It’s a veritable alphabet soup that may contain the ingredients of economic health in the Alberta oil sands.
What, for instance, do you make of SAGD, MSAR, VAPEX, SAP and THAI?
Try steam-assisted gravity drainage, multi-phase superfine atomized residue, vapor extraction, solvent aided process and toe-to-heel air injection.
They’re just part of the latest batch of advances that have turned what some might have viewed as pure science fiction into a profitable business.
Whether it is drilling, pumping, engineering, shipping or refining, Canadian innovators have figured out ways to turn sludge into liquid gold.
Through skill and risk-taking, they have developed methods to extract bitumen that is buried too deep in the Alberta muskeg to be removed by open-pit mining. Now technology lets operators pump steam into the ground, forcing the molasses-like bitumen to the surface where it can be refined into a wide range of petroleum products from gasoline to diesel fuel.
It all started in 1893
Getting to this point has been a long, often agonizing struggle since the Parliament of Canada passed legislation in 1893 approving funds for the Geological Survey of Canada to probe the oil sands as a source of energy.
There was even a time when the Alberta government was ready to approve the use of atomic bombs almost on the scale of those that destroyed Hiroshima and Nagasaki to trigger an underground nuclear inferno to turn bitumen into a liquid that would eventually be brought to the surface.
Canadian atomic energy and defense authorities had given preliminary approval to the idea, but some suspect the government deliberately avoided controversy by never completing a necessary technical report.
It wasn’t until 1967 that the first modern oil sands project, now owned by Suncor Energy, started commercial production near the tiny river town of Fort McMurray.
Science drops costs by $25 per barrel
Since then, the technological improvements have seen the cost of separating the bitumen from a mixture of sand, water and clay fall from more than C$25 per barrel to less than half that – savings that afford companies a “safety net” for a time when oil prices fall.
“It’s technology that got us where we are today and it’s going to be technology that gets us where we need to go,” says Eric Newell, who retired after 14 years as chief executive officer of Syncrude Canada, the consortium that will soon pump 350,000 barrels per day from the oil sands.
Scorning those who question the economics of the oil sands, he says there’s a wave of new technology being developed that makes him very bullish about the resource.
Advances needed
The need for advances is critical.
Natural gas is a vital element in the extraction and processing of raw bitumen. In simple terms, you need energy to produce energy.
To achieve the ambitious target of five million barrels per day of oil sands output would consume an “unthinkable” 60 percent of all the natural gas from Western Canada and the Arctic, the Alberta Chamber of Resources warns.
But the chamber acknowledges that many areas of fundamental science have brought the oil sands to their current advanced stage and new science has the potential to provide long-term answers.
The need for breakthroughs is emphasized by John Richels, president of Devon Energy, who says that “if we are going to exploit and properly develop the oil sands, we have to find a way that involves something more than truck and shovel or conventional mining techniques.”
What are the possibilities?
So what answers might lie in the alphabet soup?
SAGD – Developed in 1978 by Roger Butler at Imperial Oil, it involves drilling twin wells to bitumen deposits that are buried too deep to scoop out with mechanical shovels.
One well injects steam that breaks down the bitumen and forces it to the surface through the second well. EnCana and Petro-Canada have advanced to using SAGD for full-scale production.
Because SAGD projects can be developed in phases, construction costs are easier to manage than the massive mining ventures.
But there are drawbacks. SAGD requires natural gas to produce steam and needs water – two commodities that are expensive and limited.
MSAR – A possible fuel alternative to natural gas that is made from a mixture of bitumen, water and detergent and has combustion characteristics matching that of gas.
It was first developed by BP and PDVSA, Venezuela’s state-owned oil company, in the 1980s for the heavy oil fields of Venezuela.
MSAR is now being tested in a pilot project involving Petro-Canada, ConocoPhillips, Deer Creek Energy and Paramount Resources.
Quadrise Canada Fuel Systems, a private Calgary-based firm, has assembled a 14-member team to promote the use of MSAR in oil sands in-situ projects over the next few years, projecting the fuel will lower the costs of bitumen production by US$2.50 per barrel compared with natural gas, although it will require the reinjection of carbon dioxide emissions.
VAPEX – It’s a technology that is being tested, using a vaporized solvent such as propane, to reduce the stickiness of bitumen. VAPEX proponents believe their technology will use less steam and water than SAGD, thus lowering costs. VAPEX is thought to be a couple of years away from commercial application.
SAP – A pilot project in Saskatchewan that added a small amount of solvent to steam indicated the flow rate of oil was increased by more than 50 percent. More tests are underway in Alberta.
THAI – Yet another revolutionary technology, this involves pumping air to ignite the bitumen, allowing the oil to flow almost immediately through a second well – thus from the “toe” of the well to the “heel” using air injection, or THAI.
Proponents estimate the method can recover 80 percent of the original oil in place and partially upgrade the crude at the same time.
