Oil Sands Quarterly Report
Total Page:16
File Type:pdf, Size:1020Kb
ALBERTA O I L S A N D S INDUSTRY Q U A R T E R L Y UPDATE WINTER 2008/2009 (Reporting on the period: October 2008 to Feb. 2, 2009) 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 173 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 173 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 05 What’s new in the oil sands mention of it in Canadian history was to optimize production and minimize Key updates from Winter 08/09 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 08 Updated status of each 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. 14 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 © 2009, but this will likely change in the future, and other products. • JuneWarren-Nickle’s Energy Group Oil Sands Deposit ,*-0.&53&4 Inferred Oil Sands Deposit Heavy Oil Deposit Mapping Grosmont Carbonate Triangle the oil sands First Nations Metis Settlement Canada’s heavy oil and oil sands National Park resources are often referred to as “the oil that technology made.” Provincial Park Without intensive production technology development, the industry would not exist as it '035.$.633": does today. These technologies still continue to be advanced and 1&"$&3*7&3 optimized, improving recovery and reducing environmental impacts. $0/,-*/ ALBERTA’S INDUSTRIAL HEARTLAND $06/5:0'5)03)*-%/0 -"$-"#*$)& 3FEXBUFS -".0/5 $06/5: $0-%-",& 4563(&0/ $06/5: */%6453*"- #0//:7*--& #PO"DDPSE )&"35-"/% (JCCPOT &%.0/50/ #SVEFSIFJN --0:%.*/45&3 -BNPOU '035 4"4,"5$)&8"/ 3&%%&&3 453"5)$0/" $06/5: &%.0/50/ &-,*4-"/% /"5*0/"-1"3, %36.)&--&3 4IFSXPPE 1BSL $"-("3: $00,*/(-",& #-"$,'0051307*/$*"- 3&$3&"5*0/"3&" #&"7&3 $06/5: -&%6$$06/5: .&%*$*/&)"5 Alberta’s Industrial Heartland is over 78,550 acres in size, and is located within -&5)#3*%(& Metro Edmonton, Alberta’s Capital Region. 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 CCS projects are being pursued around the that may accrue to the province through Government world and the technology is fully supported such clusters. This includes, but is not by the United Nations Intergovernmental limited to, increased local demand for Panel on Climate Change, the International bitumen, market diversification for oil update Energy Agency, and the International sands–derived products, a reduced Panel on Climate Change. environmental footprint, and a more Over the past few years, significant oil integrated pipeline network for raw material More than 50 companies submitted sands development activity in Alberta collection and finished product distribution. Expressions of Interest for the CCS funding. contributed to substantial economic Those 20 that most closely fit with the The Government of Alberta has proposed growth and associated growth challenges. province’s objectives have been asked to to take raw bitumen in lieu of cash royalties Due to recent economic realities such submit Full Project Proposals by March to maximize the value received for the as high costs and volatile commodity 31, 2009. The projects selected to receive bitumen and support the province’s value- prices, the pace of development has funding will be announced by June 30, 2009. added strategy. This is not a new concept. moderated. This moderation is expected The province already takes its royalty to lead to improved labour availability, The Government of Alberta is providing the share of conventional oil in kind in order to cost decreases, and ease of inflationary Alberta Energy Research Institute with $6.6 obtain its maximum value for Albertans. pressures. million in funding for the three-year, $20- million project near Shell Canada’s Scotford The Government of Alberta invited interested Despite global economic pressures and facility. Three test wells will be drilled parties to make submissions detailing their lower oil prices, the Alberta government to examine the CO injection capability interest, and explaining how they would will meet its spending commitments for 2 and storage capacity in formations deep participate in using the government’s Budget 2008. The province’s 2008–09 beneath the surface. The field test phase bitumen royalty-in-kind (BRIK) volumes. Second Quarter Fiscal Update shows a is expected to be completed by June 2010 Submissions had to reflect the province’s forecast surplus of $2 billion, an increase and will expand the knowledge base of the objective of maximizing return from its of $435 million from budget. The surplus, geologic formations in Alberta that are well royalty share of bitumen. The deadline together with other cash available, will suited for carbon storage. for submitting proposals was Oct. 17, enable government to follow through on 2008. The responses to the Request for its commitment to Carbon Capture and To address rapid growth issues in the Expressions of Interest are being used to Storage (CCS) projects and the Green oil sands regions, the Government of better understand potential opportunities Transit Incentives Program (Green TRIP). Alberta created the Oil Sands Sustainable leading to a Request for Proposals Development Secretariat in the summer The Alberta government released its expected in early 2009. of 2007. The secretariat collaborates long-term Provincial Energy Strategy with ministries, industry, communities, After further consultation with Albertans, in December. It is a long-term action and stakeholders to address the stakeholders, and Aboriginal communities, plan for Alberta to achieve clean social, infrastructure, environmental, the Government of Alberta strengthened energy production, wise energy use, and economic impacts of oil sands its draft Land-use Framework. The final and sustained economic prosperity. development. As a result, a long-term Alberta Land-use Framework will ensure The strategy addresses present issues strategic plan for the sustainable future land development considers and offers a roadmap to the future of development of the oil sands is being cumulative environmental impacts as energy development in the province. The developed. The document is expected to well as social and economic factors. The strategy recognizes that environmentally be released in early 2009. government will announce more details responsible and innovative hydrocarbon on the Land-use Framework early in 2009, development remains the cornerstone of Together with industry, the Alberta including the framework’s implementation Alberta’s economy and North American government has undertaken several plan and the terms of reference for regional energy supply.