Market Snapshot: Oil sands use of natural gas for production decreases considerably in early 2020
Release date: 2020-09-09
Producers in western Canada cut almost one million barrels per day (MMb/d) of oil supply by mid-May 2020 because of COVID-19 and other market dynamics. The majority of that production cut was in the oil sands. This shut-in of production resulted in oil sands gas consumption decreasing much more than it normally does in the spring and early summer.Footnote 1 The only time it was less was during the 2016 Fort McMurray wildfires. Between January and June 2020, natural gas consumption in the oil sands decreased by 22% from 3.2 billion cubic feet (Bcf/d) to 2.5 Bcf/d.
Figure 1. Natural gas used to recover oil sands in Alberta and total oil sands production
Source and Description
Description: This graph displays a dependent relationship between natural gas and oil sands production. From January 2010 to December 2019 oil sands production increased by 155% from 1.23 MMb/d to 3.14 MMb/d. Natural gas consumption in the oil sands increased by 243% from 0.94 Bcf/d to 3.23 Bcf/d. Oil sands crude oil production decreased by 18% from January to May of 2020, while natural gas consumption decreased by 22% from January to June of 2020.
The primary use for natural gas in Canada is space heating. However, Canada’s oil sands are also large consumers of natural gas. In 2018, oil sands gas consumption was 30% of total natural gas use in Canada.
Oil sands operators use natural gas for thermal, in situ production (steam-assisted gravity drainage (SAGD) and cyclic steam stimulation (CSS)). Producers burn natural gas to generate steam, which heats underground reservoirs and the bitumen inside, becomes less viscous and can flow to the surface more easily.
The oil sands mining process also uses natural gas as fuel to create steam to separate bitumen from sand. The oil sands upgrading process uses natural gas to convert bitumen to synthetic crude oil (upgraded bitumen). Steam generated from burning natural gas at large oil sands facilities may also pass through a turbine first to generate electricity in a process called cogeneration. The facility can then use this electricity on site and sell excess electricity to other markets.
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