Peace River enters big leagues

Shell Canada is rapidly occupying the leading edge of Alberta oil sands growth.

Already the only major producer with holdings in the three largest regions — Athabasca, Cold Lake and Peace River — it has filed a regulatory application to turn Peace River from a largely experimental play into a serious player.

The Carmon Creek project would boost Shell Canada’s output from 12,000 barrels per day to 50,000 bpd by 2010 or 2011 and double those volumes over an indefinite period.

It is part of the company’s longer-term goal of developing in-situ production in northwestern Alberta to 150,000 bpd, said Brian Straub, the company’s senior vice president of oil sands.

He said a combination of cold and thermal recovery techniques “will ensure optimal development of this huge resource base” which is a major component of Shell Canada’s estimated 31 billion barrels of bitumen-in-place in the three oil sands regions.

The sandstone reservoir for the project has about 7 billion barrels in-place, although the company has yet to put a recoverable number on the deposit.

In addition, the unit of Royal Dutch/Shell has several billion barrels from its C$2.4 billion takeover earlier this year of BlackRock Ventures, which increased Shell Canada’s Peace River output to 25,000 bpd in November and would have seen it reach 30,000 bpd had it not been for apportionment on the rainbow pipeline, which ships bitumen to market.

The Peace River in-situ project started operations in 1979 and has now extracted close to 60 million barrels, but it has taken until more recent times for interest to build in the 7.5 degree API gravity bitumen, which has been the subject of experiments covering a variety of techniques and well designs to improve the economics.

—Gary Park