The Oil Sands and Cogeneration Opportunities
By Lindsay Morris, Associate Editor, firstname.lastname@example.org
Last week, I had the opportunity to attend PennWell’s Oil Sands and Heavy Oil Technologies Conference & Exhibition in Calgary, Alberta. The Oil Sands have the opportunity to be used as a cogeneration source not only in Alberta, but also in the United States.
An abundant resource in northern Alberta, the Oil Sands are used for the production of oil, and for natural gas-fired cogeneration. About a decade ago, Alberta started shifting from a reliance on coal-fired generation to natural-gas cogeneration. This shift was caused by the provincial government’s decision to deregulate the power industry, and the use of royalty incentives to increase oil sands production. TransCanada now estimates that there could be 3,500 MW of cogeneration potential for the oil sands region by 2015.
It’s no mystery that the U.S. is also expected to convert to an increasing amount of natural-gas cogeneration over the next decade or two. The shale developments in Texas, Oklahoma, Pennsylvania and elsewhere will undoubtedly be a great resource for this shift, but the possibility also exists that some resources could come from our neighbor to the north.
The Keystone Pipeline System is a plan to transport crude oil from the Athabasca Oil Sands to refineries in Illinois and Oklahoma, and further to the U.S. Gulf Coast. If U.S. federal agencies approve the plan, it will mean more oil reserves for the U.S., and a potential additional resource for cogeneration projects. On July 26, The House passed legislation to speed up the Obama administration's review of the proposed pipeline. The bill, which would require the administration to decide by Nov. 1 whether to issue a permit determining the pipeline is in the nation's interest, was approved.
TransCanada originally proposed the Keystone project in 2005. Robert Jones, vice president of Keystone for TransCanada, spoke during the keynote session at Oil Sands and Heavy Oil Technologies last week. Because the Oil Sands are the only growing supply source with a land-based connection to the U.S., he said, the Keystone project could provide the lowest cost foreign oil that the U.S. has ever purchased. “The U.S. can choose to get oil from Canada or from unreliable, unfriendly overseas sources,” Jones said.
The Canadian Oil Sands industry is expected to grow by more than 1.2 billion barrels per year by 2025, said Fay Cranmer, executive director of energy for Accenture. Translation: The Oil Sands is a growing industry.
The U.S. would be wise to connect with Canada, a more consistent ally than any other foreign country from which we import oil. While some environmental and engineering kinks still need to be unraveled in the Keystone project plan, it is an opportunity the U.S. power and oil and gas sectors would undoubtedly benefit from.