May 14, 2011

Oil Sands Projections from CERA

Canada produces about 2.9 million barrels per day of oil; about half of that (1.5 mbd) was derived from the tar sands in 2010. The United States imports about 2 mbd from Canada. (See the May 4, 2011 "This Week in Petroleum" report of the Energy Information Administration for these figures.)

A new report from Cambridge Energy Research Associates, according to the Calgary Herald, predicts that over the next 25 years $2.077 trillion will be invested in building and maintaining the oilsands, including "$253 billion in initial capital for construction and $1.8 trillion for operation, maintenance and sustaining capital."
“The projects ... that were delayed are now back being developed again, there are more projects, some projects have moved forward in time,” said CERI president and chief executive Peter Howard in an interview. “The net result is there is the potential for more money to be invested than what we had suggested in 2009. “And with more money comes more jobs, more gross domestic product, etc.”  
Under its “realistic scenario,” oilsands production capacity will ramp up from about 1.7 million barrels per day now to 2.1 million bpd by 2015, 4.8 million by 2030 and 4.9 million by 2035, the study shows 
In 2008, CERI projected oilsands production of over five million bpd by 2015, and over six million bpd by 2030 [emphasis added]. In November 2009, it revised that estimate lower, predicting that $309 billion will be spent over 35 years to increase output from 1.4 million bpd to 1.7 million bpd in 2015, 4.5 million bpd in 2030 and 5.3 million bpd by 2041.
That's quite  a tumble:

In 2008, CERA says over 5 mbd by 2015.
In 2009, CERA says 1.7 mbd by 2015.
In 2011, CERA says 2.1 mbd by 2015.

Given this record, what exactly are we to believe? When making projections, do firms such as CERA ever acknowledge past mistakes? Why didn't the reporter press Howard on his dubious record of prophecy?

Instead of predicting production, it makes a lot of more sense to make estimates of likely production given various price assumptions. Here are two graphs with data from the Energy Information Administration (via Michael Levi's study on the oil sands for the Council on Foreign Relations) that do so:

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