Developing oil sands to become even more costly: CERI

Even as oil briefly crossed above US$60 a barrel Tuesday, what’s becoming increasingly clear is that Canada’s oil sands won’t be the Holy Grail everyone expected to meet the energy supply needs of the future.

As shown in a report Tuesday by the Canadian Energy Research Institute, the cost of complying with climate-change legislation that is being aggressively pushed in the United States will make Canada’s oil sands, already the world’s most expensive to develop, even more costly.

It will probably also make them the world’s most regulated.

CERI, an independent research organization funded by Canadian industry and governments, said oil prices would have to climb as high as US$105 a barrel to pay for the cost of integrating technologies so greenhouse-gas emissions from the oil sands are comparable to those of conventional oil.

And this would not be an overnight solution. The technologies, ranging from widespread adoption of carbon capture and storage for plants using natural gas as a power source, to replacing natural gas with gasification or nuclear technologies, would take some two decades to implement fully. Newer technologies would take even longer.

Financial Post