Publication / 28 Jul 2008

Oil Sands: Exposure to Energy and Carbon Costs

Trucost has assessed how carbon intensity could affect profit opportunities from oil sand projects.

Oil sand projects vary widely in their energy efficiency and in turn, their carbon intensity. Trucost’s analysis of eight projects reveals a range in carbon emissions per unit of production.

Findings reflect the strong correlation between the energy and carbon intensity of different projects. Using carbon efficiency as a proxy for energy efficiency, Trucost can help investors understand which projects are most exposed to related operating costs. Canadian regulations set targets to reduce the carbon intensity of production at oil sands facilities. Despite carbon costs, oil sands developments will remain profitable and rapid expansion is likely to continue. Carbon is a proxy for energy use in projects, and operating costs from fuel consumption are spiraling. Oil and gas companies with carbon-intensive oil sands projects could face higher energy and carbon costs than sector peers.

Trucost identified projects with high and rising carbon intensity, which are more exposed to energy and carbon costs. The carbon intensity of the extraction projects analysed ranges from 9 kg of CO2e/barrel of oil to 106 kg CO2e/bbl. Syncrude’s oil sands project in Alberta is becoming increasingly carbon intensive, while its energy efficiency has deteriorated. Two Royal Dutch Shell oil sands projects analysed have relatively low or declining exposure to energy and carbon costs.

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