Market Overview

By 2030, Upstream Greenhouse Gas Emissions Intensity of the Canadian Oil Sands to be 30 Percent Lower than 2009 Levels, New IHS Markit Report Says

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Declines in emissions intensity—already down by a fifth over the last
10 years—are expected to continue

The emissions intensity of upstream Canadian oil sands production will
continue to decline in coming years, falling to 30 percent below 2009
levels by 2030, a new report by business information provider IHS
Markit
(NASDAQ:INFO) says.

The report, entitled "Greenhouse Gas Intensity of Oil Sands
Production: Today and In the Future,"
examines the past and future
greenhouse gas (GHG) intensity of upstream oil sands production
emissions in great detail. It includes an historical assessment of
emissions intensity by year from 2009-2017 as well as an outlook for
future emissions trends from 2018-2030.

The study found that over the last near-decade (2009-2017), upstream oil
sands GHG emissions intensity (GHG per barrel produced) fell 21 percent
and could fall by an additional 16 to 23 percent over the coming decade.

"The Canadian oil sands have a demonstrated track record of lowering
emissions intensity," said Kevin
Birn
, executive director, IHS Markit, who heads the Oil Sands
Dialogue. "This study shows that trend will continue into the future
with additional reductions expected across the major forms of oil sands
production."

From 2009-2017, oil sands mining operations were the primary source of
upstream emissions reductions. The average intensity of oil sands mining
operations fell 26 percent on a marketed product basis during this time,
a result of historical improvements and the introduction of newer,
less-GHG intensive mining operations, the report said. Improvements are
expected to continue, with an additional 15 to 20 percent reduction
between 2017-2030.

Elsewhere, Steam-assisted Gravity Drainage (SAGD)—the production method
expected to account for three-quarters of oil sands growth to 2030—will
also be a key driver of the future GHG intensity declines, the report
says.

SAGD emissions are expected to fall 17 to 27 percent during the
2017-2030 period. Lower steam intensity arising from steam displacement
technologies, as well as better use of natural gas from improvements in
well productivity and steam generation, are key contributors to the IHS
Markit outlook.

"SAGD is still a relatively new process and has yet to undergo any of
the transformational changes that occurred in mining," Birn said. "The
majority of emissions intensity reductions to date have come from
incremental improvements and learning by doing. However, the analysis
here shows that even a modest set of advancing individual improvements
working together could result in more dramatic reductions."

Overall, there is potential for the GHG reductions to exceed the
report's expectations, Birn said.

"This report could very well be a conservative estimate," he said. "We
intentionally excluded any transformational technologies under
development in the oil sands and only factored for the deployment of
commercial or near-commercial technologies or efficiencies, only
existing trends."

While the new IHS Markit report focuses exclusively on upstream
operations and did not assess the full life-cycle emissions (the entire
life of the fuel from upstream production through the combustion), the
report does extrapolate preliminary life cycle estimates by drawing on
previous IHS Markit research of life-cycle GHG intensity. Emissions
intensity of SAGD was lower than previous assessments with the most
efficient operations already operating near the U.S. average. Mined SCO
emissions were nearly identical to prior assessments, while mined
dilbit—which did not start until 2013—is expected to move to be on par
with the U.S. average over time.

The report also notes the high degree of project-by-project variability
in oil sands GHG intensity and cautioned against overgeneralization of
industry averages. The report found oil sands GHG intensity in 2017
ranged from 39 kilograms (kg) of carbon dioxide equivalent (CO2e) per
bbl to 127 kgCO2e/bbl). When placed on a full life-cycle basis that
equates to 1 percent below to 16 percent above the average crude oil
refined in the United States.

"Oil sands facilities are diverse and so are their emissions. A focus
solely upon the average may lead to over generalizations and may not
represent the reality of any one individual operation," Birn said.
"There are some operations today that appear to be at or near the U.S.
average already."

Related Materials:

Greenhouse Gas Intensity of Oil Sands Production: Today and In the
Future
and all other Oil Sands Dialogue research by IHS Markit is
available at www.ihsmarkit.com/oilsandsdialogue.

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About IHS Markit (www.ihsmarkit.com)

IHS Markit (NASDAQ:INFO) is a world leader in critical information,
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government, improving their operational efficiency and providing deep
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of the Fortune Global 500 and the world's leading financial institutions.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its
affiliates. All other company and product names may be trademarks of
their respective owners © 2018 IHS Markit Ltd. All rights reserved.

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