The Canadian Oil Sands: A backgrounder: Introduction

by Bennett Jones LLP


Investment in the Canadian oil sands has increased rapidly since the resource was first commercialized by Great Canadian Oil Sands (now Suncor) in the 1960s. This growth is forecast to continue, despite fluctuations in the economy and new energy technologies, because of the world demand for oil and the unique advantages of the oil sands.

The latest wave of oil sands development is gathering momentum, with previously shelved expansions now being reactivated and new expansions being initiated. It is believed this latest wave will entail a more disciplined approach to development by both industry and government occupied by continuing scrutiny from non-governmental organizations and non-industry stakeholders. The rapid increase in world oil price, uniquely accompanied by stagnating North American natural gas prices has accelerated development. Construction and operating costs are lower than they have been in several years and all observers wonder whether this trend will be short-lived. The Conference Board of Canada forecasts that while industry costs for Alberta’s oil sands projects will climb at a very rapid pace over the next three years, buoyant oil prices should ensure that profits return to pre-recession highs by the end of 2014.

Geography and Reserves

Alberta’s oil sands underlie a vast area of the province, located primarily in the regions of Peace River, Athabasca (the Fort McMurray area), Cold Lake (north of Lloydminster) and stretching into Saskatchewan. These areas contain an estimated 1.7 trillion barrels (initial volume in place) of crude bitumen. Of this amount, 171.3 billion barrels are considered to be proven reserves (169.9 billion barrels of bitumen and 1.4 billion barrels of conventional oil).[1] Based on these figures, Alberta has the third-largest proven crude oil reserve in the world, accounting for about 13 percent of total global oil reserves.[2] With new and emerging technologies, this reserve estimate could be increased to as much as 315 billion barrels.[3] Companies have barely scratched the surface of the resource, extracting only about four percent of the initial established crude bitumen reserves to date.[4]


A report from the International Energy Agency (IEA) states that “unconventional oil is set to play an increasingly important role in world oil supply through to 2035, regardless of what governments do to curb demand…output rises from 2.3 mb/d in 2009 to 9.5 mb/d in 2035” with specific mention of the contribution of Alberta’s oil sands, which is approximately 1.5 million barrels per day (bbl/d).[5] Alberta’s Energy Resource Conservation Board (ERCB) forecasts that Alberta’s annual bitumen production will total 3.2 million bbl/d for a total of 1.2 billion barrels per year by 2019 and the U.S. EIA estimates that Canadian oil sands operators could reach production levels of 4.5 million bbl/d by 2035.[6] Alberta’s current upgrading capacity is approximately 1.2 million bbl/d, with output of approximately 1.04 million bbl/d.[7]

Since 1999, Canada has been the largest supplier of natural gas and crude oil to the United States.[8] Statistics released by Alberta Energy indicate that Alberta exports about 1.4 million bbl/d of crude oil to the United States, supplying 15 percent of U.S. crude oil imports, or seven percent of U.S. oil demand.[9]


Investment in the oil sands gives companies a unique opportunity to add reportable reserves at relatively low risk. Business opportunities also exist in ancillary industries such as construction, engineering, petrochemicals, electricity generation, metals, housing, and transportation.

In recent years, investment in Alberta’s oil sands has been robust. From 1999 to 2010, an estimated $101 billion was invested in oil sands projects.[10] The peak of oil sands investment was in 2008 when annual investment reached $20.7 billion.[11] However, entering the latest wave of development, oil sands investment is increasing at a modest pace with an estimated $170 billion in oil sands-related projects currently underway or proposed.[12]


About 136,000 Albertans are directly employed in the oil and gas extraction and mining sectors, which accounts for one out of every 15 jobs in the province. While job creation was hindered by the onset of the global recession in 2008, the Canadian Energy Research Institute forecasts that between 2000 and 2020 development in the oil sands industry will generate 42,000 full-time positions.[13]

[1]Alberta Energy, Talk About Oil Sands (April 2011), online:  

[2] Alberta Energy, Oil Sands Facts and Statistics, online:

[3] Government of Alberta, Alberta Oil Sands Industry Quarterly Update, Winter 2011/2012, online:

[4] Alberta Energy Resources Conservation Board, Alberta’s Energy Reserves 2010 and Supply/Demand Outlook 2011-2020, online:

[5] International Energy Agency, World Energy Outlook 2010 Executive Summary, online:

[6] U.S. Energy Information Administration, International Energy Outlook 2011, online:

[7] “Facts & Statistics” Government of Alberta Department of Energy (28 October 2009), online: The Government of Alberta

[8] “Canada – U.S. Relations” (14 April 2009), online: Government of Canada

[9] “Facts & Statistics” Government of Alberta Department of Energy (28 October 2009), online: The Government of Alberta

[10] Alberta Energy, Talk About Oil Sands (April 2011), online:

[11] Alberta Energy, Alberta’s Energy Industry: An Overview, online:

[12] Alberta Energy, Talk About Oil Sands (April 2011), online:

[13] Alberta Energy, Talk About Oil Sands (April 2011), online:


Written by:

Bennett Jones LLP

Bennett Jones LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.