Alberta oil sands production increased 10 percent to 1.9 million barrels a day last year and will double to 3.8 million by 2022, the province’s energy regulator predicts.
The increase came even as oil sands capital expenditures dipped 10 percent to C$20.4 billion ($20.35 billion) in 2012. Some companies cut budgets because of “increased pressure from lower-cost conventional oil development,” according to the annual energy report released today by Alberta’s Energy Resources Conservation Board.
Alberta, the center of Canada’s energy industry, holds the world’s third-largest oil reserves, behind Saudi Arabia and Venezuela. Most of the reserves are in the oil sands in northern Alberta. Oil sands reserves declined last year to 167.9 billion barrels from 168.6 billion, the ERCB said.
The ERCB forecast that oil sands capital expenditures will increase to $21.6 billion in 2013 and peak in 2015 at $23.4 billion.
Canada’s largest energy company, Suncor Energy Inc., cut its capital expenditure outlook by C$850 million last year as it delayed its Fort Hills oil sands project and said economics of its Voyageur oil sands upgrader were challenged by rising U.S. shale oil production.
Conventional production and reserves also rose in Canada last year as horizontal drilling into shale- and tight-oil basins increased, the ERCB said. Conventional output increased 14 percent to 556,000 barrels a day and conventional reserves increased 9.5 percent to 1.7 billion barrels.
Oil sands accounted for 78 percent of Alberta’s production last year, the ERCB said, and 2012 was the first year the majority of oil sands production came from underground steam-injection projects rather than mining.
Mining projects, where oil-laden sand is dug from the ground, accounted for 48 percent of production. Steam-injection projects, which separate the oil from the sand underground before pumping it to the surface, made up 52 percent of production.