Leading by numbers and example

Outside markets needed, consultant says; next-generation technology could benefit other development; but challenges in short term

Gary Park

For Petroleum News

Canada must first secure markets outside North America if it is to have any chance of becoming a global leader in responsible and sustainable hydrocarbon development, says an oil sands report by consulting firm Deloitte.

It said that probably no other jurisdiction with so much resource potential has “anywhere near Canada’s combination of political stability, advanced education, technical prowess and transparency in business dealings.”

“Canada is poised to do for global hydrocarbon-based energy development what Germany has done for the renewable energy R&D and manufacturing sectors — lead not only by the numbers, but, most especially, by the example of vision and political will,” said the report entitled Gaining Ground in the Sands 2012.

However, Chris Lee, Deloitte Canada’s leader of national energy and resources practice, said attaining the strategy will require the industry and government to involve all interest groups in the creation of a single vision.

He said that process started in July at a conference of federal, provincial and territorial energy ministers, adding he is hopeful the election of a majority federal government and the rising importance of the oil sands in the Canadian economy could move those discussions to the next level of a national energy strategy.

The Deloitte report said the Canadian government of Prime Minister Stephen Harper provides an opportunity to encourage pipeline construction in particular that could lead to expanded markets.

Technology development

The sector should be “looking to parlay its technology development into a number of enduring values, starting with the technology itself as a home-grown intellectual property of potential application and value elsewhere in the world and also as instrumental in helping to mitigate and/or eliminate ongoing concerns about health and environmental impacts.

“The prize isn’t simply technology itself but in ensuring that we don’t lose the opportunity to develop important secondary industries and market potential,” Deloitte said.

The report forecast that next-generation oil sands technology could yield more bitumen with less effort, energy and impact and some of those advances could be used in other resource plays.

Among those technologies, it listed SC-SAGD (solvent-cyclic steam assisted gravity drainage) which could unlock the massive bitumen trapped in carbonate rocks and EM (electromagnetic) production of bitumen through the stimulation of reservoirs too shallow for SAGD, but too deep for mining.

Another gain is possible through in-situ upgrading of bitumen into synthetic crude which involves a combustion process that leaves unwanted byproducts underground, while capturing carbon which could potentially reduce water use and fuel gas consumption for steam generation by as much as 80 percent, while increasing recovery factors by up to 50 percent, the report said.

Short-term challenges

In addition to industry moves to outsource or partner with third parties for housing, transportation and steam generation, there are opportunities to collaborate in safety training and environmental measures where all companies are faced with meeting the same standards, but vary their approach and procedures.

The report said the oil sands sector could adopt manufacturing approaches to reduce cycle times (to initial oil or gas production) by 30-50 percent, overall operational costs by 15-20 percent and eliminate non-productive activity (such as recruiting, training, housing and moving people) by more than 50 percent.

Lee said the pressures could build rapidly if the development of oil sands carbonates is proven economic or more upgraders are built, requiring more skilled works.