Technologies, Markets and Challenges for Development of the Canadian Oil Sands Industry by Romain H. Lacombe and John E. Parsons 07-006 June 2007 Technologies, Markets and Challenges for Development of the Canadian Oil Sands Industry Romain H. Lacombe* and John E. Parsons** June 2007 This paper provides an overview of the current status of development of the Canadian oil sands industry, and considers possible paths of further development. We outline the key technology alternatives, critical resource inputs and environmental challenges and strategic options both at the company and government level. We develop a model to calculate the supply cost of bitumen and synthetic crude oil using the key technologies. Using the model we evaluate the sensitivity of the supply costs to the critical model inputs. * Technology and Policy Program, MIT, E40-442, 77 Massachusetts Ave., Cambridge, MA 02139 USA, E-mail:
[email protected] ** Center for Energy and Environmental Policy Research, MIT, E40-435, 77 Massachusetts Ave., Cambridge, MA 02139 USA, E-mail:
[email protected] This research was supported by a grant from BP Technologies Ventures Inc. for research on “Conversion of High-C/Low Value Feedstock into Fuels and Electricity: Exploring Technological Opportunities and How These Could Impact the Market.” 1. INTRODUCTION The Canadian oil sands resource has been under development since 1967 when the mining and upgrading operations of the Great Canadian Oil Sands project (now Suncor Energy Inc.) started in the Fort McMurray region of Alberta. For many decades the resource remained promising but inconsequential. Spurred by the recent increase in the world price of oil, the industry has begun to expand rapidly.