Canadian Energy Centre
Over $420 billion in government revenues from the Canadian oil sands sector expected through 2050
From the Canadian Energy Centre
Annual government revenues from Canada’s oil sands sector expected to rise to US$19.4 billion in 2050
With ongoing public discussions focusing on net zero emissions from Canada’s oil sands sector, it is a good time to examine projected government revenues and capital expenditures (capex) expected from the sector through 2050. This analysis illustrates how investment in low-emitting technologies, such as carbon capture and storage (CCUS), will help preserve government revenues and capex in Canada’s oil sands sector.
This Fact Sheet makes these calculations based on a conservative projection that the Brent price for oil will average US$60 per barrel between 2023 and 2050. The capex and government revenue numbers are expressed in nominal US dollars, assuming a 2.5 per cent inflation rate and a 10 per cent discount rate.
The written content in this report was prepared by the Canadian Energy Centre (CEC). It relies on data obtained from the Rystad Energy UCube, but it does not represent the views of Rystad Energy.
Background on Rystad Energy UCube
Rystad Energy is an independent energy research company providing data, analytics and consultancy services to clients around the globe.
UCube is Rystad Energy’s global upstream database, including production and economics (costs, revenues, and valuations) for more than 80,000 assets, covering the portfolios of more than 3,500 companies.
The UCube data set is used to study all parts of the global exploration and production (E&P) activity value chain, including operational costs, investment (capex and opex), fiscal terms, and net cash flows for projects and companies, both globally and by country (Rystad Energy, 2023).
In this Fact Sheet, we use a constant price in real terms for our analysis of government revenues and capex from the oil sands sector, with Brent crude oil prices set to a constant US$60 per barrel between 2023 and 2050.
Canadian oil sands sector government revenues to reach over U.S. $420 billion through 2050
Under a US$60 per barrel price trajectory, Canadian government revenues (which includes provincial royalties and federal and provincial corporate taxes) from the country’s oil sands sector are expected to rise from an annual US$12.1 billion in 2023 to US$19.4 billion in 2050 (see Figure 1).
On a cumulative basis, between 2023 and 2050 Canadian government revenues from the oil sands sector are projected to be over US$420.7 billion.
Source: Derived from the Rystad Energy UCube, based on $60 USD per barrel price scenario
Capital expenditures (capex) in Canada’s oil sands sector to reach nearly U.S. $328 billion through 2050
Under the US$60 per barrel price projection, capital expenditures (capex) in Canada’s oil sands sector are expected to rise from US$10.6 billion in 2023 to US$12.6 billion in 2050 (see Figure 2).
Cumulatively between 2023 and 2050, Canadian oil sands sector capex is projected at nearly US$327.8 billion.
Source: Derived from the Rystad Energy UCube, based on $60 USD per barrel price scenario
Notes
This CEC Fact Sheet was compiled by Lennie Kaplan at the Canadian Energy Centre (www.canadianenergycentre.ca). The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of two anonymous reviewers in reviewing the data and research for this Fact Sheet. The written content in this report was prepared by the Canadian Energy Centre (CEC) and does not represent the views of Rystad Energy.
References (All links live as of September 19, 2023)
Rystad Energy. (2023). Upstream Solution. <https://bit.ly/3veaMIV>.
Alberta
Canada’s advantage as the world’s demand for plastic continues to grow
From the Canadian Energy Centre
By Will Gibson
‘The demand for plastics reflects how essential they are in our lives’
From the clothes on your back to the containers for household products to the pipes and insulation in your home, plastics are interwoven into the fabric of day-to-day life for most Canadians.
And that reliance is projected to grow both in Canada and around the world in the next three decades
The Global Plastics Outlook, published by the Paris-based Organization for Economic Co-operation and Development (OECD), forecasts the use of plastics globally will nearly triple by 2060, driven by economic and population growth.
The use of plastics is projected to double in OECD countries like Canada, the United States and European nations, but the largest increases will take place in Asia and Africa.
“The demand for plastics reflects how essential they are in our lives, whether it is packaging, textiles, building materials or medical equipment,” says Christa Seaman, vice-president, plastics with the Chemical Industry Association of Canada (CIAC), which represents Canada’s plastics producers.
She says as countries look to meet climate and sustainability goals, demand for plastic will grow.
“Plastics in the market today demonstrate their value to our society. Plastics are used to make critical components for solar panels and wind turbines. But they also can play a role in reducing weight in transportation or in ensuring goods that are transported have less weight in their packaging or in their products.”
Canada produces about $35 billion worth of plastic resin and plastic products per year, or over five per cent of Canadian manufacturing sales, according to a 2019 report published by the federal government.
Seaman says Canadian plastic producers have competitive advantages that position them to grow as demand rises at home and abroad. In Alberta, a key opportunity is the abundant supply of natural gas used to make plastic resin.
“As industry and consumer expectations shift for production to reduce emissions, Canada, and particularly Alberta, are extremely well placed to meet increased demand thanks to its supply of low-carbon feedstock. Going forward, production with less emissions is going to be important for companies,” Seaman says.
“You can see that with Dow Chemical’s decision to spend $8.8 billion on a net zero facility in Alberta.”
While modern life would not be possible without plastics, the CIAC says there needs to be better post-use management of plastic products including advanced recycling, or a so-called “circular economy” where plastics are seen as a resource or feedstock for new products, not a waste.
Some companies have already started making significant investments to generate recyclable plastics.
For example, Inter Pipeline Ltd.’s $4.3 billion Heartland Petrochemical Complex near Edmonton started operating in 2023. It produces a recyclable plastic called polypropylene from propane, with 65 per cent lower emissions than the global average thanks to the facility’s integrated design.
Achieving a circular economy – where 90 per cent of post-consumer plastic waste is diverted or recycled – would benefit Canada’s economy, according to the CIAC.
A Deloitte study, commissioned by Environment & Climate Change Canada, estimated diverting or reusing 90 per cent of post-consumer plastic waste by 2030 will save $500 million annually while creating 42,000 direct and indirect jobs. It would also cut Canada’s annual CO2 emissions by 1.8 megatonnes.
Right now, about 85 per cent of plastics end up in Canada’s landfills. To reach the 90 per cent diversion rate, Seaman says Canada must improve its infrastructure to collect and process the plastic waste currently being landfilled.
But she also says the industry rather than municipalities need to take responsibility for recycling plastic waste.
“This concept is referred to as extended producer responsibility. Municipalities have the responsibility for managing recycling within a waste management system. Given the competing costs and priorities, they don’t have the incentive to invest into recycling infrastructure when landfill space was the most cost-effective solution for them,” she says.
“Putting that responsibility on the producers who put the products on the market makes the most sense…The industry is adapting, and we hope government policy will recognize this opportunity for Canada to meet our climate goals while growing our economy.”
Business
Decarbonization deal opens new chapter in Alberta-Japan relationship
From the Canadian Energy Centre
By Will Gibson
Agreement represents a homecoming for JAPEX, which first started work in the Alberta oil sands in 1978
A new agreement that will see Japan Petroleum Exploration Company (JAPEX) invest in decarbonization opportunities in Alberta made history while also being rooted in the past, in the eyes of Gary Mar.
JAPEX is seeking to develop projects in carbon capture and storage (CCS), hydrogen and bioenergy. It’s part of the company’s JAPEX2050 strategy toward carbon neutrality.
“This new endeavour is a great opportunity that demonstrates the world is changing but the relationships endure,” says Mar, the province’s former trade envoy to Asia and the current CEO of the Canada West Foundation.
“Alberta’s very first international office was opened in Tokyo in 1981. And we have built a tremendous soft infrastructure that includes partnerships between a dozen Alberta and Japanese universities.”
For JAPEX, the agreement represents something of a homecoming for the company that first started work in the Alberta oil sands in 1978 and operated one of the first in situ (or drilled) oil projects for nearly two decades before selling its stake in 2018.
“We are now aiming to come back to Alberta and contribute to its decarbonization,” JAPEX president of overseas business Tomomi Yamada said in a statement.
Mar says the memorandum of understanding signed this March between JAPEX and the crown corporation Invest Alberta stems from a strong relationship built over decades.
“You can’t be considered a reliable partner for a new venture if you haven’t been a reliable partner for decades in the past,” says Mar.
“Economies change and world’s needs change but strong relationships are important factor in whom you do business with.”
Alberta’s established CCS infrastructure has already attracted new investment, including Air Products’ $1.6-billion net zero hydrogen complex and Dow Chemicals’ $8.8-billion net zero petrochemical complex.
Mar sees JAPEX’s deal with Invest Alberta opening a whole new market of potential carbon neutral investors in the Pacific Rim.
“When other countries who are partners in the Trans-Pacific Partnership (TPP) see JAPEX invest in this decarbonization opportunities and net zero projects in Alberta, it will send a very clear signal to others in the TPP about the potential,” Mar says.
“This deal may come from the decades-long relationship between Alberta and Japan but can also serve as a signpost for decades to come.”
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