Canada aims to double crude oil production to over six million barrels per day by 2030

OGT: It has been an exciting year for the oil and gas industry, with the promising shale boom in the US, Brazil's pre-salt opening up and the new frontier of the Arctic luring oil and gas majors across the world. How does Canada currently place itself within this framework?

CAPP: The International Energy Agency and other forecasters predict worldwide energy demand will continue to rise (IEA - 35 per cent by 2035) requiring all forms of energy to meet demand. The IEA consistently predicts oil will remain the world’s dominant energy source by a wide margin for the foreseeable future.

This increasing worldwide energy demand is pulling Canadian oil and natural gas toward Eastern Canada, the United States and Asia. Canada has the world’s third largest oil reserves at 174 billion barrels and Canadian crude oil production is forecast to double to more than six million barrels per day by 2030, led by increasing oil sands production. Canadian natural gas supplies are also abundant.

Global energy demand is shaped increasingly by Asia, particularly China and India. From a supply perspective, Canada’s oil and natural gas assets represent a significant opportunity for all Canadians, provided we remain competitive and connected to markets.

OGT: Could you name some of the current and upcoming exploration and production projects which you are most excited about?

CAPP: In general terms, resurging growth in Western Canadian conventional oil production and new oil sands investments are driving the positive outlook. Canadian oil is clearly on the global stage and our forecast growth in production by 2030 will put Canada in the top three or four oil producers in the world. Conventional production is increasing because new technology allows industry to produce oil from formerly uneconomic resources, reversing a significant declining production trend over the last decade. Oil sands growth reflects Canada’s supply potential and growing international demand for oil.

OGT: Could you please tell us what are the most important technological challenges which the country's energy sector is facing?

CAPP: Meeting increased demand will require a more diverse energy supply base – conventional petroleum, unconventional crude oil and natural gas, alternative forms of energy – and improving energy efficiency across the economy. The challenge we all face is how to reduce GHG emissions while the demand for energy is increasing and we transition to lower carbon energy.

Technology and innovation is key to producing more energy at lower cost with less environmental impact.  Energy efficiency on the front-end of production (such as co-generation), application of technology to reduce emissions on the back-end of production (such as lower temperature extraction, use of solvents, new heat sources), along with managing emissions from production (such as carbon capture and storage) will all contribute to our ongoing improvements in performance.

OGT: How crucial is national research and development to overcome these challenges?

CAPP: GHG reduction technology development and deployment must be a key priority for industry, governments, academia, research institutions and other organizations in Canada. For example, earlier this year 12 oil sands producers announced the formation of a new alliance to accelerate the pace of environmental performance in Canada’s oil sands. Through Canada’s Oil Sands Innovation Alliance (COSIA), the signatory oil sands producers will work together with leading thinkers from industry, government, academia, and the wider public to address environmental performance in four environmental priority areas –  tailings, water, land and greenhouse gases. COSIA represents an unprecedented level of collaboration for the oil sands industry, and currently includes companies representing about 80 per cent of oil sands production in Canada.

OGT: What is the importance of unconventional oil and gas in Canada's current energy mix?

CAPP: For oil, of Canada’s 174 billion barrels of oil reserves 169 billion are in the oil sands and oil sands crude currently accounts slightly more than 50 per cent of Canada’s total production. Between now and 2030, total oil production is forecast to increase to 6.2 million barrels per day, of which five million barrels per day will come from the oil sands.

Canadian total annual natural gas production was  5.3 trillion cubic feet (tcf) in 2011. Of that total, 14 per cent came from unconventional sources, such as shale gas. By 2020 the share of unconventional natural gas production would be as high as 52 per cent, depending on prices.

OGT: What role will shale play for the country in the coming years and what type of technological improvements does the industry see in this area?

CAPP: The importance of natural gas produced from shale and other unconventional sources is growing. The share of natural gas from unconventional sources currently sits at about 14 per cent of total Canadian natural gas production but could reach 52 per cent by 2020, depending on prices.  Shale oil is already playing a role in flattening conventional production, which had been in natural decline for some years.

Technological improvements primarily focus on how industry uses water. They are designed to decrease our dependence on freshwater sources, for example, tapping into deep saline or brackish aquifers. An example is the Debolt water treatment plant in northeastern British Columbia (BC).

OGT: How is CAPP working to ensure that shale exploration in the country meets both regulations and environmental standards?

CAPP: Canada’s natural gas industry has a track record of safe operations that is the result of robust regulations and best industry operating practices.

An example of the latter are CAPP’s operating practices for hydraulic fracturing, released in January 2012. These practices support a responsible approach to water management and focus on continuous performance improvements.

For example, they state that industry supports the disclosure of fracturing fluid additives and the development of fracturing fluid additives with the least environmental risks.

OGT: What is your view on Canada's energy strategy for the future?

CAPP: A properly developed energy strategy is an opportunity for Canada to take a constructive and collective step forward, defining our own path on the global stage. We support a Canadian energy strategy that finds the balance among the equally important elements of secure, integrated energy supply, environmental performance and economic prosperity.

Broadly, the energy strategy should be approached as an opportunity to benefit all Canadians through development of a collective view of our future energy system. Developing the strategy should be an inclusive process involving the full energy value-chain, in addition to all groups with a direct interest in the energy system.

The strategy must be grounded in the fundamental view that market forces determine decisions on energy supply, transportation and use – both domestically and through Canada’s trading relationships.

This interview was conducted with the help of experts at the Canadian Association of Petroleum Producers (CAPP), Calgary Office, Alberta, Canada.

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