​These charts show when in situ oilsands costs could drop and by how much

The Nsolv pilot at Suncor's Dover site north of Fort McMurray. CIBC says Nsolv could be commercialized in five to six years. Image: Nsolv

New technologies can make greenfield SAGD projects in a US$50/bbl WTI world, enabling the oilsands industry to compete more effectively on the global stage, says a report from CIBC Institutional Equity Research.

This could be enabled by a combination of incremental new technologies, game changers, and systems that fit somewhere in between.

“The goal for oilsands producers today is to lower supply costs and improve environmental stewardship while supporting oilsands development,” CIBC analysts write.

“These goals will be achieved by a spectrum of applications, ranging from simply better ways of doing things with less steel and fewer energy inputs to radically new recovery schemes.”

These charts outline the timelines and expectations along that spectrum.

Supply costs - 15 percent internal rate of return


Source: Company reports and CIBC World Markets Inc.

Capital efficiency

Source: Company reports and CIBC World Markets Inc.

Sustaining capex


Source: Company reports and CIBC World Markets Inc.

First up is what CIBC refers to as “streamlined projects,” which include smaller central processing facilities and sustaining well pads with less metal, fewer valves, less instrumentation and greater automation.

Analysts write that streamlined projects could lower supply costs to US$58/bbl from US$65-$70 today.

“On a scale of 1 to 10, with 10 being commercial, CIBC believes a streamlined project would be a 9 or 10 or implementable immediately.”

Next in line are projects that use hybrid steam/solvent processes, which are expected to lower supply costs to US$57/bbl, before accounting for the benefit of streamlining technologies. CIBC pegs hybrid solvent/steam projects at a 7-8 out of 10 on the commerciality scale, achievable within two to three years primarily due to the time it would take to construct a project.

Solvent-only projects, like the Nsolv system that is currently being piloted at Suncor’s Dover site, are next on CIBC’s spectrum.

“This technology has the potential to lower supply costs to below US$50/bbl,” analysts write, placing Nsolv at 5-6 out of ten on the scale with commercialization in five to six years.

On the further end of the spectrum are hybrid electromagnetic heat/solvent processes, like the electromagnetically assisted solvent extraction (EASE) system that is also being tested at Dover.

While CIBC expects the supply cost for an EASE project to be closer to US$65/bbl, analysts expect the technology would significantly decrease sustaining capex and greenhouse gas emissions.

On the achieving commerciality scale, CIBC puts EASE at 5 out of 10, with commercial application in five to seven years.

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