Environmental Engineering Reference
In-Depth Information
•
cost overruns,
•
cost effective upgrading, reducing highly aromatic, high-sulfur SCO,
•
and
•
dependence on and price of natural gas for hydrogen production (originally used
because of its low price but now considered by some to be too expensive).
The wide heavy-oil/light-oil price differential has been an incentive to increase
upgrading. The price for heavy crude was as low as $12 per barrel in early 2006 and its
market is limited by refineries that can process it and by its end use as asphalt. In its June
2006 report, the NEB describes numerous proposals for building upgraders.[47]
Cost overruns for the integrated mining projects or expansions, sometimes as much as
50% or more of the original estimates, have been a huge problem for the industry. The main
reasons cited by the COS report are poor management, lack of skilled workers, project size,
and engineering issues.
Cost of Development and Production
Operating and total supply costs have come down significantly since the 1970s. Early
supply costs were near C$35 per barrel (in 1970s dollars). Reductions came as a result of two
major innovations in the production process. First, power shovels and energy efficient trucks
replaced draglines and bucketwheel reclaimers, and second, hydrotransport replaced conveyor
belts to transport oil sands to the processing plant.[48]
Operating costs include removal of overburden, mining and hydro transport, primary
extraction, treatment, and tailings removal. The recovery rate, overburden volumes, cost of
energy, transport distances, and infrastructure maintenance all have an impact on operating
costs.
Supply costs (total costs) include the operating costs, capital costs, taxes and royalties,
plus a 10% return on investment (ROI). When compared to conventional new oil production
starts, an oil sands project may have operating costs over 30% higher than the world average
for conventional new starts. However, its nearly nonexistent royalty and tax charge makes the
total cost per barrel of energy significantly less than the conventional oil project. The NEB in
its Energy Market Assessment estimated that between US$30-$35 per barrel oil is required to
achieve a 10% ROI.[49]
Operating costs for mining bitumen were estimated at around C$9-$12 per barrel
(C$2005) — an increase of up to C$4 per barrel since the 2004 NEB estimates. Supply cost
of an integrated mining/upgrading operation is between C$36 and $40/barrel for SCO — a
dramatic increase over the C$22-$28 estimate made in 2004. These supply costs for an
integrated mining/upgrading operation were expected to decline with improvements in
technologies (see table 3). However, natural gas prices rose 88% and capital costs rose 45%
over the past two years.
Operating costs for SAGD in-situ production in 2005 were about C$10-$14 per barrel of
bitumin, up from C$7.40 per barrel in 2004. Recovery rates are lower than with mining, at
40%-70%, and the price of energy needed for production is a much larger factor. The SAGD
operations are typically phased-in over time, thus are less risky, make less of a “footprint” on
the landscape than a mining operation, and require a smaller workforce. SAGD supply cost
for Athabasca oil sand rose from between C$11-$17/barrel (bitumen) to C$18-$22/barrel;
Search WWH ::
Custom Search