Alberta Oil Sands Industry Quarterly Update
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ALBERTA O I L S A N D S INDUSTRY Q U A R T E R L Y UPDATE WINTER 2010 Reporting on the period: Sept. 5, 2010 to Dec. 13, 2010 2 ALBERTA OIL SANDS INDUSTRY QUARTERLY UPDATE Alberta has the second-largest deposit as 80 per cent of Alberta’s bitumen All about of oil in the world — only Saudi Arabia deposits are too deep underground to can claim a larger stockpile of crude. economically employ this technology. But 170 billion of Alberta’s 179 billion Right now there are essentially two the oil sands barrels of oil have the special quality commercial methods of in situ (Latin for of being bitumen, a resource that has Background of an “in place,” essentially meaning wells are been developed for decades but is only used rather than trucks and shovels). important global now coming into the forefront of the In cyclic steam stimulation (CSS), global energy industry, as conventional resource high-pressure steam is injected into supplies — so-called “easy” oil — directional wells drilled from pads for a continue to be depleted. The figure of period of time, then the steam is left to 170 billion barrels represents what is soak in the reservoir for a period, melting considered economically recoverable the bitumen, and then the same wells with today’s technology, but with new are switched into production mode, technologies, this reserve estimate bringing the bitumen to the surface. could be increased to as much as 315 billion barrels. In steam assisted gravity drainage (SAGD), parallel horizontal well pairs There are three major bitumen (or are drilled from well pads at the surface. oil sands) deposits in Alberta. The One is drilled near the top of the target largest is the Athabasca deposit, reservoir, while the other is drilled near located in the province’s northeast in its bottom. Steam is injected into the the Regional Municipality of Wood top well, a steam chamber forms, and Buffalo. The main population centre TABLE OF CONTENTS via gravity, the melted bitumen flows of the Athabasca deposit is the City of into the lower well and is pumped to the Fort McMurray. The second-largest surface using artificial lift. All about the oil sands oil sands deposit is referred to as Cold 02 Background of an important global Lake, just south of Athabasca, with the Both SAGD and CSS are used in the resource main population centre the City of Cold Cold Lake and Peace River deposits, Lake. The smallest oil sands deposit is while SAGD is the in situ technology of Mapping the oil sands known as Peace River, which is located choice in the Athabasca deposit. The 03 in northwest central Alberta. A fourth choice is based on a number of things deposit called Wabasca links to the including geology. The technologies Government update Athabasca and is generally lumped in combined currently produce just over 04 with that area. one million barrels per day. The existence of bitumen in Alberta has Research is underway on a number of NEWS: been known for a long time. The first other production technologies designed 06 What’s new in the oil sands mention of it in Canadian history was to optimize production and minimize Key updates from winter 2010 in 1719, when a Cree named Wapasu water and energy use, including vapour brought a sample of the “gum” to a extraction (VAPEX), and a form of in Project listings Hudson’s Bay trading post. First Nations situ combustion known as toe to heel air 09 Updated status of oil sands in what is now the Wood Buffalo area injection (THAI). projects in Alberta had traditionally used the bitumen, Bitumen that has not been processed, which seeps from outcrops along the or “upgraded,” can be used directly as Athabasca River, to waterproof their Glossary of oil sands terms asphalt. It must be diluted to travel by canoes. 15 pipeline. Adding value, some producers Today bitumen is produced as an upgrade their product into synthetic energy source by two means — mining crude oil (SCO), which is a refinery and in situ. The majority of oil sands feedstock. At these refineries it can be production is done by surface mining, transformed into transportation fuels All photos © 2010, but this will likely change in the future, and other products. ■ JuneWarren-Nickle’s Energy Group Oil Sands Deposit Inferred Oil Sands Deposit 100 KILOMETRES Heavy Oil Deposi 10 20 30 40 50 60 70 80 90 100 Grosmont Carbonate Triangle First Nations Metis Settlement Mapping National Park the oil sands Provincial Park Canada’s heavy oil and oil sands resources are often referred to as “the oil that technology made.” Without intensive production technology development, the industry would not exist as it does today. These technologies still continue to be advanced and optimized, improving recovery and reducing environmental impacts. ALBERTA’S INDUSTRIAL HEARTLAND COUNTY OF THORHILD NO. 7 Redwater LAMONT COUNTY STURGEON COUNTY INDUSTRIAL Bon Accord Gibbons HEARTLAND Bruderheim Lamont Horse Hills Energy Park FORT SASKATCHEWAN STRATHCONA COUNTY EDMONTON ELK ISLAND NATIONAL PARK Sherwood Park COOKING LAKE BLACKFOOT PROVINCIAL RECREATION AREA BEAVER COUNTY LEDUC COUNTY Alberta’s Industrial Heartland is over 143,815 acres in size, and is located in the northeast quadrant of the Greater Edmonton region in central Alberta. This region is key to the value-added processing of Alberta’s oil sands resources into higher valued refined petroleum products and petrochemicals. 4 ALBERTA OIL SANDS INDUSTRY QUARTERLY UPDATE developing a joint strategy to target opportunities in Asia and improving consultation with industry. Amendments guide use Of CCS Government update technology In November 2010, through the Carbon Capture and Storage Statutes Amendment Act, the Alberta government introduced legislation that will guide Report measures Alberta’S ability to how large-scale carbon capture and storage CCS compete globally projects will proceed in Alberta. It clarifies ownership On Dec. 10, 2010, Alberta’s Competitiveness of pore space, which are tiny holes in porous rock Council released a new benchmarking report that where carbon would be stored deep underground. showed the province has a competitive edge over Under the proposed legislation, the Alberta its closest competitors, but also identifies areas for government would accept long-term liability for improvement to ensure Alberta remains an attractive injected CO2 once the operator provides data investment location. showing that the stored CO2 is contained. It would Report on Competitiveness: Alberta 2010 provides also establish a fund financed by CCS operators quantifiable evidence of the province’s ability to for ongoing monitoring costs and any required compete in a world market by looking at a variety remediation. The legislation does not propose any of factors crucial to success, including productivity, changes to ownership of mine and minerals resources. innovation, taxes and fiscal policy, regulation, This law makes Alberta the first province in Canada transportation and infrastructure, labour force to introduce comprehensive legislation for this development and access to capital markets. greenhouse gas reduction technology. Overall, the report indicates that Alberta is CCS major initiatives performing well in comparison to 14 other provincial The Government of Alberta has signed letters of and international jurisdictions. Alberta ranks first intent with the following four project proponents to or second in 24 of the 60 measures. Altogether, implement large-scale CCS projects in Alberta: Alberta rates either above-average or average in 45 • Enhance Energy Inc. and Northwest Upgrading: measures. The Alberta Carbon Trunk Line, Alberta’s first CO2 Areas of provincial strength include living standards, pipeline distribution system, will be capable of economic well-being, labour productivity, investment gathering CO2 from sources in Alberta’s Industrial in machinery and equipment, and taxes and fiscal Heartland and transporting it to existing mature policy. According to the report, Alberta has room oilfields to be used for enhanced oil recovery. for improvement in productivity growth, innovation • Shell: The Quest project will capture and store investments, non-resource exports, high-tech 1.2 million tonnes of CO annually beginning in employment and venture capital investment. 2 2015 from Shell’s Scotford upgrader. This report provides solid information to guide • Swan Hills Synfuels: The in situ coal gasification the council in its work, including the development project will access deep coal seams in order to of recommendations for action expected this convert the coal into a clean synthetic gas known summer. It also provides government with the ability as syngas. to better track trends and changes in Alberta’s competitiveness over time. • TransAlta Corporation and partners: Project Pioneer will use leading-edge technology to A copy of the report is available at www.finance. capture CO for enhanced oil recovery in nearby alberta.ca/competitiveness. 2 conventional oilfields. Western provinces unite to improvE Funding for these initiatives, which will reduce access to Asian markets greenhouse gas emissions by five million tonnes Energy ministers from Alberta, British Columbia and annually beginning in 2015, will come from the Saskatchewan signed an agreement in December $2-billion CCS fund announced in 2008. 2010 that will help expand and strengthen Canada’s Updates on Alberta’s CCS initiative are available at position as an energy powerhouse. Arising from the www.energy.gov.ab.ca/Initiatives/1438.asp. New West Partnership created during the spring, the Energy Memorandum of Understanding will Minister Liepert promotes responsible combine and build on the existing strengths of development at U.S. Energy Council all three provinces to expand the region’s energy meeting sectors — attracting new investment, stimulating Energy Minister Ron Liepert discussed Alberta’s job creation and strengthening the region’s commitment to responsible energy development economy. The three provinces will begin working with government and industry representatives from immediately on a number of projects, including across North America at the U.S.