ALBERTA O I L S A N D S INDUSTRY Q U A R T E R L Y UPDATE SPRING 2012 Reporting on the period: Dec. 3, 2011 to March 9, 2012 2 ALBERTA OIL SANDS INDUSTRY QUARTERLY UPDATE Canada has the third-largest oil bitumen deposits are too deep reserves in the world, next to Saudi underground to economically employ Arabia and Venezuela. Of Canada’s this technology. 179 billion barrels of oil reserves, Right now there are essentially 170 billion barrels are located All about two commercial methods of in situ in Alberta, and have the special (Latin for “in place,” essentially quality of being bitumen. This is a meaning wells are used rather than the oil sands resource that has been developed trucks and shovels). In cyclic steam for decades, but is only now coming Background of an stimulation (CSS), high-pressure into the forefront of the global energy steam is injected into directional important global resource industry, as conventional supplies— wells drilled from pads for a period so-called “easy” oil—continue to be of time, then the steam is left to depleted. The figure of 170 billion soak in the reservoir for a period, barrels represents what is considered melting the bitumen, and then economically recoverable with the same wells are switched into today’s technology, but with new production mode, bringing the technologies, this reserve estimate 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 oil sands) deposits in Alberta. The surface. One is drilled near the top of largest is the Athabasca deposit, the target reservoir, while the other located in the province’s northeast is drilled near its bottom. Steam is in the Regional Municipality of injected into the top well, a steam Wood Buffalo. The main population chamber forms, and via gravity, the centre of the Athabasca deposit melted bitumen flows into the lower TABLE OF CONTENTS is the City of Fort McMurray. The well and is pumped to the surface second-largest oil sands deposit is using artificial lift. referred to as Cold Lake, just south of All about the oil sands 02 Athabasca, with the main population Both SAGD and CSS are used in the centre the City of Cold Lake. The Cold Lake and Peace River deposits, smallest oil sands deposit is known while SAGD is the in situ technology of Mapping the oil sands as Peace River, which is located in choice in the Athabasca deposit. The 03 northwest central Alberta. A fourth choice is based on a number of things deposit called Wabasca links to the including geology. The technologies Athabasca and is generally lumped in combined currently produce just over 04 Government update with that area. one million barrels per day. The existence of bitumen in Alberta Research is underway on a number has been known for a long time. of other production technologies NEWS: The first mention of it in Canadian designed to optimize production, 06 What’s new in the oil sands history was in 1719, when a Cree including variations on solvent- named Wapasu brought a sample of assisted SAGD and CSS, recovery the “gum” to a Hudson’s Bay trading using electricity and in situ Project listings post. First Nations in what is now the combustion. 09 Wood Buffalo area had traditionally Bitumen that has not been used the bitumen, which seeps from processed, or “upgraded,” can be outcrops along the Athabasca River, to used directly as asphalt. It must be Glossary of oil sands terms waterproof their canoes. 15 diluted to travel by pipeline. Adding Today bitumen is produced as an value, some producers upgrade energy source by two means—mining their product into synthetic crude oil and in situ. The majority of ­­­oil sands (SCO), which is a refinery feedstock. production is done by surface mining, At these refineries it can be but this will likely change in the transformed into transportation fuels future, as 80 per cent of Alberta’s and other products. ■ All photos by Joey Podlubny © 2012 JuneWarren-Nickle’s Energy Group 100 KILOMETRES Oil Sands Deposit 10 20 30 40 50 60 70 80 90 100 Grosmont Carbonate Triangle National Park Mapping Provincial Park Oil Sands Area the oil sands Surface Minable Area Capital of Alberta Canada’s 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. FORT MCMURRAY PEACE RIVER ALBERTA’S INDUSTRIAL HEARTLAND CONKLIN COUNTY OF THORHILD NO. 7 Redwater LAC LA BICHE LAMONT COUNTY COLD LAKE STURGEON COUNTY INDUSTRIAL BONNYVILLE Bon Accord Gibbons HEARTLAND Bruderheim EDMONTON Lamont LLOYDMINSTER Horse Hills Energy Park FORT SASKATCHEWAN STRATHCONA RED DEER COUNTY EDMONTON ELK ISLAND NATIONAL PARK Sherwood Park COOKING LAKE BLACKFOOT PROVINCIAL RECREATION AREA CALGARY SOURCE: Divestco/Government of Alberta Divestco/Government SOURCE: BEAVER COUNTY LEDUC COUNTY LETHBRIDGE MEDICINE HAT Alberta’s Industrial Heartland is over 143,815 acres in size, and is located in the north- east 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 Government update New advisoRy BoDy To Coordinate locations. It will also integrate relevant parts of existing transportatioN planning in oil sands regioN monitoring efforts and will give government and industry A new advisory committee will review and will make the scientific foundation necessary to continue to recommendations to the Alberta government on the promote the environmentally sustainable development current and future transportation needs of the Athabasca of the oil sands. The implementation plan reflects the oil sands region. The committee of municipal, industry Integrated Oil Sands Environment Monitoring Plan released and provincial representatives will take into account the by Environment Canada in July and will be consistent with region’s unique economic and infrastructure needs and the Government of Alberta’s plans for a province-wide the importance of the oil sands to the province’s economy. environmental monitoring system. The Athabasca Oil Sands Area Transportation As the process continues to move forward, Coordinating Committee will include representatives from implementation of the monitoring program will be the Regional Municipality of Wood Buffalo; the Oil Sands jointly managed by the Government of Canada and the Developers Group; the Alberta Economic Development Government of Alberta. Annual progress reports on Authority; the Fort McMurray Airport Authority; the implementation will be prepared for the first three years, Northern Alberta Development Council; Cindy Ady, MLA with an external scientific peer review of the program at Calgary-Shaw; and the Alberta government. the end of the third year. Following that, a full external, scientific review of the new program will be conducted The committee will meet a minimum of four times every five years. per year and will provide strategic advice and recommendations on transportation planning, design, funding, construction, operations and maintenance, Use of new technoLogies spurs province To including all classes of roads, transit, rail and air traffic record land revenues within the Athabasca oil sands area. Capping a record year that saw renewed confidence in This committee is part of Responsible Actions, Alberta’s oilpatch, for the first time in provincial history Alberta’s 20-year strategic plan for the oil sands, Alberta has exceeded $3 billion in land sales for a which includes efforts to support further planning and calendar year. Revenues for the final calendar-year sale of development of vibrant communities in the oil sands provincial petroleum and natural gas mineral leases and regions. For more information about Responsible licences, also known as land sales, were $145,621,531.32. Actions, visit www.oilsands.alberta.ca. This brings the total revenue collected to $3.54 billion for the 2011 calendar year. Several records were set in 2011. In the August 24 sale, Canada and Alberta takE actioN To a record was set for the highest-ever price paid for a implement World-class Monitoring System petroleum and natural gas parcel, more than $123.5 million, foR the oil sands for a licence southeast of Fox Creek, Alta. The June 1 sale Increased air, water, land and biodiversity monitoring in netted the highest-ever single-sale record, collecting more the oil sands will begin this year as the Government of than $841 million for the province. Canada and Government of Alberta take a major step Total calendar sales in 2010 were $2.39 billion. This was forward in their partnership to improve environmental the first time the province collected more than $2 billion in monitoring in the oil sands region. revenues from petroleum and natural gas land sales. The Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring commits to a scientifically rigorous, comprehensive, integrated and transparent Premier Redford welcomes Keystone XL environmental monitoring program for the region. It reapplicatioN outlines the path forward to enhance the monitoring Premier Alison Redford issued the following statement of water, air, land and biodiversity in the oil sands by in response to TransCanada Corporation’s February demonstrating how more sites will be sampled for more announcement that it will soon reapply for a presidential substances more frequently. The program is designed permit for the Keystone XL pipeline, and in the meantime begin to provide an improved understanding of the long-term work on the pipeline’s southern leg, known as the Gulf Coast cumulative effects of oil sands development.