IEA still sees major role for Canadian oil sands
Peter O’Neil, Canwest News Europe Correspondent, Canwest News Service
Monday, June 29, 2009
The Canadian oil sands “appears to be the sector hardest hit by the recession and the sharp fall in oil prices,” the Paris-based agency said in a report assessing the impact of the economic crisis on the world’s oil and gas supplies.
PARIS -- The Canadian oil sands sector is "down but not out" in its role as a major and secure safety net in the global energy market, the International Energy Agency reported Monday.
The Canadian oil sands "appears to be the sector hardest hit by the recession and the sharp fall in oil prices," the Paris-based agency said in a report assessing the impact of the economic crisis on the world's oil and gas supplies.
The IEA said the high-cost oil sands sector accounts for 1.7 million barrels a day (mb/d) of the 2.0 mb/d in production that has been deferred or cancelled in recent months due to the plunge in energy prices.
As a result, total production growth in the sector -- traditionally viewed as the "fallback" energy source for countries outside the Organization of Petroleum Exporting Countries, according to the IEA -- is projected to fall 40% during the 2008-14 period.
The IEA, however, said it is "cautiously optimistic" and described the oil sands sector "down but not out" even though it is frequently cited as a culprit in Canada's inability to reduce greenhouse gas emissions.
"Even with a potential for sustained lower prices, and possible environmental considerations, the oil sands benefit from the sheer size of the resource base (estimated at over 170 billion barrels of recoverable reserves), the benign investment environment and the proximity of US markets," the report stated.
The IEC noted that the costs of new oil sands production has fallen in recent years, and said investment will likely pick up if current prices remain stable.
"All told, the oil sands are instrumental in boosting total Canadian oil supply from 3.2 mb/d in 2008 to 3.8 mb/d in 2014."
The IEA's 28 member countries include the U.S., Canada, Japan, Australia and most of Europe. It was created to advice western leaders on energy issues as a result of the first energy crisis in 1973, which was triggered by the war between Israel and its Arab neighbours.
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