Canadian Energy Centre
Over $420 billion in government revenues from the Canadian oil sands sector expected through 2050
From the Canadian Energy Centre
Annual government revenues from Canada’s oil sands sector expected to rise to US$19.4 billion in 2050
With ongoing public discussions focusing on net zero emissions from Canada’s oil sands sector, it is a good time to examine projected government revenues and capital expenditures (capex) expected from the sector through 2050. This analysis illustrates how investment in low-emitting technologies, such as carbon capture and storage (CCUS), will help preserve government revenues and capex in Canada’s oil sands sector.
This Fact Sheet makes these calculations based on a conservative projection that the Brent price for oil will average US$60 per barrel between 2023 and 2050. The capex and government revenue numbers are expressed in nominal US dollars, assuming a 2.5 per cent inflation rate and a 10 per cent discount rate.
The written content in this report was prepared by the Canadian Energy Centre (CEC). It relies on data obtained from the Rystad Energy UCube, but it does not represent the views of Rystad Energy.
Background on Rystad Energy UCube
Rystad Energy is an independent energy research company providing data, analytics and consultancy services to clients around the globe.
UCube is Rystad Energy’s global upstream database, including production and economics (costs, revenues, and valuations) for more than 80,000 assets, covering the portfolios of more than 3,500 companies.
The UCube data set is used to study all parts of the global exploration and production (E&P) activity value chain, including operational costs, investment (capex and opex), fiscal terms, and net cash flows for projects and companies, both globally and by country (Rystad Energy, 2023).
In this Fact Sheet, we use a constant price in real terms for our analysis of government revenues and capex from the oil sands sector, with Brent crude oil prices set to a constant US$60 per barrel between 2023 and 2050.
Canadian oil sands sector government revenues to reach over U.S. $420 billion through 2050
Under a US$60 per barrel price trajectory, Canadian government revenues (which includes provincial royalties and federal and provincial corporate taxes) from the country’s oil sands sector are expected to rise from an annual US$12.1 billion in 2023 to US$19.4 billion in 2050 (see Figure 1).
On a cumulative basis, between 2023 and 2050 Canadian government revenues from the oil sands sector are projected to be over US$420.7 billion.
Source: Derived from the Rystad Energy UCube, based on $60 USD per barrel price scenario
Capital expenditures (capex) in Canada’s oil sands sector to reach nearly U.S. $328 billion through 2050
Under the US$60 per barrel price projection, capital expenditures (capex) in Canada’s oil sands sector are expected to rise from US$10.6 billion in 2023 to US$12.6 billion in 2050 (see Figure 2).
Cumulatively between 2023 and 2050, Canadian oil sands sector capex is projected at nearly US$327.8 billion.
Source: Derived from the Rystad Energy UCube, based on $60 USD per barrel price scenario
Notes
This CEC Fact Sheet was compiled by Lennie Kaplan at the Canadian Energy Centre (www.canadianenergycentre.ca). The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of two anonymous reviewers in reviewing the data and research for this Fact Sheet. The written content in this report was prepared by the Canadian Energy Centre (CEC) and does not represent the views of Rystad Energy.
References (All links live as of September 19, 2023)
Rystad Energy. (2023). Upstream Solution. <https://bit.ly/3veaMIV>.
Taiwan Semiconductor Manufacturing Company’s campus in Nanjing, China
From the Canadian Energy Centre
Canada inches away from first large-scale LNG exports
The world’s leading producer of semiconductor chips wants access to Canadian energy as demand for artificial intelligence (AI) rapidly advances.
Specifically, Canadian liquefied natural gas (LNG).
The Taiwan Semiconductor Manufacturing Company (TSMC) produces at least 90 per cent of advanced chips in the global market, powering tech giants like Apple and Nvidia.
Taiwanese companies together produce more than 60 per cent of chips used around the world.
That takes a lot of electricity – so much that TSMC alone is on track to consume nearly one-quarter of Taiwan’s energy demand by 2030, according to S&P Global.
“We are coming to the age of AI, and that is consuming more electricity demand than before,” said Harry Tseng, Taiwan’s representative in Canada, in a webcast hosted by Energy for a Secure Future.
According to Taiwan’s Energy Administration, today coal (42 per cent), natural gas (40 per cent), renewables (9.5 per cent) and nuclear (6.3 per cent), primarily supply the country’s electricity.
The government is working to phase out both nuclear energy and coal-fired power.
“We are trying to diversify the sources of power supply. We are looking at Canada and hoping that your natural gas, LNG, can help us,” Tseng said.
Canada is inches away from its first large-scale LNG exports, expected mainly to travel to Asia.
The Coastal GasLink pipeline connecting LNG Canada is now officially in commercial service, and the terminal’s owners are ramping up natural gas production to record rates, according to RBN Energy.
RBN analyst Martin King expects the first shipments to leave LNG Canada by early next year, setting up for commercial operations in mid-2025.
Cenovus Energy’s Sunrise oil sands project in northern Alberta
From the Canadian Energy Centre
By Will Gibson
‘Canada continues to be resource-rich and competes very well against major U.S. resource bases’
A new report on North American energy highlights the important role that Canada’s oil sands and Montney natural gas resources play in supplying growing global energy demand.
In its annual North American supply outlook, Calgary-based Enverus Intelligence Research (a subsidiary of Enverus, which is headquartered in Texas and also operates in Europe and Asia) forecasts that by 2030, the world will require an additional seven million barrels per day (bbl/d) of oil and another 40 billion cubic feet per day (bcf/d) of natural gas.
“North America is one of the few regions where we’ve seen meaningful growth in the past 20 years,” said Enverus supply forecasting analyst Alex Ljubojevic.
Since 2005, North America has added 15 million bbl/d of liquid hydrocarbons and 50 bcf/d of gas production to the global market.
Enverus projects that by the end of this decade, that could grow by a further two million bbl/d of liquids and 15 bcf/d of natural gas if the oil benchmark WTI stays between US$70 and $80 per barrel and the natural gas benchmark Henry Hub stays between US$3.50 and $4 per million British thermal unit.
Ljubojevic said the oil sands in Alberta and the Montney play straddling Alberta and B.C.’s northern boarder are key assets because of their low cost structures and long-life resource inventories.
“Canada continues to be resource-rich and competes very well against major U.S. resource bases. Both the Montney and oil sands have comparable costs versus key U.S. basins such as the Permian,” he said.
“In the Montney, wells are being drilled longer and faster. In the oil sands, the big build outs of infrastructure have taken place. The companies are now fine-tuning those operations, making small improvements year-on-year [and] operators have continued to reduce their operating costs. Investment dollars will always flow to the lowest cost plays,” he said.
“Are the Montney and oil sands globally significant? Yes, and we expect that will continue to be the case moving forward.”
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