According to a soon-to-be-released report from Business Communications Company (BCC) demand for unconventional oil will reach 10.31 million barrels in 2008, up from 8.59 million barrels in 2003 at an average annual growth rate (AAGR) of 3.7%.
Demand for unconventional natural gas is expected to increase from 7.68 trillion cubic feet in 2003 to 12.78 trillion cubic feet by 2008.
Unconventional oil, previously considered too costly to produce, includes extra-heavy oil (Oil Sands), and bitumen, syncrude, shale oil and conventional heavy oil. According to BCC, the strong gains in heavy crude supply can be attributed to a combination of favourable developments.
Technological advances have reduced the cost of producing these reserves and have opened up new areas for development. Market growth has occurred in the key US Midwest and Rocky Mountain export markets, as refiners expanded their capacity to process heavy crude.
These US heavy crude refineries process mainly Canadian and Venezuelan heavy oil because of greater availability and good performance in coking units and asphalt production. And equally important was a period of strong commodity pricing, which brought a strong influx of equity capital to the Western Canadian industry.
Technology advances such as steam-assisted gravity drainage (SAG-D), vapour extraction incorporating a solvent such as naphtha (Vapex), and new cyclic steaming techniques are making significant progress in opening the bulk of Canada’s postulated 300 billion barrels of recoverable oil sands resource (80%) that is too deep to be mined by conventional technology.
Natural gas contained within unconventional gas deposits is generally stored quite more uniformly within reservoirs that can extend over vast areas, rather than trapped within isolated anticline closures. Over the next five years to 2008, demand for unconventional natural gas will increase at an AAGR of 10.7%.
Newer recovery innovations have significantly raised the average proportion of unconventional gas reserves eventually brought to the surface. Technological improvements are facilitating Rocky Mountain production of tight sand gas and coal bed methane.
BCC statistics show that marketed production in Wyoming, for example have increased from 3.4% of total US output in 1996 to 7.1% in 2002. Continued steady economic growth in the industrialised countries of Europe and North America will also sustain the level of natural gas demand. Resurgence in the developing countries is critical to demand growth, since economic growth in these countries is more closely tied to energy.