IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The Valuation of the Alberta Oil Sands

Listed author(s):
  • Andrew Sharpe


  • Jean-François Arsenault


  • Alexander Murray
  • Sharon Qiao

The Alberta oil sands reserves represent a very valuable energy resource for Canadians. In 2007, Statistics Canada valued the oil sands at $342.1 billion, or 5 per cent Canada's total tangible wealth of $6.9 trillion. Given the oil sands' importance, it is essential to value them appropriately. In this report, we critically review the methods used by Statistics Canada in their valuation of the Alberta oil sands. We find that the official Statistics Canada estimates of the reserves (22.0 billion barrels) of Alberta's oil sands are very small compared to those obtained using more appropriate definitions, which results in an underestimation of the true value of the oil sands. Moreover, the failure to take into account the projected growth of the industry significantly magnifies this underestimation. We provide new estimates of the present value of oil sands reserves based on a set of alternative assumptions that are, we argue, more appropriate than those used by Statistics Canada. We find that the use of more reasonable measures of the total oil sands reserves (172.7 billion barrels), extraction rate (a linear increase from 482 million barrels per year in 2007 to 1,350 million barrels in 2015, and constant thereafter) and price ($70 per barrel, 2007 CAD) increases the estimated present value of the oil sands to $1,482.7 billion (2007 CAD), 4.3 times larger than the official estimate of $342.1 billion. Using our preferred estimate, Canada’s total tangible wealth increases by $1.1 trillion (17 per cent), and reaches $8.0 trillion with oil sands now accounting for 18 per cent of Canada’s tangible wealth. The importance of these revisions is also demonstrated by their impact on the per-capita wealth of Canadians, which increases from $209,359 to $243,950, or by $34,591 (or 17 per cent). Given the importance of the oil sands for Canada, Statistics Canada should undertake a review of its methodology. In light of the growing body of climatologic literature supporting an association between anthropogenic GHG emissions and global climate change, no analysis of the „true value? of the oil sands would be complete without an accounting of the social costs of the GHG emissions that arise from oil sands development. According to our baseline estimates, the oil sands impose a total social cost related to GHG emissions of $69.4 billion. In making this estimate, we assume that each barrel of oil sands output imposes a social cost of $2.25 (based on a cost of $30/tCO2-e and an intensity of 0.075 tCO2-e/bbl). Our preferred estimate of the net present value of oil sands wealth net of GHG cost is thus $1,413.3 billion, 4.1 times greater than the Statistics Canada estimate which does not account for any environmental costs. This report does not account for non-GHG related environmental and social costs. A comprehensive valuation of all environmental costs are needed to assess whether future benefits derived from oil sands development are outweighed by even larger environmental costs.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2008-07.

in new window

Date of creation: Nov 2008
Handle: RePEc:sls:resrep:0807
Contact details of provider: Postal:
151 Slater Street, Suite 710, Ottawa, ON K1P 5H3

Phone: 613-233-8891
Fax: 613-233-8250
Web page:

More information through EDIRC

Order Information: Web: Email:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:sls:resrep:0807. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CSLS)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.