Summary 
The energy demands – steam and electricity - for Alberta’s oil sands are massive. In situ operators use large quantities of steam to reduce bitumen viscosity and extract it out of the ground. The surface mining operations use steam to separate the bitumen from the sand. Production of synthetic crude oil requires steam for various upgrading processes.
Operators can build their own steam plants and purchase power from the grid, or they can cogenerate steam and power in a single facility—and the latter is just what many of them are opting to do. Cogeneration of steam and electricity holds a potential benefit to Alberta’s oil sands operators.
The various oil sands development plans announced to date would build to 4.2 million barrels per day (MMbpd) of bitumen and SCO production by 2020, if they were all to proceed. Even in CERI’s more likely reference case production reaches 3.2 MMbpd by 2020.
Some of the cogeneration projects built to produce steam generate excess electricity beyond the project’s internal requirements—and the surplus could go into the Alberta grid system. Oil sands operators, the grid system operator (AESO), merchant transmissions companies, electricity utilities, and large end-users alike need to understand the implications of all this cogeneration capability.
How much of a surplus generating capacity is planned?
When is it likely to be available?
What are the implications for transmission and the grid system operator?
What are the economics? How are they impacted by varying natural prices?
The CERI research team believes that cogeneration of steam and electricity for oil sands developments “is more of a business planning decision than a purely economic decision” and “depends highly on natural gas prices”.
Oil sands cogeneration capacity impacts all the players along the supply chain. Those organizations that understand the issues that CERI has examined and analyzed can position themselves to identify the business opportunities presented.
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