Unconventional and Frontier Oil and Gas Sources

Unconventional resources refer to oil and gas that is produced or obtained through non-traditional extraction technologies. Unconventional oil resources include heavy oil, oil sands, oil shale and tight sands.

The International Energy Agency (IEA) defines unconventional oil as ‘oils obtained by unconventional production techniques’. ‘Unconventional oils are extracted from reservoirs containing extra heavy oils or oil sands which need heating or treatment (for example, emulsification) in situ before they can be brought to the surface for refining/processing. They also include the oils extracted from oil sands, extra heavy oils, coal oil shale are at, or can and which be brought to, the surface without treatment and require processing after mining (ex situ processing). Unconventional oils may also be produced from natural gas. They may be divided into two groups: Oils for transformation (examples include synthetic crudes extracted from extra heavy oils, oil sands, coal and oil shale) and oils for direct use (examples include emulsified oils (e.g. Orimulsion) and GTL (gas-to-liquid) liquids.’

Frontier resources refer to conventional reserves in challenging locations such as extremely deep, cold and/or very inaccessible regions or are deposits in challenging chemical conditions e.g. natural gas which contains acid or sour gas.

The advantage of unconventional reserves or resources for consumers is that they may be located in more politically stable regions than conventional reserves or resources, in the case of Canada, or they may be closer to the consumer reducing transportation costs and ensuring more secure supplies, for example oil reserves in Canada and Venezuela are located closer to the US than the Middle East and North Africa. Moreover, if domestic unconventional resources and reserves can meet domestic demand, security of supply is more or less guaranteed as there is less competition with other countries for the fuel. Furthermore, countries can shift from being net importers to net exporters of energy.

However, unconventional resources are more expensive to exploit and their extraction may be inefficient. They are more likely to have unexpected, additional costs through delays. For example, Arctic projects have the challenge of getting supplies, equipment and workers to sites, which could be delayed by weather conditions. Moreover, in this extremely cold environment ice management plans are needed, heated floors etc. Furthermore, environmental opposition to projects is significant in some of the countries with unconventional resources as illustrated by the current high level of opposition to the Keystone pipeline project connecting Canadian oil sands projects to demand centres in the US.

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