The Future Of Liquid Fuels In Alberta
Authors: Quon D. , Wong S. , Singh S. , McDonald R.D. 
Published: March 2010

In the next 30 – 40 years, Alberta will be one of the few places where liquid hydrocarbon fuels can be economically produced from: conventional sources; oil sands, both mined and in-situ; coal, via liquefaction technologies. In order to make meaningful comparisons between alternative sources and alternative technologies, two large-scale mathematical models, AERAM and AREF, were used for the analysis.

In the reference case scenario, the following assumptions were made: a drop in real world oil prices from 1983 to 1985, a small increase until the end of the decade and a real rise of slightly under 2% annually to the end of the century and thereafter; continuing low natural gas prices for industrial users in Alberta, at a substantial discount to the projected Alberta Border Prices; some technological progress in oil sands and coal liquefaction technologies. The results suggest that no new conventional refineries will be built but that considerabler etrofitting will be necessary, in order to increase the diesel fuel yield relative to the gasoline yield. With respect to synthetic fuels, in-situ oil sands projects using high-quality deposits are expected to dominate the new projects in the 1980s and 1990s but as these high quality sites become fully committed during the 90s, mined oil sands will re-emerge. Given the projected fuel prices, coal liquids are projected to be competitive in the export market by the year 2010. From then on, Alberta should have several economically viable synthetic fuel options.

Introduction

The province of Alberta is in an enviable position of having not only significant reserves of conventional crude oil, but also immense reserves of oil sands and coal, potential sources of future liquid fuels.

The Department of Energy and Natural Resources (ENR), Province of Alberta, wanted to have an analytical framework to assess the relative economic significance of different fossil fuel resources, in particular, the relative importance of liquid fuels derived from oil sands and coal. Toward that end, ENR contracted with the Technical and Economic Evaluations group of the Alberta Research Council to develop a formal mathematical model of the liquid fuels sector in Alberta. The rationale was that no "stand-alone" process economics analysis of a particular coal liquefaction technology would be adequate without taking into account alternative competitive liquid fuel technologies, over-all energy prices, market trends and discount rates. A brief description of AREF is given in Appendix A.

Although the Alberta Research Council has in existence a comprehensive energy supply model called ABRAM(1), it was decided to develop a new model, focussing specifically on liquid fuels and capable of describing the coal liquefaction technologies in detail. This model, called AREF, is now operational and is described fully elsewhere(2).

As will be shown later, there are strong linkages between liquid fuels and other energy forms, particularly natural gas, and we have had to use results from the more comprehensive model AERAM as input data to AREF.

This paper presents the results from some analyses using both AREF and ABRAM.