Environmental Engineering Reference
In-Depth Information
Countries (OPEC) accounts for 70%. The Middle East also leads in reserve growth and
undiscovered potential, according to the Energy Information Administration (EIA).[1]
The United States' total oil reserves are estimated at 22.7 billion barrels, a scant 1.8% of
the world's total (see Appendix A). U.S. crude oil production is expected to fall from 5.4
million barrels per day (mbd) in 2004 to 4.6 mbd in 2030, while demand edges up at just over
1% annually. Net imports of petroleum are estimated by the EIA to increase from 12.1 mbd
(58% of U.S. consumption) to 17.2 mbd (62% of U.S. consumption) over the same time
period.[2]
When it comes to future reliable oil supplies, Canadian oil sands will likely account for a
larger share of U.S. oil imports. Oil sands account for about 46% of Canada's total oil
production, and oil sand production is increasing as conventional oil production declines.
Since 2004, when a substantial portion of Canada's oil sands were deemed economic, Canada
has been ranked second behind Saudi Arabia in oil reserves. Canadian crude oil exports were
about 1.82 million barrels per day in 2006, of which 1.8 mbd or 99% went to the United
States. Canadian crude oil accounts for about 18% of U.S. net imports and about 12% of all
U.S. crude oil supply.
An infrastructure to produce oil, upgrade, refine, and transport it from Canadian oil sand
reserves to the United States is already in place. Oil sands production is expected to rise from
its current level of 1.2 (mbd) to 2.8 mbd by 2015. However, infrastructure expansions and
skilled labor are necessary to significantly increase the flow of oil from Canada. For example,
many refineries are optimized to refine only specific types of crude oil and may not process
bitumen from oil sands. One issue likely to be contentious is the regulatory permitting of any
new refinery capacity because of environmental concerns such as water pollution and
emissions of greenhouse gases.
Challenges such as higher energy costs, infrastructure requirements, and the environment,
may slow the growth of the industry. For example, high capital and energy input costs have
made some projects less economically viable despite recent high oil prices. Canada ratified
the Kyoto Protocol in 2002, which bound Canada to reducing its greenhouse gas (GHG)
emissions significantly by 2012 but according to the government of Canada they will not
meet their Kyoto air emission goals by 2012. The Pembina Institute reports that the oil sands
industry accounts for the largest share of GHG emissions growth in Canada.[3]
Major U.S. oil companies (Sunoco, Exxon/Mobil, Conoco Phillips, and Chevron)
continue to make significant financial commitments to develop Canada's oil sand resources.
Taken together, these companies have already committed several billion dollars for oil sands,
with some projects already operating, and others still in the planning stages. Many of these
same firms, with the U.S. government, did a considerable amount of exploration and
development on “tar sands” in the United States, conducting several pilot projects. These U.S.
pilot projects did not prove to be commercially viable for oil production and have since been
abandoned. Because of the disappointing results in the United States and the expansive
reserves in Canada, the technical expertise and financial resources for oil sands development
has shifted almost exclusively to Canada and are likely to stay in Canada for the foreseeable
future. However, with current oil prices above $60 per barrel and the possibility of sustained
high prices, some oil sand experts want to re-evaluate the commercial prospects of U.S. oil
sands, particularly in Utah.
This CRS report examines the oil sands resource base in the world, the history of oil
sands development in the United States and Canada, oil sand production, technology,
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