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In search of tech solutions Oil sands players roll out proposals to reduce GHG emissions; consume less water, natural gas; shrink environmental footprints Gary Park For Petroleum News
Extending technology horizons in the Alberta oil sands continues among big players and small, with a heavy emphasis on reducing greenhouse gas emissions, GHGs.
From late September to early October, a host of developments took place, dominated by word from Canadian Oil Sands Ltd., the 36.74 percent partner in the Syncrude Canada, that the consortium led by Imperial Oil will pursue an extension of its Mildred Lake mine in Alberta.
The plan, including the replacement of two mine trains and integration with existing environmental infrastructure, is designed to extend the Mildred mining operations by about 10 years, with construction expected to start within the next decade.
Marcel Coutu, president and chief executive of Canadian Oil Sands, said the project “reflects our expectation that it will provide very attractive economic returns by extending the useful life of the mine trains into the 2030s … and to minimize new land disturbance.”
A formal regulatory application is expected to be filed in 2014.
Syncrude Canada is currently producing about 250,000 barrels per day of bitumen.
New sands technology In a separate announcement, Syncrude operator Imperial Oil will spend C$100 million to test a new oil sands technology it expects will dramatically lower GHGs.
Instead of heating water into a 300-degree steam and injecting it below ground to melt bitumen deposits, Imperial will experiment with the use of solvents to thin the bitumen and help it flow.
The use of solvents such as propane or butane does not require heating, which means burning large quantities of natural gas, contributing to GHG levels.
Imperial is now drilling three wells to test the “non-thermal” operation, which Chief Executive Officer Bruce March said “works great in the laboratory.”
Imperial is also examining the use of solvents in mining, with a process that is designed to reduce water use by 90 percent, eliminating the effluent lakes that mar the landscape in the oil sands region. March said the technology could be ready for use in a decade.
Baytex looking at pilot project In other developments:
• Heavy oil producer Baytex Energy is spending C$120 million to buy oil sands leases that include an approved thermal project from an unnamed seller industry sources believe is Koch Oil Sands Operating.
Baytex said it hopes to start a pilot project in 2013 on the undeveloped 30,000 acres and, if successful, start construction of a 5,000 barrels per day operation to deliver initial production in 2016.
James Bowzer, chief executive officer of Baytex, said the pilot is adjacent to the company’s existing Cold Lake operations and complements the company’s existing thermal operations at Seal in northwestern Alberta’s Peace River area and at Kerrobert in southwest Saskatchewan.
Baytex would not identify the seller, but it has earlier indicated that a thermal project with output of 10,000 bpd was approved earlier this year, coinciding with approval by the Alberta Energy Resources Conservation Board for a Koch development.
Baytex said the Cold Lake properties have associated proved plus probable reserves of 44 billion barrels and estimated lifetime finding and development costs of C$12.50 per barrel.
Value Creation files for SAGD project • Privately held Value Creation has filed an application with the Alberta regulator for a proposed C$3.39 billion steam-assisted gravity drainage project that will apply the company’s proprietary bitumen processing and upgrading technology.
The Advanced TriStar project is planned to use the technology to confine the footprint to about 1,000 acres on a 7,000-acre lease while maximizing bitumen recovery.
It is anticipated that groundwater from the basal water sands of the McMurray formation in northeastern Alberta will provide the source of water supply for the project.
The application is for a three-phase development, targeting production of almost 80,000 bpd of medium oil, with the initial phase delivering 15,000 bpd of bitumen emulsion which will be converted to 12,750 bpd of decontaminated oil for blending with diluents to produce almost 16,000 bpd of Value Creation Medium oil.
Subject to regulatory approval, construction is due to start in 2014 and operations scheduled for 2016.
Cenovus acquisition • Cenovus Energy received Alberta court approval to acquire the remaining assets of Oilsands Quest for C$10 million, or what Chief Operating Officer John Brannan described as a “reasonable price” for an asset that is a “good bolt-on acquisition that has the potential to add value to one of Cenovus’s next big emerging oil sands projects.”
The three leases cover about 146,000 acres in Alberta and Saskatchewan that adjoin the Telephone Lake property, which regulators are reviewing for an initial 90,000 bpd project.
The deal also gave Cenovus 84,000 acres of oil shale lease in east-central Saskatchewan, but does not include Oilsands Quest’s corporate assets or shares.
Cash needed for development • Connacher Oil and Gas, which lacks the cash to develop its oil sands assets, outlined two methods to raise more money for its Great Divide project, where it plans to improve operating costs and increase bitumen production.
The company said it aims to reduce the amount of diluents needed to transport bitumen to add as much as C$5 per barrel to its net realized price for diluted bitumen and enhance the “marketability” of its oil.
Connacher also said it expects to use rail to market more than 50 percent of its bitumen in 2013 by using a rail car fleet of about 400 cars, but has yet to put a price on the expected gain.
The company is also reviewing its business plan with the prospect of combing its Great Divide Pod 1 and Algar projects to raise bitumen production in three phases over 25 years to 44,000 bpd from the currently approved 20,000 bpd.
It is also upbeat about results from tests of steam mixed with solvents for injection into the reservoir, in hopes that the method could reduce its capital costs.
Industry sources believe the Great Divide property could be included in a deal between Athabasca Oil Corp. and state-owned Kuwait Petroleum.
Hangingstone approved • Athabasca Oil Corp. said it has received Alberta government approval to proceed with the initial phase of its Hangingstone project, which is scheduled to start operations at 12,000 bpd in the second half of 2014.
Project 1 will be followed by additional steam-assisted gravity drainage phases bringing eventual output to about 80,000 bpd as the company pursues combined thermal and light oil production to 220,000 barrels of oil equivalent per day by 2020.
The Hangingstone lease covers 136,000 acres, currently estimated to contain 100 million barrels of proved reserves and 900 million barrels of best-estimate contingent resources.
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