Environment Canada Environmental Stewardship Branch “Heavy Oil Vent Mitigation Options - 2015” Conducted by: New Paradigm Engineering Ltd. Prepared by: Bruce Peachey, FEIC, FCIC, P.Eng. New Paradigm Engineering Ltd Ph: (780) 448-9195 E-mail: [email protected] Second Edition (Draft) April 30, 2015 Acknowledgements and Disclaimer Acknowledgements The author would like to acknowledge funding provided by Environment Canada, Environmental Stewardship Branch, and the support of a wide range of equipment vendors, producers and other organizations whose staff have contributed to direction, content or comments. This second edition is an upgrade to the initial report for Environment Canada and reflects additional work and content developed by New Paradigm Engineering Ltd. Our intent is to continue to provide in-kind updates, as necessary to keep information current and to reflect any additional information we are made aware of. Disclaimers This document summarizes work done under this contract in support of Environment Canada’s efforts to understand the potential sources of methane venting from primary, or cold, heavy oil operations in Western Canada and the potential mitigation options and barriers to mitigation to reduce those emissions. Any specific technologies, or applications, discussed or referred to, are intended as examples of potential solutions or solution areas, and have not been assessed in detail, or endorsed as to their technical or economic viability. Suggestions made as recommendations for next steps, or follow-up actions are based on the authors’ learnings during the project, but are not intended as specific input to any government policy or actions, which might be considered in crafting future emissions policies. Report Table of Contents Executive Summary 1. Project Description 1.1. Objective and Benefits 1.2. Background Studies 1.3. Content Focus 2. Background on Primary (Cold) Heavy Oil Production 2.1. Description of Cold Heavy Oil Production and Processes 2.2. Characteristics of Raw Products Extracted and Removed from Heavy Oil Sites 2.3. Design Layout of Typical Sites 2.4. Key Stages of Heavy Oil Production – Well Drilling to Abandonment 2.5. Gas Production During Oil Production Stages 2.6. Costs Associated with Heavy Oil Developments 2.7. Identification of Equipment Used On-Site 2.8. Description of Operating Variables for Basic On-Site Equipment 3. Background on Heavy Oil Venting 3.1. Description of Operating Challenges 3.2. Identification of Sources of Emissions, Volumes and Composition Ranges 4. High-Level Assessment of the Current Status of Heavy Oil Venting in Alberta and Saskatchewan 4.1. Alberta Situation Assessment 4.2. Saskatchewan Situation Assessment 4.3. Producer Performance and Attitudes Towards Vent Mitigation 5. Update of New Paradigm Heavy Oil Vent Gas Mitigation Options 5.1. Heavy Oil Vent Gas One Page Option Sheets 5.2. Adjustments from 2000-2001 Vent Option Study 5.3. Process Used for Updating Options 6. Summary of Heavy Oil Vent Status and Barriers to Change 6.1. Summary of Status 6.2. Barriers to Change Appendices A. Revised Option Sheets, Flowcharts and High Level Comparison of Options, by Challenge Area: 1. Resource Development 2. Vent Measurement/Quantification/Estimation 3. Flow Stabilization Options 4. Fuel Displacement 5. Gas Compression/Capture 6. Power Generation 7. Enhanced Oil Recovery or Production Stimulation 8. Methane Conversion 9. Odour Mitigation B. Vent Quantification Standard (Proposed) C. Key References Heavy Oil Vent Mitigation Options - 2015 Executive Summary This report describes the various types of primary heavy oil operations found in Western Canada, which combined are responsible for venting 4-5 MtCO2eq per year of GHG emissions, mainly in the form of methane, which constitutes a significant reduction target for either Federal or Provincial Policy. Some key summary observations found in this report are that: Development Options - There are at least five main types of primary heavy oil development options in use in Western Canada at the current time. Some options are driven solely by the properties of the resources being developed, while others are driven by economic choices for efficient heavy oil production. Technology is Available for Conservation or Conversion – Even for low volumes of surplus produced gas, not required for use as on-site fuel, there are technology options which may be applied at all scales of operation. The author believes that there is a wide range of technology options now available, which could significantly reduce GHG emissions and increase gas conservation, from these sources at a very low cost compared to the option of using Carbon, Capture and Sequestration at some larger point sources, such as the Shell Quest Project. Producer Motivation is Necessary to Effect Change – Current regulations and incentives do not appear to provide sufficient motivation for producers to conserve produced gas, or to reduce GHG impacts, in operations (mainly CHOPS area) where there is only methane being emitted. Where odour concerns are present, the same types of emissions are being conserved or converted, as operators have no choice, as the reduction activities become a requirement for them to be allowed to produce oil from those sites, so become part of the oil production economics. In general, mandatory conservation or conversion should not be a major economic barrier for heavy oil economics. The following five conclusions are proposed based on the trends and options currently available for CHOPS producers: o Conclusion #1 – Regulation is needed to motivate companies with large solution vent or flare volumes, to adopt existing technologies to reduce methane vent and flare emissions. o Conclusion #2 – Conservation of solution gas should be considered as an integral part of oil production, so the costs of conservation and/or emissions reduction are part of the economics of oil production, just as costs for health, safety and other environmental impacts are. As part of oil economics the cost to mitigate emissions is small compared to the total investment and revenue streams, even if incremental gas recovery economics are low or negative. o Conclusion #3 – If economics are only to be based on gas conservation, on a stand alone basis, then there should at least be a requirement to make those economic calculations based on proactively including all gas from the start of production, with facilities installed during initial construction, not waiting for later phase GOR estimations, which historically suffer from low measurement quality, and which also miss most of the produced gas, which is emitted in the first 1-3 years of oil production. o Conclusion #4 – To properly assess economics, regulations and options, consistent standards are needed to ensure that GORs developed are true indications of produced gas volumes, and that other uses of gas for fuel are optimized and minimized based on efficient fuel use, to determine the true volumes of surplus gas available for conservation. o Conclusion #5 – Enough technologies are available now so the focus should be on motivating large-scale and proactive implementation of those options, as appropriate, rather than hoping for low cost breakthroughs, which are only applied reactively, after most of the solution gas is gone. Importance of Appropriately Assessing Total Gas Volumes Produced and Used by Production Sites – Since gas volumes on these sites are not currently measured on a daily basis, the methods and procedures used by producers to estimate a base Gas Oil Ratio (GOR) for each site, and the volumes used as fuel are critical to establishing how much produced gas is available for potential capture, vs. being emitted by flaring and/or venting. A set of proposed vent quantification standards were developed in 2004, but do not appear to have been widely implemented by the industry. Current reactive regulations result in much of the vent gas being emitted before economic conservation is assessed for a site. More rigorous standards for determining produced gas and vent volumes, and assessing economics based on typical well gas production on a proactive basis could result in more gas being conserved under Alberta’s Directive 60 and similar regulation in Saskatchewan. 1. Project Description The purpose of this Project is to describe and characterize primary heavy oil operations in western Canada, describe the facilities and on-site resources available on each site, and how these impact the emissions of gases from the sites. It then provides information on methods to manage and mitigation the gas emissions through a range of development, operational and mitigation options. 1.1. Objectives and Benefits The objectives of the Project were: To describe the wide range of heavy oil operations now underway and the production processes being used in western Canada; To characterize the range of raw products extracted and removed from various types of heavy oil production sites, which are currently in operation; To explain why production sites are designed in the way that they are for typical heavy oil operations; To follow the typical development stages in heavy oil operations, from drilling to abandonment, and how the air emissions vary with the stage of development; To discuss high level cost and economic factors associated with heavy oil developments which impact design and operational decisions; and finally; To identify equipment which might typically be found on heavy oil production sites, and describe the key