Canada’s oilsands will bring in trillions even at depressed oil price: study

The recent slide in crude oil may be ringing alarm bells in Canada’s oilsands, but a new study says production and revenue should still grow at a massive rate even if the price of black gold doesn’t meet previous expectations.

The report by the Canadian Energy Research Institute (CERI), an Alberta think-tank funded by both the government of Alberta and the oil industry, projects oilsands production to balloon to 3.7 million barrels of oil a day by 2020 from 1.98 million barrels a day as of last year. Looking out to 2030, output is seen climbing to 5.2 million barrels.

That forecast updates a similar CERI study done in 2011 to account for clearer Statistics Canada data on the oilsands, but also to factor in recent softness in the price of oil. The study assumes a long-term price of US$85 a barrel, down from the previous assumption of US$100 a barrel.

Crude has been in a tailspin over the last few months, and actually fell below US$78 a barrel in New York on Tuesday, although it’s tough to imagine it at that level over the longer term.

“If it stayed at that level for a period of time you would probably expect to see some of the projects which have been permitted by the regulator possibly being put on hold or being delayed,” says CERI President and CEO Peter Howard.

“We don’t imagine that the oil price is going to stay sub-$80 for a long period of time.”

Assuming no price collapse, the long-term economic benefits of the oil patch feature very big numbers, according to the study.

Trillions in revenue expected

Between now and 2038, revenue from existing and new oilsands projects is expected to be around $2.5 trillion, while the GDP impact is ballparked just under $3.9 trillion.

The patch is also expected to be a boon for both jobs and taxes, employing just over 802,000 in at its peak in 2028, up from a current 514,000, and pumping just under a trillion into federal, provincial and municipal tax coffers, with the bulk of that going to the Feds.

Oh, and in addition to that, Alberta will pull in about $600 billion in royalties over the next 25 years.

Of course, there are significant ifs where the oilsands are concerned, beyond just the price of oil.

The projections depend on the construction of pipelines and the continued transport of crude by rail, neither of which are sure things, with the Northern Gateway and Keystone XL pipelines facing major opposition and memories of the 2013 Lac-Megantic derailment unlikely to recede any time soon.

Howard says the improved Statscan data, which more clearly separates oilsands activity from other extractive industries, was the main driver behind updating the study.

“This data set brought out the oilsands as its own economic sector, and that meant that its relationship to other provinces was much more transparent,” he says.

With the new data, CERI says 11.3 percent of oilsands economic impacts will occur outside of Alberta, up from 5.4 percent the 2011 study.