ALBERTA OIL SANDS INDUSTRY QUARTERLY U P D AT E SPRING 2015 Reporting on the period: December 5, 2014 to March 20, 2015 ALBERTA OIL SANDS INDUSTRY QUARTERLY UPDATE All about the Canada has the third-largest oil reserves methods. Alberta will continue to rely in the world, after Saudi Arabia and to a greater extent on in situ production oil sands Venezuela. Of Canada’s 173 billion in the future, as 80 per cent of the Background of an barrels of oil reserves, 170 billion barrels province’s proven bitumen reserves are are located in Alberta, and about 168 too deep underground to recover using important global resource billion barrels are recoverable from mining methods. bitumen. This is a resource that has been There are essentially two commercial developed for decades but is now gaining methods of in situ (Latin for “in place,” ON THE COVER increased global attention as conventional essentially meaning wells are used rather ConocoPhillips Canada's Surmont 2 SAGD supplies—so-called “easy” oil—continue than trucks and shovels). In cyclic steam project, located south of Fort McMurray, will start operations this year. At 118,000 bbls/d, it to be depleted. The figure of 168 billion stimulation (CSS), high-pressure steam is is the largest single SAGD phase ever built. barrels of bitumen represents what is injected into directional wells drilled from COVER PHOTO: CONOCOPHILLIPS CANADA considered economically recoverable pads for a period of time, then the steam with today’s technology, but with new is left to soak in the reservoir for a period, TABLE OF CONTENTS technologies, this reserve estimate could melting the bitumen, and then the same be significantly increased. In fact, total oil wells are switched into production mode, 3 Mapping the oil sands sands reserves in place are estimated at bringing the bitumen to the surface. 1.8 trillion barrels. In steam assisted gravity drainage There are three major bitumen (or oil (SAGD), parallel horizontal well pairs 4 Government update sands) deposits in Alberta. The largest is are drilled from well pads at the surface. the Athabasca deposit, which is located One is drilled near the top of the target in the province’s northeast in the Regional reservoir, while the other is drilled near 6 Labour market update Municipality of Wood Buffalo. The main its bottom. Steam is injected into the top population centre of the Athabasca well, a steam chamber forms, and the deposit is Fort McMurray. The second- melted bitumen flows into the lower well 7 What's new in the oil sands: largest oil sands deposit is referred to via gravity and is pumped to the surface business as Cold Lake, just south of Athabasca, using artificial lift. with the main population centre the Both SAGD and CSS are used in the City of Cold Lake. The smallest oil sands Cold Lake and Peace River deposits, while 8 What's new in the oil sands: deposit is known as Peace River, which SAGD is the in situ technology of choice technology is located in northwest-central Alberta. in the Athabasca deposit. The selection A fourth deposit called Wabasca links to is based on a number of factors, including the Athabasca and is generally lumped in geology. The technologies combined 9 Oil sands production data with that area. currently produce just over one million Production by extraction method, The existence of bitumen in Alberta barrels per day. aggregate synthetic crude oil and has been known for a long time. The first Research is underway on a number of bitumen production mention of it in Canadian history was other production technologies designed Oil sands technology guide in 1719, when a Cree named Wapasu to optimize production, including brought a sample of the “gum” to a variations on solvent-assisted SAGD and Hudson’s Bay trading post. First Nations CSS, recovery using electricity and in situ 10 Project listings in what is now the Wood Buffalo area combustion. had traditionally used the bitumen, which Bitumen that has not been processed, seeps from outcrops along the Athabasca or “upgraded,” can be used directly as 16 Glossary River, to waterproof their canoes. asphalt. It must be diluted to travel by For the first time in 2012, in situ oil pipeline. Adding value, some producers sands production exceeded mined oil upgrade their product into synthetic crude 18 Oil sands contacts sands production in Alberta. In 2013, oil, which is a refinery feedstock. That can 53 per cent of the province’s oil sands be transformed into transportation fuels volumes were produced using in situ and other products. Unless otherwise stated, all photos copyright JuneWarren-Nickle’s Energy Group © 2014 2 ALBERTA OIL SANDS INDUSTRY QUARTERLY UPDATE Oil Sands Deposit Surface Minable Area National Park Grosmont Mapping Provincial Park Carbonate Triangle the oil sands Oil Sands 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 COUNTY OF THORHILD NO. 7 Redwater CONKLIN LAMONT COUNTY STURGEON COUNTY LAC LA BICHE Bon Accord INDUSTRIAL HEARTLAND COLD LAKE Gibbons Bruderheim BONNYVILLE Lamont Edmonton Energy and FORT Technology EDMONTON Park SASKATCHEWAN LLOYDMINSTER EDMONTON STRATHCONA ELK ISLAND COUNTY NATIONAL PARK Sherwood Park RED DEER COOKING LAKE BLACKFOOT PROVINCIAL RECREATION AREA BEAVER COUNTY LEDUC COUNTY CALGARY ALBERTA’S INDUSTRIAL HEARTLAND Alberta’s Industrial Heartland is over 143,815 acres in size, and is located in the northeastern 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 MEDICINE HAT higher-valued refined petroleum products and petrochemicals. LETHBRIDGE 100 KILOMETRES 10 20 30 40 50 60 70 80 90 100 SOURCE: DIVESTCO INC./GOVERNMENT OF ALBERTA 3 ALBERTA OIL SANDS INDUSTRY QUARTERLY UPDATE GOVERNMENT UPDATE ALBERTA STRENGTHENS ENVIRONMENTAL financial security to deal with potential PROTECTIONS IN THE OIL SANDS remediation issues through the Conservation As part of ongoing efforts to reduce the and Reclamation Regulation and ensuring environmental impact of oil sands development, tailings are progressively treated and reclaimed Alberta has introduced new steps to reduce tailings throughout the project life cycle and are ready ponds and regulate the use of water from the to reclaim within 10 years of the end-of-mine Athabasca River. life of that project. The tailings management framework focuses on Highlights of the surface water quantity getting tailings ponds remediated faster and slowing management framework include: tailings ponds growth. Tailings are currently managed • requiring the majority of water used by existing through the Alberta Energy Regulator’s Directive 074, operators and all water used by new operators to which does not set timelines for the remediation of stop during low-flow periods; existing ponds. • restricting water use during these low-flow The surface water quantity management periods to a minimum for older operators framework establishes stringent water use who are technologically unable to stop all requirements for both current and future minable oil withdrawals; sands operators. At present, this industry uses one • establishing weekly triggers, which act as an per cent of water from the river annually. early warning point before a limit is reached, “Alberta’s oil sands region is already one of the and setting water withdrawal limits for all most protected and regulated energy development minable oil sands operators using best-available areas in the world,” says Kyle Fawcett, Minister of science; and Environment and Sustainable Resource Development. • maintaining an adequate quantity of water “To enhance this level of protection we need for aboriginal river navigation and pursuit of systems that continue to drive innovation. Industry traditional activities. must continually improve its management of wastes The Alberta government worked with industry, like tailings and respect the full range of water aboriginal groups, environmental non-governmental management opportunities that exist in the region.” organizations and other stakeholders to develop Highlights of the tailings management these frameworks that will guide progress on framework include: environmental issues in the oil sands. • limiting the amount of tailings that can be The Tailings Management Framework For The accumulated; Minable Athabasca Oil Sands and Surface Water • pushing companies to invest in technology to Quantity Management Framework For The Lower remain within those constraints; Athabasca River were proposed under Alberta’s • establishing firm thresholds to identify when Lower Athabasca Regional Plan. The surface companies must take action to prevent harm to water quantity framework also supports the the environment; and Water Conversation’s theme of managing • requiring companies to post additional industrial water use. PHOTO: SYNCRUDE PHOTO: CENOVUS ENERGY 4 ALBERTA OIL SANDS INDUSTRY QUARTERLY UPDATE SAGD WELL PAD AT CENOVUS ENERGY'S CHRISTINA LAKE PROJECT. PREMIER PRENTICE'S STATEMENT ON communicate Alberta’s record as a safe, secure and PRESIDENT OBAMA’S DECISION TO VETO reliable energy supplier and our strong support for KEYSTONE XL LEGISLATION Keystone XL and for all infrastructure projects that Premier Jim Prentice issued the following statement