History of The Petroleum Industry in Canada (oil Sands and Heavy Oil)

History Of The Petroleum Industry In Canada (oil Sands And Heavy Oil)

Canada's oil sands and heavy oil resources are among the world's great petroleum deposits. They include the vast oil sands of northern Alberta, and the heavy oil reservoirs that surround the small city of Lloydminster, which sits on the border between Alberta and Saskatchewan. The extent of these resources is well known, but better technologies to produce oil from them are still being developed.

Because of the cost of developing these resources (they tend to be capital intensive), they tend to come on stream later in the cycle of petroleum resource development in a given producing region. This is because oil companies tend to extract the light, high-value oils first. The more difficult-to-extract resources are developed later, generally during periods of high commodity prices, such as the extended period of higher prices which began in the early 1970s.

As has often been the case, the oil sands were different. The resources were so huge that experimentation began at about the same time as drilling for conventional petroleum in western Canada. Although the promise of the oil sands deposits has been clear for more than a century, oil production from the Suncor and Syncrude oil sands plants did not become profitable until well after the 1979 oil crisis. Despite comparatively high oil prices in world markets, for political reasons government kept prices for oil from these technological pioneers at artificially low levels until well into the 1980s.

In recent years, oil sands and heavy oil development have been so successful that these resources now account for more than half of Canada's crude oil production.