Monday, July 18, 2016

Canada

Canada is in a wierd place for oil production. Like the US, light oil peaked in the seventies, but we still produce enough to meet domestic needs. Where Canada is special is the oil sands. An almost unfathomable amount of bitumen. A reserve that will last for over 200 years at extraction rates of four million barrels per day. It has only been developed recently because of the extreme difficulty in mining it. Bitumen differs in crude in that it has a lower hydrogen content and more carbon. Crude at room temperature is a fluid, that makes it nice and easy to pump. Bitumen is a solid. It will only flow if heated or disolved. And because of this, it has a hight cost per barrel to extract. It only became economical to develop those fields once the price of oil reached a suitable level. But now that the industry has been set up, it has vaulted Canada into being a global partner and a hugely important partner to the US.
But while Canada has a damn near infinite amount of oil within driving distance of the US, we have a whole lot more. In northern Alberta and the Northwest Territories there is a vast shale field that potentially rivals the American Bakken formation. It has not been touched for one tiny reason. It is in the middle of absolute nowhere. It is very hard to set up a major oil drilling operation when the only roads exist in winter when trucks can drive on frozen lakes and rivers. Eventually though when other global reserves deplete, those fields will become economical. And by that point most of the Arctic should be melted, and we will have access to any fields in the Arctic Circle as well.

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