canadian heavy oil association
The first quarter century of knowledge sharing and business networking
1986-2011
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Table of Contents page 9
welcome from the government of alberta Ted Morton, Minister of Energy
page 12
Editor’s note page 14
page 10
Heavy oil and oilsands timeline
Gerald Bruce, President 2011-12
page 73
Welcome from choa
CHOA at a glance
FEATURES page 22
Mining Pioneers How entrepreneurs and scientists made the conventional oil industry stand up and take notice By Mary Clark Sheppard
page 28
From obscure to essential Heavy oil and oilsands come of age By Gordon Jaremko
page 33
In situ heavy oil and oilsands technology How we got here By David Theriault and Neil Edmunds
page 38
CHOPS and SAGD: revolutionizing in situ heavy oil By Maurice B. Dusseault
page 43
The regulator’s role in the development of Alberta’s heavy oil and oilsands By Neil McCrank, Q.C.
page 46
The oilsands and the aboriginal community Working together to reach consensus and achieve shared aims By Jim Boucher
page 50
CHOA past, present and future A collection of past presidents reflects on what was and what is to come By deborah jaremko
page 56
About the Canadian Heavy Oil Association
The mission of the Canadian Heavy Oil Association is to provide an appropriate technical, educational and social forum for those employed in, or associated with, the heavy oil and oilsands industries.
Suite 400, 500-5 Ave SW Calgary, Alberta T2P 3L5 p: 403.269.1755 f: 403.453.0179 e: office@choa.ab.ca www.choa.ab.ca
The evolution and future of in situ oilsands recovery technology By Ian D. Gates and Jacky Wang
PAGE 67
Contributions of a lifetime CHOA inaugurates the first three members of its Hall of Fame By Qi Jiang and Melanie Collison
Published by JuneWarren-Nickle's Energy Group in partnership with the Canadian Heavy Oil Association
the first quarter century: 1986-2011
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W H I T E H O R S E
WELCOME FROM THE GOVERNMENT OF ALBERTA The history of the oilsands in Alberta is reflected in the
As minister of energy, I believe I have an advocacy
25-year history of the Canadian Heavy Oil Association.
role on behalf of responsible development of our energy
Through the years, the association has acted as a bridge,
resources. I believe we are in a position to show leader-
offering networking opportunities, technical briefings
ship towards a sustainable and diversified clean energy
and conference events. With a focus on connecting
future. I believe that in order to obtain maximum benefits
the many facets of the industry, the association has
from our resources, we need to find and access addi-
become a world-class medium for all things relating to
tional markets for our energy products.
the heavy oil industry. When it comes to energy, Alberta has a strong story to
On behalf of the Government of Alberta, congratulations on your 25th anniversary.
tell. Today, Alberta’s energy story, and therefore Canada’s energy story, stands at a crossroads. The resources
Ted Morton
under our feet represent economic stability for this and
Alberta Minister of Energy
future generations, if these resources can be responsibly developed and transported to markets.
the first quarter century: 1986-2011
9
WELCOME FROM CHOA For 25 years, the Canadian Heavy Oil Association
resources is evolving as research and development
(CHOA) has been the premier organization for the
programs enable new discoveries to position the in-
exchange of technical knowledge in the heavy oil and
dustry for a bright future.
oilsands industry, also providing membership with
The people that have dedicated their efforts and
invaluable networking opportunities. We have become a
careers contributing to the success of the heavy oil
world-class forum, fostering the advance of technology in
industry have much to be proud of, as Canada is now
support of more sustainable operations. Today, CHOA,
receiving due recognition as a global energy supplier
with over 1,700 members, is the largest association in
fuelled by the expanding role that heavy oil plays in our
the world dedicated solely to heavy oil and oilsands.
energy production portfolio.
To highlight our 25th anniversary, CHOA has pro-
From humble beginnings in 1986, over the last 25
duced this special legacy publication. Developed in
years the CHOA has been an active participant in the
collaboration with JuneWarren-Nickle’s Energy Group,
evolution and development of the heavy oil industry.
this special volume showcases the heavy oil industry’s
Through the technical talks, networking and social
evolution from a niche curiosity to a key contributor to
activities that are the foundation of the association, we
global energy security and supply.
are excited to see how far the industry has progressed
This publication captures the developmental history from the early industry pioneers to the key people who
in such a short time, and look forward to the next 25 years of development and prosperity.
are making a significant contribution to the industry
I trust you will develop an appreciation of how this
today. The evolution and application of technology to
industry is based on the contribution and commitment
the heavy oil and bitumen resources have enabled the
of individuals with a passion for heavy oil, as show-
industry to develop, grow and prosper through the
cased in the publication.
economic cycles to become a significant source of
10
Canadian heavy oil association
the molecules needed to satisfy the world’s energy
Gerald Bruce
needs. The role that technology plays to ensure reliable
CHOA President
and sustainable production of heavy oil and oilsands
2011-12
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EDITOR’S NOTE Welcome to the Canadian Heavy Oil
wells per township. By the end of this five-year
Association’s (CHOA’s) 25th anniversary
study period, mapping was moving from 2-D to
commemorative publication. I was somewhat
3-D characterization, along with 3-D geostatis-
disconcerted when I was first asked by the CHOA
tical modelling, and drilling density by industry
to help coordinate and organize this volume—how
was increasing significantly, along with techno-
do you cover 25 years of a technical organization
logical advances in both CSS and SAGD. For
in such an exponentially growing business as the
a full discussion of the evolution of these differ-
Canadian heavy oil industry? How do you balance
ent in situ techniques, see the articles “How we
the different facets—from government, industry
got here” by Dave Theriault and Neil Edmunds,
and academia? I felt the weight of the responsi-
and “CHOPS and SAGD: revolutionizing in situ
bility of leading such a distinguished publication,
heavy oil” by Maurice Dusseault.
but also knew this anniversary would focus the
In the early to mid-2000s, conflicting resource
issues at hand, offering a broader perspective.
development became an issue, with a request
At the same time, it is a joyous celebration.
to the Alberta Energy Resources Conservation
In the past 25 years, the vast heavy oil and
Board (ERCB) by bitumen producers to shut in
oilsands deposits of Alberta have been recog-
associated gas production in the Athabasca.
nized as one of the major unconventional energy
The ERCB formulated a policy of bitumen con-
resources of the world, and an integral part of the
servation, which resulted in outcomes, which
global energy mix. Steam assisted gravity drain-
are summarized by Neil McCrank in his article
age (SAGD) and cyclic steam stimulation have
on page 43.
moved beyond the pilot and experimental schemes
Next we look to the future in two articles. The
to full commercial-scale operations. Bitumen,
first, “The oilsands and the aboriginal commu-
heavy oil and synthetic crude oil (derived from
nity: working together to reach consensus and
the upgrading of bitumen) have surpassed con-
achieve shared aims” by Fort McKay First Nation
ventional oil and gas production in the province.
Chief Jim Boucher, examines the joint journey
This commemorative publication is an im-
taken by the aboriginal community and industry
portant piece of the CHOA’s history. To begin,
in the Athabasca region. The second, “The evo-
we thought a chronology of heavy oil and oilsands
lution and future of in situ oil sands recovery
development in Canada would be useful. This
technology” by Ian D. Gates and Jacky Wang,
is followed by historical reviews by Mary Clark
examines the technological advances that are
Sheppard, daughter of hot water process inventor
predicted to help balance development with
Karl Clark, and by energy journalist and historian
environmental concerns.
Gordon Jaremko. And then we get to the heart
Most importantly, in this publication the CHOA
of the publication, and the CHOA—technology.
recognizes three oilsands pioneers who have been
Just before the CHOA was founded, cyclic
inducted into our Hall of Fame: Dr. Roger Butler,
steam stimulation (CSS) projects were started
Edward E. “Ned” Gilbert and David J. Theriault,
in Alberta at Primrose and Peace River, and the
whose achievements have been highlighted by
Underground Test Facility was in initial stages
Qi Jiang and Melanie Collison.
of testing the feasibility of using SAGD as an
We hope that you enjoy this publication, and
in situ technology for recovery of bitumen too
that you continue to use the CHOA as a tech-
deep for recovery by surface-mining techniques,
nical and social network to help us all achieve
mainly in the Athabasca deposit. That same year,
a balanced approach to sustainable economic
1986, the Alberta Geological Survey started a
development of our immense heavy oil and oil-
five-year research program on regional char-
sands deposits today and into the future.
acterization of the Athabasca oilsands. At that
12
Canadian heavy oil association
time, well delineation was sparse (compared to
Fran Hein, Ph.D., P. Geol.
present-day drilling) and, where possible, the
Technical and Social Committee, CHOA
regional databases consisted of a control of four
Chief geologist, ERCB
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TIMELINE tiMeline 1719 A Cree named Wa-pa-su brings samples of oil sand to York Factory, a Hudson’s Bay Company trading post on the edge of Hudson’s Bay in Manitoba. He had previously brought samples of salt and brimstone.
1848 The first geological assessment of the oilsands was done by John Richardson, associated with his search for the lost Franklin Expedition party members.
1700s
seventeen hundred
1894 The federal government field party drills the first wells into the oilsands, looking for light oil at Athabasca Landing under the recommendation of George M. Dawson.
1800s
eignteen hundred 1882 The Geological Survey of Canada sends Robert Bell and his team on an expedition to study the Athabasca Basin.
1778 Explorer Peter Pond provides the first recorded description of the Athabasca oilsands.
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Canadian heavy oil association
Photos: page 14, National Archives of Canada; Glenbow Archives; page 15, northpolepenquin.com; istock/100pk; istock/A-Digit
HEAVYoilOIL++oilsAnds OILSANDS heAvy
1906 Count Alfred von Hammerstein conducts four unsuccessful seasons of drilling between 1906 and 1909.
1920 Railway is completed to Waterways, just south of Fort McMurray.
1910 Experiments in using bitumen for street pavement begin in Edmonton.
1900—1919
nineteen hundred 1910 Hammerstein forms the Athabasca Oil and Asphalt Co. There is a flurry of speculative activity in the Athabasca region and in the village of Fort McMurray.
1919 Imperial Oil Limited drills 18 holes in the Lloydminster area. Favourable geological reports are issued.
1923 Heavy oil is discovered near Wainwright, Alta.
1920—1927
nineteen hundred
1920s Traces of high-grade oil are discovered in a water well in the Lloydminster area.
1927 Oxville Oil and Gas Development Co. begins drilling in the Lloydminster area. Over the next five years there would be numerous discoveries, but no commercial wells.
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TIMELINE tiMeline 1927 Alcan Oil Company becomes the International Bitumen Company Limited, under the control of Robert Fitzsimmons. By 1930, Fitzsimmons will be operating a small hot-water separation plant at Bitumount, a site approximately 90 kilometres north of Fort McMurray.
1929 The first horizontal well is drilled in Alberta.
1927—1929
1930 Alberta obtains control of its lands and natural resources from the federal government, and the Alberta Department of Lands and Mines is formed.
nineteen hundred 1929 Edmonton scientist Dr. Karl Clark patents his oilsands hot-water extraction process.
1936 The Abasand experimental oilsands plant starts up.
1938 Oil and Gas Conservation Act is passed and responsible energy development is committed to Alberta law. The Petroleum and Natural Gas Conservation Board, the second iteration of Alberta’s energy regulator, is formed.
1930—1939
nineteen hundred 1930s Monitor Oils, Texecano Oils and Ribstone Oils drill wells in the Lloydminster region. Oil is found, but nothing commercial.
1937 The first heavy oil refinery is built, adjacent to wells south of Lloydminster.
1938 Lloydminster Royalties Ltd. brings in a Lloydminster heavy oil well at 250 barrels on the first day. The next day, it produces only salt water.
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Canadian heavy oil association
photos: page 16, istock/kathykonkle; Provincial Archives of Alberta; page 17, Provincial Archives of Alberta.
HEAVY heAvy OIL oil + OILSANDS oilsAnds
1941 Canadian Pacific Railway announces plans to rebate 50 per cent of its royalty to stimulate heavy oil development.
1943 Sparky #1, four miles from Lloydminster, is brought in. After producing for a few years, it is abandoned due to production problems.
1946 Husky Oil Ltd. locates a used 1,500-barrel-per-day refinery in the Lloydminster area.
1940—1949
1950 A provincial government report calls oilsands production economically feasible.
nineteen nineteenhundred hundrednineteen hundred 1943-48 About 200 wells are drilled in the vicinity of Lloydminster.
1945 The Lloydminster area produces about 50,000 barrels of oil, refined by Excelsior Petroleum into primarily bunker “C” fuel.
1947 Husky issues the first posted price for heavy crude oil from the Lloydminster region.
1958 Federal and provincial committees are formed, including the Oil and Gas Conservation Board, to assess California’s Richfield Oil Corporation of California’s proposal to use nuclear detonation to liquefy the oil sands at Pony creek (near Chard, Alta.).
1950—1959
nineteen hundred 1950s Railroads begin switching from bunker “C” to diesel fuel, devastating Lloydminster oil sales.
1953 Great Canadian Oil Sands (GCOS) is incorporated.
1958 A precurser to Syncrude Canada Ltd. builds the Mildred Lake pilot plant.
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the first quarter century: 1986-2011
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TIMELINE tiMeline 1960 The Oil and Gas Conservation Board approves the first oilsands mining scheme.
1963 The “yo-yo” pipeline is built to connect Husky’s Lloydminster refinery to the main Inter-provincial Pipeline.
1960—1969
1972-75 Around 3,000 wells in the Lloydminster area produce about 3,000 barrels per month.
nineteen hundred 1961 The Saskatchewan government begins drilling test holes on provincial road allowances, enabling oil companies to determine reservoir size at a very low cost.
1967 GCOS starts operations of its the first commercial oilsands mine and upgrader complex.
1978 The concept of steam assisted gravity drainage (SAGD) is developed by Dr. Roger Butler for in situ recovery of bitumen.
1970—1979
nineteen hundred 1974 The Alberta Oil Sands Technology and Research Authority is formed as a Crown corporation with a mandate to develop new oilsands technologies.
1978 Syncrude, the second commercial mining/upgrading installation, begins production.
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Canadian heavy oil association
photos: page 18, Provincial Archives of Alberta; Glenbow Archives; page 19, Oilsands Review; Gerry Stephenson; Joey Podlubny.
HEAVY heAvy OIL oil + OILSANDS oilsAnds
1980s-1990s 2-D geological mapping is superseded by 3-D geological mapping to show thicknesses and properties of multiple-stacked layers in the subsurface, along with 3-D geostatical modelling.
1985 Imperial Oil Cold Lake’s cyclic steam stimulation (CSS) in situ oilsands extraction project starts.
1984 The Underground Test Facility is initiated by AOSTRA as an in situ SAGD bitumen recovery facility.
1986 The Canadian Heavy Oil Association is incorporated.
1980—1989
nineteen hundred
1985 Amoco Canada starts the Primrose CSS project.
1991 1993 The CHOA Reservoir Syncrude and the Handbook is published. Fort MacKay First Nation commence 1990-2000s a pilot project 4-D seismic where 30 wood becomes bison are repatriated commercialized. to live on reclaimed Alberta’s first oilsands mining application is landscapes. in SAGD
1988 NewGrade Energy Inc., a joint venture by Consumers’ Co-operative Refineries Limited and the Government of Saskatchewan, completes construction of a heavy oil upgrader. It starts operating in 1990.
1990—1995
nineteen hundred
1992 The Lloydminster Upgrader begins processing heavy oil.
1995 Canadian Prime Minister Jean Chrétien announces $25 billion worth of tax breaks for the oilsands industry.
ns s tio la n es tu o in ra OA us ng CH b Co to rs in a ye
25
the first quarter century: 1986-2011
19
TIMELINE tiMeline
1996—1999
2000-2005 Syncrude and the Fort MacKay First Nation declare their wood bison pilot project a success and applies to Alberta Environment to make bison pastures a permanent feature of reclaimed landscapes. The herd has grown to over 250 head.
2001 The world’s first commercial SAGD project is up and running for Alberta Energy Company at Foster Creek.
2002 The Oil and Gas Journal includes the EUB’s large bitumen reserves numbers in its year-end publication, a major step in the acknowledgment of Alberta’s vast oilsands opportunity.
2003 The EUB publishes its Regional Geological Study of the Athabasca Wabiskaw-McMurray in its Report 2003A in support of the its Bitumen Conservation initiative of the EUB, and as part of the published hearings concerning co-production of gas over bitumen.
neteen hundred 1997 Gulf Canada starts the Surmont SAGD pilot.
2000 The Alberta Energy and Utilities Board (EUB) publishes its first large bitumen reserve number for the year 1999 in its ST98-2000 report.
2001 Alberta’s conventional heavy oil production peaks at approximately 570,000 barrels per day.
2003 The Athabasca Oil Sands Project (mining/extraction/upgrading) starts up, inaugurating a new production growth era.
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Canadian heavy oil association
ur field
Photos: Page 20, Joey Podlubny; Page 21, Canadian Natural Resources; Suncor Energy.
HEAVY heAvy OIL oil + OILSANDS oilsAnds
2008 A global recession–induced slowdown suspends the development of many new oilsands projects.
2006 The CHOA
Handbook is
published.
2006 Oilsands production for the first time surpasses one million barrels per day.
2008 Canadian Natural Resources Limited commences operations at the Horizon bitumen mining and upgrading project.
2010 Suncor Energy Inc. celebrates the reclamation to a solid surface of Tailings Pond One, the first tailings pond in the oilsands sector.
2000-2009
two thousand
2005 ERCB Decision 2005-122 rules production from certain Wabiskaw-McMurray gas zones will not be allowed in 917 wells where gas is in communication with underlying in situ bitumen resources. The decision conserves about 25.5 billion barrels of recoverable bitumen in contact with the shut-in gas.
H2
2009 Construction begins on Imperial Oil’s Kearl oilsands mine, the first project of its kind not to include an upgrading facility.
2
2010 Renewed strength in energy prices and investor confidence again spark forecasts of substantial new growth in oilsands development.
2011 CAPP predicts that in situ oilsands production will overtake mining oilsands production in 2014. 2011 NEB forecasts oilsands production to reach 5.1 million barrels per day by 2035.
2011 The Canadian Heavy Oil Association marks 25 years of operation.
2010-2011
two thousand
2011 CAPP reports total 2010 conventional heavy oil production in Alberta and Saskatchewan of 375,000 barrels per day, and combined mining and in situ oilsands production of approximately 1.5 million barrels per day.
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the first quarter century: 1986-2011
21
MINING PIONEERS
Mining pioneers How entrepreneurs and scientists made the conventional oil industry stand up and take notice By Mary Clark Sheppard
he average Canadian can be excused for having
road materials lab, Dr. Karl Clark, had just found a way of separating oil from
only a vague idea about the oilsands industry, since it is only
the bituminous sand and was causing great excitement among his colleagues.
now an international one. But its origins are Canadian, and this
Tory made contact, an offer was made, and early in September of 1920, Clark
should be celebrated with pride. Before official records began,
arrived in Edmonton with his wife and infant daughter, several months before
it was known that native peoples had observed oil seeping from
Stansfield could get away.
the cutbanks along the Athabasca River near Fort McMurray,
He was given an office, a lab and a good supply of bituminous sand. His
Alta., some 250 feet high. They used the sticky material to caulk
brief was to find a way of turning the resource into an asset for the province.
their boats, as did the early explorers and fur traders who also traversed the
In January of 1921, the Scientific and Industrial Research Council of
area. These oily sand beds were first officially recognized in 1875 by the
Alberta was inaugurated with Clark as its first full-time working member. It
authorities in Ottawa and were named bituminous sands. The resource was
was renamed the Alberta Research Council in 1930 and is now known as
speculated and prospected upon for the next three decades, without any
Alberta Innovates– Technology Futures.
real progress achieved.
Karl Adolph Clark (named after his father’s friends at Hamburg University)
In 1905, the Province of Alberta was inaugurated and two years later
grew up in Toronto where his father, Malcolm Sinclair Clark, was a professor
saw the establishment of its university. The University of Alberta’s founding
of French and German Languages at McMaster University. His grandpar-
president, Dr. Henry Marshall Tory, was trained as a mathematician, but had
ents had emigrated from the Western Isles of Scotland in 1846. Clark’s
a great interest in science and natural resources. He was very much aware
undergraduate studies were at McMaster University and he obtained a PhD
that Alberta’s wealth at that time depended entirely on the cattle and agrar-
in physical chemistry from the University of Illinois in 1916. Rejected by the
ian industry, plus some small coal mines. With the backing of Alberta’s first
armed services, he joined the Geological Survey of Canada, based in Ottawa,
premier, Alexander Rutherford, Tory determined to establish a research depart-
and began fieldwork studying the various rocky materials used for road sur-
ment for studying the province’s natural resources. He was well aware of the
facing materials found in Ontario and Quebec.
20-odd years that had been spent in the fruitless pursuit of liquid oil from the
Later, when working on the Prairies, he encountered a different problem.
bituminous sands. Perhaps what was needed, he reasoned, was an entirely
Before gravel was found, roads were made entirely from the prairie soil. In
different approach and a new technology to develop this potential resource.
dry weather they presented a very good surface, almost like concrete, but
It was only after the First World War that Tory was able to fulfill this dream.
because of the bentonite contained in the soil, in wet weather the road became
By 1920, he had arranged to recruit Edgar Stansfield of the Mines Branch
a slippery, unstable mess along which almost nothing could navigate. Clark
in Ottawa to work on coal classification studies. In the spring of that year,
wondered if the bentonite could be waterproofed somehow. Oil was a natural
Stansfield mentioned to Tory that a young scientist in charge of the Branch’s
water repellent and maybe the bituminous sands could be employed to this end.
22
Canadian heavy oil association
A bitumen production pilot plant north of Fort McMurray called Bitumount operated between 1929 and 1955. The work performed there was eventually considered a singular success, proving that oil suitable for refinery feed could be produced from the oilsands. Photo: Provincial Archives of Alberta
In 1919, the Road Materials Laboratory was set up in the Mines Branch
Up to this point Clark had worked by himself, but for planning a larger test
of the federal government and Clark was transferred from the Geological
plant he needed an assistant. By good fortune, the right man for the job turned
Survey to head it up. Early the next year, some bituminous sand came into
up looking for work. His name was Sidney Martin Blair.
his hands and provided him the opportunity to pursue an idea he had been
Born in Ontario of Scottish ancestry and a veteran of the Royal Flying
thinking about for some time. Based on colloidal chemistry, he applied
Corps Canada, Blair had already studied petroleum engineering via the Kharki
standard emulsification procedures using a soap reagent to a mixture
University program set up in England by President Tory for servicemen await-
of sand and water, but to his astonishment, instead of getting an emul-
ing passage home to Canada from the First World War. He and Clark worked
sion, he got a separation. This was the event Stansfield had related to Dr.
together for four years and developed a friendship that lasted throughout their
Tory at their meeting in 1920 and which led to Clark’s appointment to the
lives. After receiving a master’s degree in 1926, Blair left to learn more about
University of Alberta.
oil refining and enjoyed a distinguished career in the U.K. oil industry during
Clark had already achieved a separation in his beaker in Ottawa. The
the Second World War, before returning to Canada in 1948.
follow-up task now was finding a way of recovering the oil. It looked to be
The mechanics of the process they developed involved the following stages:
a straightforward matter after siphoning off the water, but it proved not to
1. The bituminous sand and sodium silicate were mixed in solution
be the case. In Edmonton, all his attempts to find a way of retrieving the oil without bringing the sand with it, or the sand without bringing the oil
2. This solution was transferred into a treatment box and heated for several hours, during which time the mixture became a pulp.
with it, failed. But, while working through endless failures, Clark noticed
3. The pulp was discharged into a mixing box and more hot water was added.
the propensity of froth to form when his solutions were stirred with more
4. The mixture was moved into a bath of hot water, where an oil froth formed
hot water. This put him in mind of the new technology called mineral flotation that was at that time catching the interest of engineers. After much time spent manipulating the components of the sand in solution with dif-
and the sand fell to the bottom of the bath. 5. A simple drum rotating above the waterline and within the oil froth drew the oil away, leaving the sand to be lifted out by a bucket line.
ferent reagents, he found an answer. It involved the creation of a water pulp
Between 1923 and 1929, three experimental plants were built: in the base-
of the bituminous sand with sodium silicate as the surface active agent,
ment of the university power plant, at the Dunvegan rail yards north of Edmonton
which, when mixed with more hot water, formed a froth that floated the
and on the banks of the Clearwater River opposite the railhead outside Fort
heavy oil and allowed the sand to sink. This discovery marked the end of
McMurray. Each choice of location was a function of its perceived advantages.
the pure research at the lab because the challenge then was to find a way
At the university, because of its proximity to the research lab and a good sup-
of expressing this procedure mechanically. The next phase was to build a
ply of heat and water; at Dunvegan, there was a supply of fresh bituminous
small lab plant, and this is when Clark began to be an engineer.
sand and no restrictions on height, but still sufficiently near to the lab and the first quarter century: 1986-2011
23
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PhotoS: Provincial Archives of Alberta
MINING PIONEERS
Karl Clark had three experimental separation plants to test his hot water extraction process in the 1930s. Above, at Waterways, in the Athabasca region of northern Alberta, and right at the Dunvegan rail yards north of Edmonton. local machines shops; and on the Clearwater River, in the bituminous sand country of the north. The power plant worked very well and produced good samples of oil, but it
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had a design problem caused by lack of headroom. At the Dunvegan plant there
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was plenty of height. This time, results were sporadic and sometimes nothing worked at all initially, but once equipment was changed, things went well. The third plant on the Clearwater River, built in 1928 and operated in 1929, was a joint project with the Mines Branch in Ottawa. At end of season in 1929, the operation was hailed as highly successful. Besides pushing back the frontiers of separation technology, the building of such an operation some 300 miles into the wilderness of northern Canada was noteworthy and the event was recorded in technical journals throughout the world. But again a problem showed up. Yields had been uneven and were sometimes very disappointing. Clark had suspected for some time that there was an unknown factor, and it came to light purely by chance. The bituminous sand at the Clearwater site contained salts that rendered it unusually acidic. When Clark finished his investigations in 1932, he felt confident that all the major factors affecting successful separation had been found and understood. The timing was unfortunate because as the Depression was taking effect in Alberta,
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the Research Council had to be shut down due to lack of funds. Clark was absorbed into the Faculty of Engineering. The baton was then picked up and carried by two pioneer entrepreneurs, Robert Fitzsimmons and Max Ball, whose enterprises each made a contribution to the first large-scale commercial venture, Great Canadian Oil Sands Limited (GCOS), later to become Suncor Energy Inc. Fitzsimmons, originally from the Maritimes, was the first on scene. In 1923, he purchased an undeveloped lease some 60 miles downriver from Fort McMurray, intending to drill for oil. He set up home and garden, settled there with his family
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and secured a post office, calling it Bitumount. His drilling efforts during the following four years came to naught, so in 1928, he built a separation plant. He knew about the success of the Dunvegan plant and more or less copied what was being built on the banks of the Clearwater. Although he had little technical knowledge, he more than made up for it with his innovative skills and enthusiasm. Much to the interest of the research council, his bituminous sand separated extraordinarily easily and without the use of an additive. He managed to build up a little business selling his rather sandy bitumen for roofing purposes and laying on roads. However, the advent of the Second World War caused his financing to dry up and he had to sell out to a Montreal entrepreneur by the name of Lloyd Champion, who reckoned to produce oil suitable for use on the Alaska Highway then being built.
24
Canadian heavy oil association
OILSANDS SOLUTIONS
The second private enterprise, which became Abasand Oils Ltd., was led by Max Ball, an American. He was both a lawyer and geologist with considerable experience in the field of petroleum, and also understood how expensive dry holes were to the industry. Like those before him, he was drawn to the romance and lure of the bituminous sands that lay seemingly ready for the taking. Ball had a separation process developed by J.A. McClave in connection with the University of Colorado. Instead of hot water, he used dilutants to flush out the bitumen. Ball had great difficulty securing a lease because in 1930, in the middle of his negotiations with the federal government, control of natural resources was transferred from federal to provincial jurisdiction. In the end, a compromise was struck. He would build his plant on land already offered by the federal government, known as the Horse River Reserve, and when he needed to expand, the province would offer a larger lease of his choice downriver. This was to be a valuable asset to him later on. When he was able to get started, Ball was beset by mining problems, as his bituminous sand was particularly difficult to quarry due to the presence of marcasite nodules. But he managed to produce diesel oil, which, though rather crude, was useable. The Consolidated Mining and Smelting Company of Canada (CM&S, now Teck Resources Limited) was one of his backers, as it wanted fuel for mining operations along Lake Athabasca. However, disaster struck in 1941 as the plant burned to the ground. It was
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November, and a month later came Pearl Harbor, and the United States entered
· Single Project Execution interface.
the Second World War. At this point, Canada was seriously short of oil. The Turner
· Incorporation of Fabrication and Construction knowledge from concept to commissioning.
Valley field in Alberta was able to produce only about one-fifth of national need. The rest had to be imported from across the border. Under these new circum-
· Design standardization.
stances, the Americans were uneasy about the adequacy of their own supplies
· Simplified Project Controls & Reporting.
and let it be known that Canada should not feel they could rely entirely on them. A committee was set up to address the problem. It was comprised of representatives of both the federal government and the industry, and its focus was on the bituminous sands. Its particular brief was to decide if the Abasand plant,
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then in the process of being rebuilt, was capable of being expanded to 10,000 barrels per day. Since CM&S also used flotation principles for recovering its minerals, it was put in charge of re-examining the plant. CM&S brought Clark back into the picture and asked him to give an analysis of the operation. In his report, Clark pointed out that more diluent was being lost than oil produced, so the separation operation needed redesigning. In the end, the committee decided Abasand was capable of being expanded. It appeared briefly as though there would be a joining of hands between those who had knowledge as well as interest in the bituminous sands— Abasand, CM&S, Clark and the Federal Mines Branch. However, using the
Contact: sales@geminicorp.ca the first quarter century: 1986-2011
25
MINING PIONEERS War Measures Act, the federal government took over the plant and put the Mines Branch in charge. It soon became clear there was no place for the Photo: Provincial Archives of Alberta
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previous team in the new regime. Ball returned to Washington, D.C., where he was quickly taken into the oil controller’s office, the input CM&S had provided was no longer wanted and the Alberta Research Council became personae non grata. Not many months passed before stories about Karl Clark, inventor of the hot water process.
difficulties being encountered at Abasand began to emerge. These continued as further weeks passed. Production was very poor, and eventu-
ally it became known that the plant had become merely a research facility. The Alberta government became very concerned. The minister of public works, William Fallow, a long-time supporter of the research council, made a series of blistering attacks on Ottawa. Alberta authorities were afraid that the failures at Abasand were going to give the bituminous sands such a bad account that development would be put off for years, at least. Fortunately, in June of 1945, the problem was resolved because the plant burned down just as the war was drawing to an end and the federal government made a graceful withdrawal from the scene. Champion, the Montreal entrepreneur who had taken over International Bitumen Company Limited in 1942, was also having problems making his plant operate. In 1944, he finally sought the advice of friends he had in Sun
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Oil Company. They recommended he start over with a new plant. Sensitive to how upset the Alberta authorities were over the debacle at Abasand, and knowing some of the Alberta’s cabinet ministers, Champion suggested that they might together build a really good separation plant that would prove to the world the potential value of the natural resource. At Bitumount he could provide good docking facilities and a site of proven good sand. They would use the research council’s proven technology. He further suggested that he finance half the cost and the other $250,000 be covered by a government loan, which he would repay over a 10-year period. A deal was struck. Although the federal excursion into the bituminous sands had been a disaster, the new Bitumount pilot plant that operated in the summer of 1949 was a singular success. Many technical difficulties had to be overcome and there was much criticism from the government opposition when Champion couldn’t raise his part of the money, leaving the Alberta government to bear the whole cost. But it all turned out well. The oil produced was pronounced suitable for feeding into the refineries of the day, and most importantly, the plant was able to provide the kind of engineering data required should a large-scale operation be built. Almost 20 years earlier, when the Clearwater plant had operated successfully, the petroleum industry considered it only as an interesting innovation. This time, it sat up and took notice that there was a new viable source of
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26
Canadian heavy oil association
crude oil.
Mary Clark Sheppard is the daughter of Dr. Karl Clark, the Alberta Research Council scientist who invented the hot water extraction process that enabled oilsands producers to separate bitumen from its matrix of sand, silt, water and clay. This invention resulted in the first commercial oilsands operations. Clark Sheppard has published two biographies about her father and his work.
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history
From obscure
to essential ft e r a l o n g h i s t o r y of hard labour as the Cinderella in the bargain basement of the petroleum industry, heavy oil rules today. It eclipses the former darlings of the fossil fuel family, light crude and natural gas, as the engine of growth in the 2011 edition of a 25-year forecast done periodically by the National Energy Board (NEB), Canada’s Energy Future: Energy Supply and Demand Projections to 2035. The “reference case,” or scenario rated as most likely to come true, is a paint-by-numbers portrait of the greatest investor-driven oil production prospect outside the Organization of the Petroleum Exporting Countries. The picture draws on business intentions and immensely detailed annual reserves reports by Alberta’s Energy Resources Conservation Board (ERCB). Canadian output is expected to double, reaching six million barrels per day as of 2035. In all its forms— from wells with pumps that strain to pull up molasses-like flows to bitumen mine and upgrader complexes that manufacture premium synthetic crude— heavy oil is forecast to grow to 5.4 million barrels per day or nine-tenths of the national total from the current two million barrels per day or two-thirds. Alberta’s 140,200 square kilometers of oilsands resources are the growth mainstay. Even after making allowances for project delays or cancellations, production is expected to more than triple to five million barrels per day as of 2035 from the current 1.6 million barrels per day. Within the heavy oil product line, the premium-value top item, upgraded 28
Canadian heavy oil association
Left (top): Construction underway on the Great Canadian Oil Sands plant (now Suncor), the first commercial oilsands operation in the world, in 1966. Photo: suncor energy
Left (bottom): Shell Canada’s Scotford upgrader, which was commissioned in 2003. This project marked a new era in oilsands development where it would begin to dominate. Photo: joey podlubny
Heavy oil and oilsands come of age By Gordon Jaremko
synthetic crude, is forecast to grow,
mineral pitch issues from a crev-
and pound a well into the ground
48 metres on his farm 16 kilometres
but at a slower pace that lags the
ice in a cliff composed of sand and
with the cable-tool machinery, which
south of Lloydminster in 1926, he
overall total expansion due to less-
bitumen. It lies a few hundred yards
worked like a piledriver. The epic
and his neighbours sent the water to
favourable cost and price trends
back from the river in the middle of a
effort was fuelled by a common
chemists at the University of Alberta
than the outlook for raw bitumen.
thick wood. Several small birds were
theory of the pioneer era that black
for analysis. After laboratory tests
Upgraded output is expected to
found suffocated in the pitch.” Like
gold lay in pools beneath the bitumen
showed the well had accidentally
about double to 1.9 million bar-
every other aspect of the oilsands,
ore at a depth of about 190 metres.
run into oil, the farmer and his friends
rels daily in 2035 from the current
from microscopic clay “fines” in geo-
Only a puddle of such “free oil” was
created the Marren-Lloydminster
887,000 barrels per day.
logical water associated with the ore
found. The firm went broke. The
Oil and Gas Company Ltd., raised
Heavy oil is no overnight success.
to sandpaper-like abrasive action
deserted rig collapsed and bush
$100,000 and ignited an explora-
No Alberta resource has a longer
of its knife-edged quartz grains on
grew over it until industry veterans
tion campaign that spread across
pedigree or more checkered record
steel industrial hardware, the environ-
Stan Kondratiuk and Fin Lineham
the Alberta-Saskatchewan border-
of striving to grow up into a product.
mental peril noted by Richardson
retrieved it in the 1970s using a metal
lands, with numerous discoveries
The fur trade was at its height and
spawned generations of technology
detector, trucks, helicopters, and
inspiring homegrown companies
development.
cash and services donated by numer-
to keep the drilling going through the Great Depression of the 1930s.
the Victorian-era British princess that Alberta was eventually named
Only 10 years after Richardson’s
ous companies. The sight teaches a
after had not even been born yet at
observation, the first commercial oil
lesson about oil, OTS Park director
By 1934, Lloydminster had natural
the time of the first recorded sight-
well in North America launched the
Barry Moore said in an interview: “It
gas service. The district sprouted
ing of the oilsands. A Cree rover
Canadian industry near Sarnia, in
doesn’t come easy or cheap.”
two oil refineries: Excelsior in the
called Wa-Pa-Sun carried a bitumen
southwestern Ontario. By the time
Variations on the same theme are
town and Dina, about 40 kilo‑
sample east to the York Factory out-
Alberta became a province at the
taught by exhibits and oral history
metres to the south, near Wainwright.
post of the Hudson’s Bay Company,
dawn of the 20th century, oil had
memoirs preserved by the Heavy Oil
Lloydminster had one of the first main
where agent Henry Kelsey made a
its modern image as black gold and
Science Centre in Lloydminster. The
drags paved with asphalt in western
note of it in his official journal. More
inspired feats of technical and eco-
city, east of Edmonton on the Alberta-
Canada. Black smoke rose over the
mentions occurred in the diaries of
nomic daring.
Saskatchewan border, has been the
town from a refinery waste inciner-
18th century northern explorers Peter
A monument to the exploration
capital of conventional heavy crude
ation pit every day except Monday,
Pond and Alexander Mackenzie. As
era—and especially the magnetic
drilling in both provinces for almost
which the plant voluntarily recognized
a trade item, bitumen has a history
attraction of Alberta’s northern heavy
a century.
as Wash Day by stopping the burn-
dating back to the ancient Egyptian
oil regions—greets visitors at an out-
Among the lessons taught by the
ing long enough to let households
pharaohs, with uses ranging from
door shrine to industry pioneers in a
centre is that primitive technology
dry their laundry clean on outdoor
preserving the dead as mummies
secluded southwestern Edmonton
and rudimentary earth sciences did
clotheslines. Farmers in the district
to folk medicine and waterproofing
ravine. A wooden derrick marks the
not invariably end in failure. Lady luck
built fences with discarded drill pipe.
boats and canoes.
entrance to the Edmonton Oilfield
played a big role in the pioneer era
Stores posted entrance signs at their
Technical Society’s nine-acre pri-
of the energy industry.
entrances saying “Please remove
The first description of the oilsands by a scientist—chemist John
vate OTS Park.
In the absence of seismic sur-
oily footwear.”
Richardson, a member of an 1848
The structure is a reconstructed
veys and computer simulations of
Large-scale development began
overland search party seeking the
cable-tool drilling rig that entrepre-
geological formations, fussy cattle
in 1946 with the arrival of Husky Oil
lost polar expedition of Sir John
neur A.F.A. Coyne and his Northern
sniffed out the path to the discovery
Ltd., then an American-owned pro-
Franklin—included an observation
Production Co. Ltd. imported from
that launched conventional heavy oil
duction and refining empire based
of the resource’s potential to be a
Pennsylvania, then hauled in pieces
development with flowing wells and
in Cody, Wyo. The company led a
hazard. While crossing the future
400 kilometres north to the Fort
rocking-horse pumpjacks. When
mini-boom in supplying the railways
bitumen-mining district north of Fort
McMurray area. The enterprise took
his livestock turned up their noses
with heavy crude, barely refined into
McMurray, Richardson recorded in
from 1915 through 1918 to assemble
and refused to drink from a well that
thick bunker oil akin to steamship fuel.
his diary that “a copious spring of
the rig beside the Athabasca River
Charles Marren dug to a depth of
The stuff only had to heat boilers the first quarter century: 1986-2011
29
history
and not work as an instant explosive
development. The Saskatchewan
At its peak in 2003, conventional
From Laboratory to Production: The
mist when mixed with air to drive
government paid half the price of the
heavy oil production hit 917,700
Letters of Karl A. Clark, 1950-66.
the rapidly moving pistons of inter-
$700-million Regina plant by tak-
barrels per day, NEB records show.
His patent on the production pro-
nal combustion engines. Bunker oil
ing on 50 per cent ownership. The
Despite gradual depletion of wells as
cess was 11 years old. The beginning
was a technical advance at first, as a
federal, Alberta and Saskatchewan
they age, output is projected to con-
of operations by the first commer-
cleaner and more efficient replace-
governments shared majority own-
tinue for the next quarter century and
cial plant was still 17 years off. But
ment for coal in steam locomotives.
ership of the Lloydminster project
still be 530,100 barrels daily in 2035.
Clark saw a wide road ahead into
The gravy train lasted until the rail-
and poured in $1.2 billion or 75 per
On the growth side of the heavy
a colossal future for the northern
ways converted to diesel engines in
cent of its costs. In both cases, the
crude spectrum, the oilsands, the
Alberta bitumen belt, with conven-
the late 1950s, enlarging demand for
governments sold their interests to
vigour foreseen by the NEB and
tional black gold paving the way.
the higher-value light oil discovered
industry after construction was com-
ERCB fulfills a prophecy by the
He predicted: “Great volumes of
south of Calgary at Turner Valley in
pleted and early operations worked
Edmonton scientist who invented
oil will be produced. This will have
1936 and southwest of Edmonton
bugs out of their systems.
the original process for bitumen
to get to more than a local market.
at Leduc in 1947. Husky and other
The ensuing wave of drilling and
extraction using hot water. Karl Clark
Bituminous sands development
heavy oil producers devised blends
production growth spawned tech-
predicted a giant future for the big-
depends on pipelines to outside
and opened up niche markets that
nology that gave the heavy oil region
gest but crudest item in Alberta’s
marketing areas. If there had been
kept their specialty alive while it was
a new landmark: spinning tops of
resource endowment at the time that
no oil discoveries and a bituminous
eclipsed by abundant light crude
a potent extraction device known
it most seemed to be doomed by
sand development had to shoulder
through the 1950s, ’60s and ’70s.
as the progressing cavity pump.
better luck elsewhere. He had his
the construction of pipelines as well
Construction of two plants in the
The hardware replaced pumpjacks
vision when the Leduc discovery of
as its own mining and extracting job,
late 1980s, Husky’s Biprovincial
and sucker rods with steel poles
the most valuable naturally occur-
I think the development would be in
Upgrader at Lloydminster and the
that resemble corkscrews but use
ring fossil fuel, freely flowing light
the distant future. But the oilfields
Co-op Upgrader at Regina, set off
a more sophisticated method than
oil, was less than three years old.
are presenting the bituminous sands
the modern wave of conventional
mechanical lifting on auger-like cir-
“Many people consider that the
with a pipeline system to make use
heavy oil development. As in the
cular ramps. The devices work like
finding of oilfields in the province
of. Any time that the cost of produc-
pioneer discoveries, technology
super vacuum cleaners with suction
eliminates any chance of bituminous
ing oil from the bituminous sands is
was not the only force at play in
that overcomes gravity by rotating
sand development in the foreseeable
such as to show a profit, the stage
creating a new market by building
precision-engineered shapes. The
future,” Clark acknowledged in cor-
is now or soon will be set for the
capacity to manufacture heavy crude
force lifts sand out of the ground
respondence dated Jan. 20, 1950.
development to start.”
into a suitable product for fuel and
with the crude, in turn spawning
“I do not think this is so. In fact, I
Oilsands schemes rolled up to
lubricant refineries. Both upgrading
innovations and growth businesses
figure that it is quite otherwise,” he
the industrial starting gate while
projects were deemed to be matters
in separating and disposing of oily
wrote. The document is preserved by
Alberta still had more conventional
of high public interest in fostering
waste in environmentally accept-
his daughter Mary Clark Sheppard
black gold than the pipelines could
resource and regional economic
able ways.
in her book Athabasca Oil Sands:
take. Projects had to fight for delivery
30
Canadian heavy oil association
Left: Drilling steam assisted gravity drainage well pairs in the Athabasca oilsands, 2005. Top right: Conventional heavy oil operations in the Lloydminster heavy oil belt. Bottom right: Inside the central processing facility at Imperial Oil’s Cold Lake in situ project, the earliest commercial thermal oilsands operation. Photos: Joey Podlubny
capacity that was divvied up by
raised output to spread costs thin-
an ERCB market-sharing regime,
ner. They made technical advances
“pro-rationing.”
on a large scale from increasingly
The first commercial mining and
computerized control systems to
upgrading complex, Great Canadian
replacing imported mine bucket-
Oil Sands Limited, only made it into
wheels, draglines and conveyor
production in 1967 by limiting its size
belts with rugged, simpler trucks
to a ceiling that the premier, Ernest
and shovels more suited to the ore
Manning, set after long regulatory
and northern conditions.
and political duels: five per cent of
It took a quarter century for
total Alberta output, or 45,000 bar-
the Athabasca Oil Sands Project
rels per day. The Syncrude Canada
(AOSP) to start up the third Fort
Ltd. project was older, but had to
McMurray mine in 2003 and another
settle for second place in the de-
five years for Horizon to become
velopment lineup because it sought
the fourth. Innovations ranged from
elbow room for 100,000 barrels per
cost- and emissions-cutting reduc-
day. After waiting for ERCB approval
tions in the operating temperature of
until 1969, Syncrude also had to
the production process to building
delay construction in order to fit into
the AOSP synthetic crude upgrad-
provincial oil supply and demand
ing plant near Edmonton, in a more
forecasts. The ruling included a rare
economical location than the sub-
board split. The majority under chair-
arctic climate and muskeg swamps
man George Govier set a three-year
of northeastern Alberta.
postponement, while future chairman
The lone exception to the long
Vern Millard dissented by interpreting
oilsands project lull pioneered a
the economic projections as requir-
new business strategy as well as
ing a longer wait.
technology. The Cold Lake de-
Skeptical companies in the in-
velopment went into action in the
dustry majority held back from
mid-1980s after a ’70s mega-
replacing a partner that dropped out
project version was divided into less
while Syncrude was under construc-
costly stages. By gradually grow-
tion in 1974. The Alberta, federal
ing in profitable phases through the
and Ontario governments filled the
’80s, ’90s and early 2000s, Cold
gap by taking on part ownership and
Lake established reliability and eco-
providing loans and grants. By the
nomic respectability for “in situ” or
time production started in 1978, ris-
underground bitumen extraction with
ing costs, adverse energy policies
steam pumped into the ore. As of
and unpredictable upheavals on the
2015, the NEB predicts in situ meth-
global oil market discouraged any
ods of tapping the four-fifths of the
further new developments. Activity
oilsands that are too deep to mine
focused on making the first two com-
will emerge as a growing majority
plexes economical. They gradually
of production.
Gordon Jaremko has worked since 1972 for newspapers, wire services, magazines and specialty publications, with occasional forays into books and broadcasting, from home bases in Calgary, Edmonton and Ottawa. He is recognized as a leader in coverage of the Canadian energy industry. the first quarter century: 1986-2011
31
www.pwc.com/ca/energy
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© 2012 PricewaterhouseCoopers LLP. All rights reserved. “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. 2327-02-1.4.2012
FEATURE technology history 1 The Alberta Oil Sands Technology and Research Authority Underground Test Facility north of Fort McMurray revolutionized in situ bitumen recovery by proving that steam assisted gravity drainage would work. Image: Gerry Stephenson
In situ heavy oil and oilsands technology How we got here By David Theriault and Neil Edmunds
the first quarter century: 1986-2011
33
technology history 1
n situ oilsands development
the early years
Formation were the inability to push
that required melting, and he clearly
is thriving today. According
Thermal steam flooding recovery
bitumen, a lack of understanding
understood the significant role of
to the Alber ta Energy
applications began as early as 1952
the role gravity could play, massive
gravity drainage. This is in contrast
Resources Conservation
at Shell’s pilot in Yorba Linda, Calif.,
sanding of perforated completions,
to the conventional paradigm of a
Board, there is a significant
at Chevron’s commercial project at
and the common presence of mobile
very difficult fluid to push.
resource at 1.8 trillion barrels
Kern River, Calif., in 1968, as well
water and gas zones.
in place and in situ projects
as in Venezuela. Along the way,
It is well known that the late Dr.
SAGD test at Cold Lake, involving
are producing approximately
cyclic steam stimulation (CSS) was
Roger Butler developed and first
one of the world’s first horizontal
755,000 barrels of oil per day
serendipitously discovered.
published the basic concept of
wells as a producer, plus two verti-
SAGD in 1978. What is less well
cal injectors. However, the results
In 1980, Imperial conducted a
at year-end 2010. About 75 per
CSS proved to be the key
cent of this production comes
to unlocking the bitumen in the
from ther mal methods . T his
Clearwater Formation in Alberta.
development exists because
Imperial Oil Limited began piloting
society demands hydrocarbons,
CSS at Cold Lake in 1965, eventu-
and this demand is growing as
ally building what is still the most
population increases, standards
productive in situ bitumen project
of living improve and technology
in Alberta. This activity was occur-
advances. Technology advances
ring before SAGD and horizontal
come from communication and
well technology. However, the tech-
collaboration among industry,
nology did not fare as well in the
academia and government. Our
McMurray Formation, as evidenced
known and perhaps significant is
did not stand out against the well-
discussion will focus on the
by dozens of pilot tests of CSS,
that in 1978, he was working at the
developed CSS technology already
reservoir recovery technology
steam flooding and in situ com-
Imperial Oil Sarnia refinery, not in
in place, and the technology was
advances in thermal and steam
bustion conducted prior to 1990.
the Calgary heavy oil patch. Butler
not pursued.
assisted gravity drainage (SAGD)
The most prominent reasons for the
understood that bitumen at reser-
Moving to current technology
applications.
lack of success in the McMurray
voir temperatures acted as a solid
In the meantime, the Alberta Oil
W W W. H O C S . C A
Technical advances supporting in situ oilsands development are evidence that this industry does not stand still, and that industry, academia and government do collaborate to advance technology development.
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34
Canadian heavy oil association
Sands Technology and Research
pioneered the use of thermal simu-
McMurray tests. By 1989, the UTF
kicked off from 1997 to 1999
Authority (AOSTRA) had been
lators to model SAGD. Simulation
had demonstrated twin-well start-
at Surmont, Foster Creek and
founded by the Province of Alberta
quickly and convincingly showed
up, effective McMurray sand control,
Hangingstone. Commercial projects
with a specific mandate to com-
that SAGD would be the most suc-
steam trap production control and
initiated since 2001 have resulted
mercialize the McMurray in situ
cessful process of the several under
a likely commercial combination of
in 2010 SAGD production levels
resource. Horizontal wells were
consideration, that horizontal injec-
productivity, SOR and recovery
of 318,000 barrels of oil per day.
identified as a potentially enabling
tors were superior to vertical, and
factor from a decidedly middle-tier
technology, especially after a 1976
that SAGD could be reliably ini-
reservoir.
visit by AOSTRA management to
tiated between twin horizontals
Once SAGD was demonstrated
nical challenges including advancing
an “oil mine” in Yarega, Russia. At
spaced a few metres apart, using
and surface horizontal well drilling
sand control technology utilizing
Yarega, tunnels had been driven in
only heat conduction and gravity.
became commercially available, in
wire-wrapped screens and slotted
a shallow heavy oil formation and oil
At the time, horizontal well drill-
situ oilsands development was in
liners, utilizing gas lift to electric sub-
drained from pipes driven horizontally
ing technology from surface was not
the game big time.
mersible pumps and metal-to-metal
into the sand, which were periodically
yet developed. As a result, three well
steamed. Thus, what was to become
pairs, each about 60 metres long
the Underground Test Facility (UTF)
and 25 metres apart, were drilled
was seen as a means to make a large
upwards from tunnels in the Devonian
number of horizontal wells feasible,
limestone, about 15 metres below
drilled from tunnels with heavily mod-
the base of the McMurray Formation.
ified mine-face drilling techniques.
(Insiders called it the “upside-down
(The remarkable development of
test facility.”) The first pair began
the mine, and custom drilling tech-
steaming in December of 1987 and
nology for the UTF, is an unsung
was converted to continuous pro-
story; even these achievements
duction in April of 1988. Phase A
were critical steps in the success
production rates and steam to oil
SAGD piloting of surface hori-
of the reservoir tests.) AOSTRA
ratios (SORs) quickly set records for
zontal drilling applications were
Moving to today’s commercial application Cold Lake CSS exceeded 100,000 barrels of oil per day by 1998 and has gone through numerous expansions. With the addition of Primrose horizontals, 2010 CSS production levels reached 244,000 barrels of oil per day.
Throughout this time, operators have addressed numerous tech-
progressing cavity pumps to allow lower-pressure operations, using slant drilling rigs to access more shallow reservoirs, improving water recycling and moving towards zero liquid discharge. As a result, cumulative steam to oil ratios (CSORs) have dropped to between 2:1 to 3:1, and industry is applying solvent assisted steam processes that could bring the CSOR to 1.5:1. Canadian thermal technology stands as the most efficient in the world, recovering
Putting rock theory into practice Oil Sands Imaging has the tools and expertise to transform seismic to success. Discover how our advanced Seismic Transformation and Classification (STAC™) workflow can transform your seismic data volumes into highly accurate lithological volumes (including facies and fluids classification).
Ask about IMAC™, our in-house Interactive Multi-Attribute Classification software: designed by interpreters for interpreters. oilsandsimaging.com | 400, 736-8 Ave SW Calgary | 1.403.237.6686 Advanced Reservoir Characterization
In Situ Oil Sands; Oil Carbonates; Unconventional Tight Oil & Gas; Conventional Oil & Gas; and more.
the first quarter century: 1986-2011
35
technology history 1
some of the heaviest oil from colder
collaboration through its formal con-
reservoirs, using less steam.
ferences and informal luncheons
This progress is evidence that
and beer and chat sessions, and
this industry does not stand still,
has facilitated great networking for
and that industry, academia and
all. These advances can be a great
government do collaborate to
springboard to other innovations and
advance technology development.
will continue to improve the environ-
The Canadian Heavy Oil Association
mental and economic performance
has played a prominent role in the
of the heavy oil and oilsands industry
sharing of information and industry
into the future.
David Theriault is senior vice-president, in situ and exploration for Laricina Energy Ltd. He has 31 years of heavy oil and oilsands experience. Prior to joining Laricina, Mr. Theriault was president of Triangle Three Engineering Ltd., providing consulting services directed at oilsands resource assessment, development and exploitation, and provided strategic support on gas-over-bitumen regulatory applications and technical solutions. He was director, oilsands, at Gulf Canada (now ConocoPhillips Canada) from 1997 to 2001, responsible for the Surmont pilot project, the Surmont commercial 100,000-barrel-per-day regulatory applications, Syncrude Canada Ltd., upgrading and the gas-over-bitumen challenge.
Neil Edmunds is currently vice-president of enhanced oil recovery for Laricina Energy Ltd. Mr. Edmunds brings a strong technical background of over 33 years in the oil and oilsands industry, focused primarily on thermal recovery of heavy oil. Prior to his current position with Laricina, Mr. Edmunds was a reservoir engineering specialist with Encana Corp. from 2000 to 2005, where he provided reservoir and operations direction for vapour extraction and SAGD pilots at Foster Creek, researched new recovery technologies and provided expert testimony on gas-over-bitumen issues before regulatory hearings. Formerly, Mr. Edmunds was manager, enhanced oil recovery for CS Resources Limited, responsible for the Senlac thermal project, and later vice-president, recovery technologies, where he focused on research projects. Since 1997, Mr. Edmunds has been principal of Clearwater Engineering providing periodic consulting services in thermal recovery and the development of reservoir simulation software. Prior to that, Mr. Edmunds was process development coordinator at the Underground Test Facility for AOSTRA, and was previously senior reservoir engineer with Vikor Resources Ltd. and AOSTRA. Mr. Edmunds holds a Bachelor of Science in Mechanical Engineering (Gold Medal) from the University of Alberta.
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Canadian heavy oil association
11-08-05 11:50 AM
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Technology History 2
CHOPS and SAGD:
revolutionizing in situ heavy oil By Maurice B. Dusseault
38
Canadian heavy oil association
Left: Cold heavy oil production with sand (CHOPS) operations underway aided by a progressing cavity pump. Below: An operating steam assisted gravity drainage (SAGD) well pad. PhotoS: Joey Podlubny
wo technologies that
became used for surface transfer of sludges and
simply the preferential drainage of the fluid of higher
radically changed the Canadian
viscous liquids, and were used in the heavy oil
density (water) while the fluid of lower density (air)
heavy oil business in the late 20th
industry in California. From there, they made their
remains high in the aquifer. Vertical shafts, perhaps
century are cold heavy oil production
way to Canada in about 1982-83. Sand-resistant
with short radial horizontal drains, and even gently
with sand (CHOPS) and steam assisted
PC pumps capable of lifting viscous oil from
inclined drains from mine tunnels had been used in
gravity drainage (SAGD). Both required
depths of up to 1,000 metres were perfected
California (Kern County), Russia (Yarega), Ontario
a substantial paradigm change in the
in the Lloydminster area between 1983-95 by
(Lambton County) and elsewhere. Oil was delib-
minds of field operators and reservoir engineers.
pioneering companies such as KUDU and BMW
erately produced by gravity drainage into vertical
CHOPS arose directly from field practice; gradually,
Pumps (now Weatherford Canada Partnership).
hand-dug wells less than 40 metres deep in Ontario
aided by incremental advances and new pumping
With the rod-fall velocity problem solved, and with
for a year before the famous Pennsylvania oil strike
technology, it became generally adopted over a
PC pumps that lasted more than a year (up to
by Edwin Drake in 1859.
long period of time. SAGD arose from theoretical
two years now is common), the CHOPS concept
However, the breakthrough SAGD concept of
and laboratory developments, and was met with
started to crystallize. Combined with large-diameter
steam injection combined with gravitational phase
extreme skepticism, but was adopted rapidly after
perforating (“big-hole” charges, up to 30 millimetre
segregation and horizontal well production was
the first full-scale field successes in the early 1990s.
diameter), more aggressive workover methods and
developed by Canadian Dr. Roger Butler in the 1970s.
Heavy oil exploitation in Canada began in the
improved efficiencies in sand handling, by 1990-92
Facing industry skepticism, even within his own com-
1930s in the Lloydminster, Alta., area. Wells 400–500
local operators were aggressively developing suit-
pany, Butler convinced the Alberta government to
metres deep produced one to five cubic metres of oil
able zones and expanding “conventional” heavy oil
fund a full-scale field SAGD demonstration in the
per day using reciprocating rod pumps in perforated
production until CHOPS production peaked at about
late 1980s using shafts and tunnels from which
(10–12 millimetre diameter) casing to produce oil of
10,000 cubic metres per day in about
500–10,000 centipoise viscosity. Small amounts
2002 in Canada. Concepts such as
of sand came in with the oil, probably on the order
deep slurried sand injection with pro-
of 0.1–0.2 per cent, tanks had to be occasionally
duced water, salt cavern waste storage,
cleaned and early local companies seemed aware
various thermal and chemical methods
that sand influx was simply part of non-thermal vis-
to aid in sand separation at the surface,
cous oil production. The low oil rates were in part
and many others developed in response
related to slow rod fall, so that pump speeds of three
to the need to produce oil in a very dif-
to four strokes per minute were common, and still are.
ferent manner than previously.
When prices rose steeply in 1972-81, many large
The important paradigm shift in
oil companies (Texaco Inc., Amoco Corporation,
CHOPS was moving from tolerating a
Exxon Mobil Corporation) attempted to develop
bit of sand and low production rates in
the billions of barrels in the heavy oil belt using sand
heavy oil to encouraging sand influx and learning to
horizontal well pairs were drilled because the tech-
screens, hydraulic fracturing, gravel packs and other
manage the consequences, thereby producing oil
nology to precisely place horizontal wells from the
technologies to exclude sand. A great deal of applied
much more rapidly, and often from fields that would
surface did not yet exist. This seminal project was
research was done on different screens, various slot-
never have been developed otherwise (2.5 to six metre-
viewed in a derisory manner by industry at the time,
ted devices and special methods, but in all cases,
thick sandstones). CHOPS stands as a remarkable
and almost all companies (except Chevron) refused
massive production impairment occurred. The screens
example of practical developments in the field by
the invitation to join the primary experiment, even
and gravel packs plugged quickly, and many rea-
experienced and intelligent operators leading to a
voicing public criticism of the project in technical
sonable wells that had been producing three to five
viable technological construct. Also, more and more
and business conferences.
cubic metres per day with a small amount of sand
oil companies are realizing that sand production is
The Alberta Oil Sands Technology and Research
became non-productive: the sand problem was
almost always beneficial to oil production and are find-
Authority organized the project, and full technical
solved at the expense of the oil. Many large com-
ing ways to manage the sand rather than exclude it,
viability was demonstrated. With the advent of
panies such as BP p.l.c. and Chevron Corporation
reaping the benefits of the improved oil rates.
controlled-trajectory horizontal wells drilled from
lost their enthusiasm over heavy oil and gradually
Leaving aside surface mining, commercial bitumen
surface in the mid-1990s, commercialization fol-
(viscosity greater than 10,000 centipoise) exploita-
lowed in 2001 (10,000 barrels per day at Foster
Progressing cavity (PC) pumps were conceived
tion in Canada began in the 1980s when the Imperial
Creek), exceeding 350,000 barrels per day in 2011
by René Moineau in France in about 1930, while
Oil Limited Cold Lake cyclic steam stimulation pro-
and targeted to reach the one-million-barrel-per-
he was working on air compression for jet engines.
ject passed the 10,000-barrel-per-day threshold.
day mark just before the year 2020.
Moineau received a doctorate degree for his dis-
Gravity drainage was a known concept in water
SAGD seems to be a revolutionary technology with
sertation on this novel approach, later becoming
wells and low-viscosity oil production. The lower-
even geopolitical implications, because the heavy
a professor of mechanics. Gradually, PC pumps
ing of the phreatic table in water well pumping is
oil in the world is by no means evenly distributed.
left the Lloydminster area.
the first quarter century: 1986-2011
39
Technology History 2
There were approximately 14 trillion barrels of liquid crude oil originally in the earth’s rocks, about 4.5 trillion barrels of conventional oil, of which about
Figure 1: Oil Price and Major Events in the Canadian Viscous Oil Industry
1.2 trillion barrels has been produced to date. Of the
70
approximately 9.5 trillion barrels of viscous oil (greater than 100 centipoise), over seven trillion barrels is in
60
sandstones, mostly unconsolidated high-porosity sandstones at relatively shallow depth (less than
14–16 per cent, and the rest of the world has the remaining approximately 40 per cent. SAGD gives the highest recovery factors of any technology and is being adopted rapidly worldwide, but nowhere
USD Oil Price (1982$)
Venezuela has 22 per cent, Russia has perhaps
40
faster than in Canada because of the vast resources
Lloydminster heavy oil began 1930s
Leduc discovery
PC pumps
Peak oil USA
Horizontal wells
Oil Price
30 20
Commercial SAGD Commercial CHOPS
Peak oil Canada
50
1,000 metres). Of this seven trillion barrels of viscous oil resource, Canada has about 25 per cent,
Commercial cyclic steam
WTI BRENT OPEC
Suncor (GCOS)
Syncrude mine
Albian mine
10
and the stable political and economic conditions. Continued improvements are being implemented
0 1946
as the body of practical and scientific knowledge expands unceasingly.
1952
1958
1964
1970
1976
1982
1988
1994
2000
Horizon mine 2006
2012
To finish this discussion of the history of these two technologies, brief descriptions of the screen-
requires continuous sand influx so the formation sand
reservoir should have a richness factor (fraction of
ing criteria are given. These parameters have been
must be cohesionless; furthermore, all attempts to
total zone porosity filled with oil) exceeding 0.7 with
determined over many years through study and field
block the sand or consolidate the reservoir lead to
a reasonable vertical permeability. An overlying gas
observations, and their evolution also forms part of the
massive production rate drop, perhaps by a factor of
zone or a basal water zone can be tolerated because
technical history of CHOPS and SAGD development.
10. Formation sand must continually move slowly to
SAGD operates at a constant pressure, which can
the wellbore, and workover practices are generally
be set to avoid severe influx and steam chamber
aggressive methods designed to start or re-initiate
quenching risks, but of course an ideal reservoir would
Successful CHOPS projects are in unconsolidated
sand influx. Mobile water or gas in the reservoir,
have not these zones and could be operated at the
heavy oil sandstones from 2.5 to 15 metres thick with
even within 500 metres, is generally disastrous, as
optimum pressure (higher or lower than hydrostatic).
oil viscosity up to about 20,000 centipoise. High
the extreme drawdown used and the propagation
Solution gas is not necessary, but its presence will
clay content (greater than six to seven per cent) is
of high permeability zones because of the sand pro-
aid production, and SAGD can be combined with
a strongly negative factor that not only affects oil
duction will lead to early gas or water breakthrough.
solvent injection to reduce steam needs.
amounts of difficult emulsions. Because CHOPS
SAGD
2,500–4,000 barrels per day at peak production.
is a solution-gas drive process, sufficient gas in
Successful SAGD projects are located in uncon-
A key factor in the success of SAGD is the shear
solution is necessary. Most heavy oil deposits are
solidated sandstones at least 20 metres thick with
dilation resulting from the high thermally induced
close to saturated with methane, with a solution-gas
oil viscosities of 1,000 centipoise, up to two million
stresses; this causes massive increases in perme-
constant near two cubic metres per cubic metre
centipoise, although there are no real limits to the
ability, breaks through thin clay beds that impede
megapascals (e.g. 10 cubic metres of methane per
viscosity range—even 100-centipoise oils can be
vertical drainage and generally accelerates oil
cubic metre of oil at 500 metres of depth). CHOPS
exploited by SAGD if conditions are appropriate. The
production.
CHOPS
flux rate, but also leads to the generation of large
Maurice Dusseault started teaching at the University of Alberta in 1977 after completing his degree in civil engineering. For five years, he held an Alberta government–funded chair intended to foster oilsands development and energy research. Since 1982, he has been professor of geological engineering, Earth and Environmental Sciences Department, University of Waterloo, teaching rock mechanics, deep waste disposal and production methods. He has co-authored two textbooks and 480 full-text articles. He works widely with industry as an advisor and professional instructor in petroleum geomechanics, and was a Society of Petroleum Engineers (SPE)–distinguished lecturer in 2002-03, visiting 19 countries and 28 separate SPE sections, speaking on new oil production technologies. Maurice has developed a number of professional short courses in subjects, such as production approaches, petroleum geomechanics, waste disposal and sand control, presented in 20 different countries in the last 10 years. He has also helped found three companies, all still growing. 40
Canadian heavy oil association
In good reservoirs, SAGD wells can achieve
References Dusseault, MB. 2007. CHOPS. SPE Petroleum Engineers Handbook, Chapter 5, Volume VI— Emerging and Peripheral Technologies (EMPT), Ed. Warner HR, 40 pages.
Komery, DP, Luhning RW, Pearce JV, Good WK, 1998. Pilot Testing of Post-Steam Bitumen Recovery from Mature SAGD Wells in Canada. 7th UNITAR Conference on Heavy Crudes and Tar Sands, Beijing, China, Paper 1998.214, 18 pages. (Alberta Energy Resources Conservation Board website)
Joshi, S.D. 1991. Horizontal Well Technology. PennWell Publishing, Tulsa, OK, 537 pages.
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For 25 years, you’ve worked hard to help lighten the industry’s heavy oil challenges. Happy birthday, CHOA. And thanks for giving Halliburton the opportunity to be part of something unique: a respected forum where Canadian operators, service companies and others can freely exchange heavy oil ideas and concerns. Gaining greater insight into operator challenges has helped Halliburton develop everything from industry-leading water management technologies that both conserve water and clean it, to advanced SAGD and multilateral services that safely and efficiently help operators access greater amounts of oil while barely disturbing the surface. Keep up the good work, CHOA. Thanks to you, heavy oil’s future is brighter than ever.
Solving challenges.
™
© 2012 Halliburton. All rights reserved.
HALLIBURTON
regulatory Gas over bitumen: a key conservation decision. Photo: photos.com
THE REGULATOR’S ROLE IN THE DEVELOPMENT OF ALBERTA’S HEAVY OIl aND OILSANDS By Neil McCrank, Q.C.
Impact of Depleted Gas Zone Oil production Steam injection
n 2012, there is a universal recognition that the oil that will be produced from Alberta’s heavy oil and oilsands is significant. The Depleted gas pool
actual bitumen-in-place in northeastern Alberta is estimated to be over 1.7 trillion barrels, of which more than 300 billion barrels are considered potentially recoverable from the oilsands (excluding the vast carbonate deposits). “Proven reserves” are currently 173 billion
Steam injection
barrels remaining to be recovered, of which 80 per cent is expected Bitumen reservoir
to be recovered using in situ technology. While the “regulator y regime” around conventional oil is well documented, very little has been written about the regulation of the unconventional oilsands and conventional heavy oil.
Bitumen production
The early days (pre-1955) One of theof earliest discoveries of petroleum in Canada was directly attributed Impact Depleted Gas Zone
Normal SAGD Process
to the knowledge of local Aboriginal people who travelled the Athabasca Oil production
Oil production
River in northeastern Alberta. They mixed the bitumen that flowed out of injection with spruce gum to caulk the seams of their the banks of theSteam Athabasca
Steam injection
birchbark canoes. This use was documented in the early 1700s by traders of the Hudson’s Bay Company. Normal pressure gas pool
However, while the governments of Canada and Alberta were interested Depleted in developing this possible resource, and piloted “oilsands paving projects” gas pool
among others, it was not until about 1925 that Dr. Karl Clark of the Alberta Research Council successfully demonstrated a separation method using
Steam injection
Steam injectionsoda. These are the same fundamentals used in the hot water and caustic
processing of oilsands at commercial mining operations today.
Illustration: ERCB
Bitumen reservoir
At about the same time, discoveries of conventional heavy oil Bitumen were made reservoir
on both sides of the Alberta-Saskatchewan border.
During the next almost three decades, governments continued their Bitumen production
Bitumen production
research and pilots and encouraged small commercial projects, but the resource was largely ignored while the development of much easier con-
The Energy Resources Conservation Board decision in 2005 to shut in all natural gas wells in the Athabasca area in communication with bitumen deposits ended nearly a decade of debate.
ventional oil grew rapidly in Alberta. The regulatory regime quite naturally followed the resource development activities, focusing on conventional oil discoveries. the first quarter century: 1986-2011
43
regulatory
The growth of the oilsands resource (1955-95)
It was necessary for the regulator to develop regulations in the areas
The development of the regulatory regime relating to the oilsands started
where it was the principal regulator (eg., conservation, safety practices) and
to take shape in late 1954 with the formation of Great Canadian Oil Sands
to enter into joint initiatives with government departments that shared juris-
Limited (GCOS), the forerunner of today’s Suncor Energy Inc. near Fort
diction on air quality, water usage, tailings ponds, etc., (Alberta Environment
McMurray. This led to the passage of the Bituminous Sands Act by the Alberta
and others).
legislature in April 1955, the most important feature of which was the stipu-
The regulator was also obliged to remain informed and current on new
lation that any operation for the recovery of hydrocarbons from the sands
technology that was being developed. The most important development
would not be subject to the provisions of the Oil and Gas Conservation Act.
related to the new technology that would allow for the extraction of the
For the first time, there was recognition that the oilsands resource was
bitumen resource that was too deep to mine. An example was the field test of the steam assisted gravity drainage (SAGD) process that was being tested
a different product for the government to regulate. Over the next four decades, the regulators—most importantly the Petroleum and Natural Gas Conservation Board (1938-87), the Oil and Gas Conservation
by AOSTRA at the Underground Test Facility in the Fort McMurray area.
Board (1957-71) and the Energy Resources Conservation Board (ERCB,
The modern era (1995-today)
1971-95)—responded to the developments and major legislature initiatives
Since about the mid-1990s, oilsands and heavy oil resources have become
such as the 1983 Oil Sands Conservation Act.
more very important to Alberta, Canada, and indeed North America.
In the mid-1970s, the Alberta government created the Alberta Oil Sands
The large-scale mining operations in northeastern Alberta continue to
Technology and Research Authority (AOSTRA) to encourage development
expand and multiply, and the regulator maintains a constant vigilance in
of new technology for the recovery of bitumen from the oilsands.
ensuring these developments continue to be in the “public interest.”
It was essential for the regulator to develop processes to ensure that
However, the more dramatic change has been in the technological
applications, approvals and inspections related to oilsands mining opera-
advancements that have allowed the production of in situ bitumen to become
tions (ie., GCOS, Syncrude Canada Ltd.), in situ technology pilots (Shell
commercially viable. The technology centres around thermal processes
Canada Limited at Peace River, BP p.l.c. at Wolf Lake) and others were
such as SAGD, electric stimulation and combustion, all of which cause
“in the public interest.”
the reservoir to be heated to the point where the bitumen begins to flow
During the same time frame, these same activities relating to the heavy
naturally and is then collected and pumped to the surface. This new focus
oil development (ie., Imperial Oil Limited conducting small-scale pilots at
on in situ development created a need for the regulators to find new ways
Cold Lake) were being carried out by the regulator.
of assessing and monitoring these projects.
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44
Canadian heavy oil association
One of the major contributions made by the regulator (the Alberta
battles between the bitumen leaseholders and the separate holders of
Energy and Utilities Board—AEUB, 1995-2008—the successor to the
natural gas leases, and a number of inquiries that were held by the ERCB/
earlier ERCB and renamed the ERCB again in 2008) was to recognize
EUB. The government, the lessor of these gas leases, was obliged to pro-
the need to re-categorize the in situ bitumen “resource” to a “reserve”
vide compensation for any loss of value to the lessees, but the bitumen
where it was proven on the “core and cuttings” analysis to be commer-
resources were protected from possible sterilization by the depletion of
cially viable with current technology.
the gas cap and the associated pressure.
In the early 2000s, the AEUB announced that the “proven reserves” in the oilsands were upwards of 173 billion barrels. This change was
The way forward
initially criticized, but after a “stout” defense of its scientific approach
The hydrocarbon energy deposits in Alberta are massive and their extraction
by the AEUB, the international oil and gas community accepted these
will remain challenging. It will continue to require dedicated profession-
“proven reserves” calculations.
als in the industry, the government and the regulator to ensure that the
A further contribution made by the regulator was the protection of
resources are developed “responsibly and in the public interest.”
this massive “proven reserve” so that it could continue to be extracted in an efficient and effective manner. This became known as the “bitumen conservation initiative.” When the Oil and Gas Conservation Act was enacted in 1983, the requirements for approval of gas production within or adjacent to oilsands deposits were not carried over from the previous Oil and Gas Conservation Act. This was probably due to the fact that at that time, there were no expectations that the bitumen would ever be produced and, in any event, the need for a preservation of the pressure due to a gas cap was not contemplated. In 2005, the AEUB took a decisive step to order a shut in of all gas wells in the Athabasca area that were known to be in communication with known deposits of in situ bitumen that were deemed commercially producible. This action brought to a close a decade of hotly contested
Neil McCrank, Q.C., is former chair of the Alberta Energy and Utilities Board, a position he held from 1998 to 2007. Mr. McCrank received his bachelor of science degree in electrical engineering in 1966 from Queen’s University in Kingston, Ont. In 1969, he graduated with an LL.B. from Queen’s University and was admitted to the Law Society of Upper Canada in 1971 and the Law Society of Alberta in 1980. He is also a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta. He is currently counsel in the Calgary office of Borden Ladner Gervais LLP.
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the first quarter century: 1986-2011
45
first nations
Working together to reach consensus and achieve shared aims By Jim Boucher
he journey the
also on a provincial and national scale—
First Nation is composed of Cree
aboriginal community
in large part due to the advent of the
and Dene people who have prac-
a n d i n d u s tr y h ave
oilsands industry as a substantial
ticed hunting, trapping, fishing and
taken together has—at
economic driver.
gathering along the Athabasca River
times—been fraught with
difficult, that journey needed to be taken for us to reach where we are
The FMFN comprises over 600 band
As a First Nation, we consider
today—a place of better understanding,
members with approximately 400
ourselves a leader in working col-
greater mutual respect and increased
residing in the hamlet of Fort McKay,
laboratively with industry, and hold
capacity to work together. As chief of
a community located approximately
a successful and long-established
the Fort McKay First Nation (FMFN)
65 kilometres north of Fort McMurray,
record of strong relationship-building
for a good portion of the last 25 years, I
Alta., nestled along the shores of
with the various mining companies
have witnessed momentous economic
the Athabasca River in the Regional
operating near our land. Given the vast
changes not only within my region but
Municipality of Wood Buffalo. Our
amount of activity concentrated within
Although sometimes
46
Canadian heavy oil association
for generations. We are a signatory to
The Fort McKay First Nation: Our community and our people
complexity and contention.
Treaty 8, and belong to the Athabasca Tribal Council (ATC), of which I am also on the board of directors.
Left: The five First Nations groups in the Athabasca oilands region, including the Fort McKay First Nation, are represented by the Athabasca Tribal Council. Photo: Joey Podlubny
Below: The community of Fort McKay has been interacting with industrial developers for close to 100 years. This is Fort McKay in the 1920s. Photo: Provincial Archives of Alberta
the Athabasca oilsands, it could be
available to our community members,
The aboriginal community has long
of this work over two decades, the ATC
argued that there is nowhere else in
we have reaped a number of benefits
recognized the need to establish a
has been able to establish very healthy
North America where there is as signif-
from resource development within the
constructive working relationship with
working relationships with industry
icant an impact on a community from
region. At the same time, this has not
industry and, likewise, industry also
and government that have significantly
a resource development standpoint as
been without consequence in terms
has appreciated the need for foster-
benefited the aboriginal communities
in Fort McKay. Since 1986, oilsands
of impacts on our environment and
ing a productive relationship with the
of the Wood Buffalo region.
production in our region has doubled
traditional way of life. We are also
aboriginal community. In 1988, the ATC
and is expected to double again by
deeply concerned about the effects
was formed to represent the interests of
2020. In the past, our First Nation
of such development on our water, air
five First Nations in close vicinity to oil-
The oilsands and Fort McKay First Nation today
has estimated there to be approxi-
and land, and how this may adversely
sands development in northern Alberta:
As a First Nation co-existing with
mately 800 million barrels of oil within
affect our culture and traditions, par-
Athabasca Chipewyan, Chipewyan
oilsands development, we are com-
our territory, and with that heralds the
ticularly for future generations.
Prairie, Fort McKay, Fort McMurray
mitted to maintaining our tradition of
No. 468 and Mikisew Cree.
longstanding relationship-building
potential of great opportunity for our
From 1998 to 2002, the ATC
with industry for the betterment of our
Industry Agreement Group oper-
community. Our focus for the future
ing near our lands are run by Suncor
Aboriginal and industry relations: A historical journey
ated with a primary focus to build
has been to maximize our community’s
Energy Inc., Syncrude Canada Ltd.,
In the past, Aboriginal People were
capacity between the regional First
economic prosperity through creat-
Royal Dutch Shell plc, and Canadian
not necessarily considered obvious,
Nations and the industry groups work-
ing sustainable, long-term growth
Natural Resources Limited. Through
integral parties to be included in deci-
ing in the Athabasca oilsands. Their
and development while upholding
this, we are profoundly familiar with the
sions on development or consulted on
aims were to foster long-term mutu-
respect for our environment. Given
issues related to the oilsands industry,
the impact of such development on
ally beneficial relationships between
this, our First Nation brought our for-
community relations, environmental
our communities. We had to become
all parties (First Nations, industry and
mer Industry Relations Corporation
monitoring and ecological preser-
proactive in asserting ourselves as im-
government), and support growth and
under band administration as the new
vation. Given our circumstances, our
portant members of the community
sustainability of ATC-member First
Sustainability Department in early
First Nation and community members
whose voices and input needed to
Nations while maximizing the benefits
2011. This restructuring was done to
have realized many positive gains—
be heard and respected. We wanted
and managing the impacts of indus-
provide community members greater
largely financial—as a direct result
to become active participants in a
trial development. In 2002, this group
access to information, services and
of oilsands development. Through
viable economic opportunity, which
transitioned from capacity building to
knowledge about industry development
agreements we have forged with oil-
the oilsands offered, while also pre-
more of an issues-management pro-
while helping to ensure Fort McKay’s
sands companies, our joint venture
serving our culture and traditions and
cess within the framework of a new
economic prosperity, social stability,
partnerships with industry through
respecting our environment. And
structure that included ATC-member
long-term sustainability and a healthy,
our Fort McKay Group of Companies
we have worked hard over the last
First Nations, industry groups and all
productive environment for our future
as well as employment opportunities
number of decades to do just that.
three levels of government. As a result
generations.
First Nation’s community members. The mining projects currently operat-
the first quarter century: 1986-2011
47
first nations
From our perspective, long-term
working together with industry to reach
in the economy through building the
and support community members in
sustainability involves establishing
a shared understanding for protect-
capacity of our community members.
launching their own businesses.
agreements with each of the min-
ing the environment and First Nations’
Our aim is to build community-
ing companies operating in the Fort
interests. Environmental issues out-
member capabilities so they may
Moving forward
McKay area that address environ-
lined in the agreement include noise,
continue to thrive economically, cul-
The oilsands industry provides the
mental and economic stability and
odours and air quality, air-quality stan-
turally and spiritually for generations
aboriginal community an important
security in the community for future
dards, safety, the management of water
to come—reaping the benefits of
opportunity that we must be pre-
generations. The first new agree-
use and potential impacts regarding
progress that come with resource
pared to maximize and manage for
ment reached was in 2011 with Total
the Athabasca and Ells rivers, wild-
development while still honouring
the long-term sustainability of our
E&P Canada for its proposed Joslyn
life impacts, soil and vegetation, mine
our history, customs and traditions.
communities and our people into the
North mine. This represented a water-
planning, tailings and land reclamation.
We also appreciate that educa-
future. I believe that Aboriginal People
shed moment, providing an historic
We also recognize the need to
tion and training are the keys for our
will have an even more integral role as
example of a First Nations community
further strengthen our participation
community members—particularly
participants in Alberta’s thriving econ-
our youth—to become active partici-
omy for decades to come; however,
pants in the resource economy and in
we need to ensure that we are suffi-
shaping their own destinies. In support
ciently equipped with the education
of this, our First Nation has created
and training necessary to make that
systems for educational advance-
a reality. Through the important rela-
ment, career building and business
tionships that we have forged with our
development. We have an E-Learning
industrial neighbours, we also look for-
Centre in Fort McKay, which operates
ward to continuing to work with the
as a Keyano College satellite campus
oilsands industry as both economic
providing academic upgrading and
partners and workforce participants
foundational programs to our commu-
for the long-term prosperity of all of
nity members. In addition, we have a
us living and working within Alberta’s
Business Incubator Park to encourage
northeastern region.
Jim Boucher is the elected chief of the Fort McKay First Nation, a position he has held since 1986. He is also chairman of the board of the Fort McKay Group of Companies (FMGC), 100 per cent owned and controlled by the Fort McKay First Nation of Alberta, and involved in a number of joint ventures. Under Chief Boucher’s vision and leadership, the FMGC has grown into one of the most successful First Nation–owned commercial enterprises in Canada, with annual revenues of more than $50 million. Chief Boucher is considered one of the most influential people in Alberta, and one of the most successful aboriginal leaders in Canada.
Dave Theriault, Laricina’s Senior VP In Situ & Exploration, is a leader in advancing Laricina’s growth and development through his work with industry associations, government and regulatory bodies. Mr. Theriault has been instrumental in supporting the progress of the Canadian Heavy Oil Association since its inception, both as a member and past president. His commitment to the growth and success of the association has been crucial in its evolution over the past 25 years. Congratulations to Mr. Theriault on his Canadian Heavy Oil Association Life Membership for Achievement Award.
Congratulations to CHOA on 25 years of industry leadership support.
www.laricinaenergy.com
48
Canadian heavy oil association
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New ideas. New approaches.
presidents
CHOA Past Presidents 1987 Ken MacRae 1988 Paul Carr, Alberta Energy Company (retired) 1989 Paul Carr, Alberta Energy Company 1990 Terry Kimmel 1991 Dennis Miller, Westmin 1992 Bruce Lounds, Amoco Corporation 1993 Howie Dingle, Imperial Oil Ltd. 1994 Robert Wilson, Husky Energy Inc. 1995 Jane Stevens, CS Resources (Southern Alberta Institute of Technology) 1996 David Theriault, Alberta Energy Company (Laricina Energy Ltd.) 1997 Don Towson, Petro-Canada (retired) 1998 Keith Sadler, Alberta Energy Resources Conservation Board (MEG Energy Corp.) 1999 Sue MacKenzie, Petro-Canada (independent consultant) 2000 Claes Palmgren, Petro-Canada (Statoil Canada Ltd.) 2001 Albert “Ab” Fink, Petro-Canada (retired) 2002 Daryl Wightman, Encana Corporation (Rock Doc Consulting Ltd.) 2003 Gord Rouse, Petro-Canada (Laricina Energy Ltd.) 2004 Mark Doig, WorleyParsons (Husky Energy Inc.) 2005 K.C. Yeung, Suncor Energy Inc. (Husky Energy Inc.) 2006 Gerry Belyk, APA Engineering (EIT Canada Ltd.) 2007 Bill MacFarlane, Nexen Inc. 2008 Trent Kaiser, Noetic Engineering Inc. 2009 Tracy Grills, T. Grills & Associates 2010 Barry Lappin, FMC Technologies 2011-12 Gerald Bruce, MEG Energy Corp. 50
Canadian heavy oil association
CHOA past, present and future A collection of past presidents reflects on what was and what is to come By Deborah Jaremko Photos by Joey Podlubny
n December 2011, a group of past presidents of the Canadian Heavy Oil Association (CHOA) gathered to share their stories about involvement in the CHOA, events during their tenure, challenges they faced and their views on where the association should go in the future. This conversation is largely drawn from that meeting.
HOW WOULD YOU CHARACTERIZE THE STATUS OF THE HEAVY OIL AND OILSANDS INDUSTRY AT THE TIME OF YOUR PRESIDENCY? Jane Stevens: [In] 1996, the oil price was really low and a lot of heavy oil production was shut in. There were revised tax and royalty rules that were favourable, and a favourable differential. I think things were just beginning to improve again [after some of the] curveballs that the industry had received, such as the National Energy Program. As far as CHOA was going, we had at that time 352 members. Don Towson: The industry started out being more conventional heavy oil– focused. The big activity in the oilsands industry [in 1997] was mining. We
Jane Stevens 1995 CS Resources (Southern Alberta Institute of Technology)
were attempting to get the miners involved in the
SAGD [steam assisted gravity drainage] was brand
Daryl Wightman: The industry was characterized
heavy oil association, but not with very much suc-
new, unproven commercially. Heavy oil exploita-
by a period of growth [in 2002], which led to
cess in those days. The in situ other than Imperial
tion was predominantly non-thermal and [cyclic
rapid growth in the CHOA membership num-
[Oil Limited]’s Cold Lake operation, which was
steam stimulation].
bers, too. We grew very quickly from 300 or so
underway then, was very much pilot-focused—
We really weren’t considered mainstream back
all sorts of pilot operations going on, not much
then, so elevating our profile, gaining additional
to about 1,000. Mark Doig: In 2004, we really started to see the
in the way of commercial activity.
exposure and “trumpeting” the bright future of our
industry heat up. That’s when we started to see
Keith Sadler: I would say that the heavy oil and
industry were all key elements of our work. It was
some of the forecasts of $80 billion of capital
oilsands industry [in 1998] was really starting to
sometimes challenging to get people’s attention.
being spent over the next 10 years, and we’d be
evolve as a major player in the oil and gas industry.
We had a great CHOA board and membership—
producing five million barrels per day of heavy
There were numerous new in situ projects being
lots of energized right-minded people—and we
oil by 2025 and all these other wild predictions,
proposed, including the initial developments in
had a lot of fun moving the organization forward.
and that’s when we started to run into the real
the Athabasca oilsands area. Today, this area has
We were trying to break the 400-member mark,
resource shortages. Gas prices started to rise
many successful operations.
and we did!
and we were looking at alternatives to gas to feed
There was also a lot of interest and information
Ab Fink: It was a mature thing in the conventional
these projects, and I think we went from about
exchange amongst the CHOA membership, so
heavy oil side of the business. At that time [in
500 to about 800 members. So as well as the
technical meetings were very popular, as they are
2001], SAGD was starting to ramp up and I think
industry booming, the CHOA really started to
today. As well, international interest was increas-
that reflected in what happened to the member-
boom during that period, too.
ing in the form of oilsands conferences in the
ship. When I first joined [in the mid-1990s] it was
K.C. Yeung: It was about [2004-07] that you saw
U.S. and China.
about 150, and when I left in early 2000s it was
these commercial projects. During the appli-
It was very exciting to be part of an industry
800. The onslaught of people came on, I think,
cation and construction phase, people really
that was clearly beginning to take on a predomi-
in conjunction with the way the oilsands started
started to come in and look at all the CHOA
nant role in Alberta’s energy industry. Similarly,
up and really started becoming a bigger force in
activities. It was about that time that we had the
it was exciting to be part of the CHOA and to be
the industry. In fact, it was interesting because
Fort McMurray conference with dmg [:: events],
associated with the key players in the industry
one of the things that evolved over the period
and the first time I offered the SAGD 101. It
at the time.
was a bit of a push back from the conventional
was also the time that people from overseas
Sue MacKenzie: We were definitely a nascent in-
side, saying, “Geez, you know, there’s so many
started to come to Canada, and so we were
dustry in the non-mining domain [in 1999]—still
guys from the oilsands side here; are we losing
being invited to attend a few events with Alberta
considered to be the ugly duckling, high cost, low
touch with conventional heavy oil?” and that was
Economic Development. In 2005, we went to
recovery, R&D [research and development]-esque.
a bit of an issue.
China to attend a heavy oil seminar there, and
David Theriault 1996 Alberta Energy Company Ltd. (Laricina Energy Ltd.)
Don Towson 1997 Petro-Canada Limited (retired)
Keith Sadler 1998 Energy Resources Conservation Board (MEG Energy Corp.)
the first quarter century: 1986-2011
51
presidents
then the year after was about the time that we
that were being developed. [Membership was]
We consciously looked at the [membership] mix
went to Kuwait.
over 1,000—it was 1,200 or something like that.
and said that we’ve got to keep the mix, because
Gerry Belyk: Really, you know, in 2006-07, is when
Barry Lappin: In my term [2010-11], it was the
otherwise it’ll turn into, you know, a Petro-Canada
it was just going gangbusters. It was just amaz-
media exposure and the explosion of the oppo-
organization or an Imperial organization, or what-
ing what was going on. The folks were starting
sition, and a lot of it not making a whole lot of
ever, and the intent was, no, you have to keep it
to come in from overseas, and then they were
sense factually or having Hollywood getting
across the width and the breadth of the industry
inviting us out and we were going to a number of
involved in it now. It’s incredible that you see
and who our membership represented.
different places. There was a huge demand, more
the oilsands on the front page now. When the
than there even is today. There have been [many
association started, nobody wanted anything
WHAT MAKES CHOA SO SPECIAL
trips], certainly to China, Singapore, Malaysia,
to do with it.
David Theriault: It is a great opportunity to share
Peru, Kuwait, India and Russia.
And we actually saw that [international] invest-
experiences and network.
K.C. Yeung: I think it was all these multi-billion
ment happening, and a lot of it from Asia. We’re
Ab Fink: It’s inexpensive and you get a bunch of
dollar projects; one factor is the oil price was going
[also] starting to see a lot more collaboration,
insights from people, standing around just chat-
up in 2006-07, and 2008, that’s when everybody
and again, this is a real shift from the earlier
ting about stuff, and/or the actual presentations.
comes in, with the proven technology.
years in our industry where we saw people that
In the presentations, we always said we couldn’t
Trent Kaiser: [In 2008-09] there was a huge explo-
were very protective of technology, very close
just have somebody come in and just tell us a story.
sion in recognition of the potential of Alberta’s
to the vest, and now we’re seeing a lot of joint
It’s got to be more than just somebody’s thought
heavy oil resources. There was a lot of excitement
ventures, we’re seeing a lot of collaborations.
on a piece of paper. Somebody’s actually doing
in those days with people seeking us out, want-
One other thing I think is interesting: I saw
ing to find out more, trying to figure out how their
a statistic that said as an industry we are now
Barry Lappin: How we are different becomes very
snake oil might fit into the oilsands industry. And
spending more money on maintenance and
apparent when you look at our membership base.
then over the next couple of years, you started to
operations than we are on capital, which tells
We’re not representing mining companies; we’re
hear a bit about the opponents to the industry.
us that we’ve kind of arrived.
not representing in situ individually. We’re represent-
It was quite a roller coaster ride to feel all of
something with it.
ing everybody including the government, regulatory,
this excitement and then all of this anxiety from
THE GENESIS OF CHOA
Europeans and others that were staring to hurl
Ab Fink: When you think of it, it started out with
keeps us unique, I think. It’s kind of our brand, that
the rocks at the industry with some half-truths
a couple of guys saying to each other, “Let’s go
is, the CHOA brand, and what sets us apart.
and facts taken out of context. The interest that I
down and have a beer and talk about what we’re
K.C. Yeung: It’s relatively informal compared to the
acquired while I was president was in addressing
doing.” And it sort of progressed from that kind
other organizations...[and] you don’t need to be
all of these public perceptions or misperceptions
of informal discussion.
an engineer or technologist or geologist.
Sue MacKenzie 1999 Petro-Canada Limited (independent consultant)
Albert “Ab” Fink 2001 Petro-Canada Limited (retired)
Daryl Wightman 2002 Encana Corporation (Rock Doc Consulting)
photo: supplied
environmental, all the different services. That truly
52
Canadian heavy oil association
Don Towson: It’s an organization of people and
want to share all the profits, and we made a lot
it broadens everyone’s horizons. What I always
not of companies.
of money from that conference.
do to people who ask me, “How do I get to know
Ab Fink: [At CHOA events] I kinda felt like I was
Gerry Belyk: I know when I started looking into
the heavy oil industry?”—the first thing I say is,
just having a discussion with somebody about
[CHOA], I thought it would be a good opportunity
“Join the CHOA.”
something. And it was easy, it happened; it was
to meet people, seeing the different technologies
much easier to get into than feeling like you had
that are going on and also giving overviews of
THE EVOLVING ROLE OF THE CHOA
to get up in front of somebody about something
what is happening in the marketplace. The bot-
Trent Kaiser: The interest that I acquired while I was
very formal.
tom line to it all is relationships and it’s contacts,
president was in addressing all of these public
Jane Stevens: For me, it was a home for a geolo-
and absolutely in all my years of working, which
perceptions or misperceptions that were being
gist because there really wasn’t much offered by
has been 19 or so years, is that this is the most
developed in the industry. I think that’s part of,
[other groups that are] all sort of about explor-
amazing organization I’ve ever been involved with
just that growth of recognition, led to the work
ation. We don’t have to go out and find it [heavy
as far as meeting people and just gaining expo-
that we did on changes in governance for the
oil and oilsands]; we know where it is, we just
sure with people. Phenomenal.
board, which I think is a hallmark that several
need to know how to get it out of the ground.
Gord Rouse: I think there is something for every-
of us can be proud of, transitioning the asso-
It was more of a reservoir description task for
body, you know, whether you like the technical
ciation towards having a bigger contribution on
a geologist and not an exploration task, so I felt
conference in the spring or the business one in
this global stage.
that CHOA was speaking more my language at
the fall, or if you like golf or curling, you can go
Barry Lappin: Trent kind of left a legacy of our asso-
the time, and they didn’t seem picky that I was a
there at some point in the year. And, of course,
ciation trying to leap into the public perception
geologist and not an engineer.
there are the five different groups that make up
area, but we also made it to an elementary school
Mark Doig: A great illustration of [the uniqueness of
the lunches—and it’s not always at lunch, it can
once. There’s a first for the CHOA. We actually
CHOA] was the ICE 2004 conference. We did
be at 3 o’clock for a beer.
went to a class, and went into a school and actu-
that in collaboration with the CSPG [Canadian
Mark Doig: I think the reason CHOA has been
ally talked to the kids.
Society of Petroleum Geologists] and the CWLS
successful is that we focus on being a technical
Trent Kaiser: My favourite quote from that elemen-
[Canadian Well Logging Society]. The difference
group, exchanging information and an opportunity
tary school visit: “We’re using SAGD to get the
in approach between the CSPG, the CWLS and
for networking. Those are the twin pillars of how
oil out of the ground. You know what SAGD
the CHOA was like night and day. They were
the CHOA has grown and will continue to thrive.
stands for? S is for steam, because we need
appalled that these ragtag gypsies would come
The way I look at the CHOA is that it is the
the steam to make it hot, and A is for assisted,”
along to these meetings and no, we didn’t want
window on the industry. I’ve been in the heavy
and you know, we went through the letters...”Can
to give out speakers fees, and no, we didn’t need
oil industry 30 years. When I joined the CHOA
anyone guess what the D stands for?” “Oooh,
to have specially edited papers, etc. But we did
in its infancy, it really broadened my horizons, as
oooh, ooh! Dirty!”
Mark Doig 2004 WorleyParsons (Husky Energy Inc.)
K.C. Yeung 2005 Suncor Energy Inc. (Husky Energy Inc.)
Gord Rouse 2003 Petro-Canada Limited (Laricina Energy Ltd.)
the first quarter century: 1986-2011
53
presidents
It spoke volumes about the challenge that we had ahead of us because already in Grade 3, they were already indoctrinated. On that piece about, what do people expect
[the balanced advocacy approach] is happen-
we’re going to be aiming in the wrong direction.
ing, but I think it is very difficult.
We all have an opinion of what we think the group
LOOKING TO THE FUTURE
wants and it might be perfectly accurate, but we have to be careful in that if that does change,
from the CHOA, it’s part of a riddle that we still
Mark Doig: Five years ago, at our 2006 long-range
we don’t miss the boat.
haven’t solved yet in terms of what the collective
planning retreat, I was the past-president going
Barry Lappin: [The year] I was president was the
knowledge is in our membership and how it can
out and was asked by the board to give a five-
first year that the governance board actually was
be leveraged to provide more reliable and more
year vision of the CHOA. It is interesting seeing
in existence, and we had a full-time executive
honest information about the industry, and there
the CHOA now compared with our vision of it
director and that made a huge, huge differ-
is an expectation that we are advocating for
five years ago. We looked a lot back then at
ence. [We have] established new policies and
the industry. I think some of this has to be, you
how our membership was portioned—in situ
procedures; we re-aligned the board and the
know, how do you define advocacy? Are you
versus mining versus conventional, how much
operating committees; we got student member-
trying to provide balanced information about
of it was owner company people, service com-
ships, special rates for students; we introduced
the industry—that’s how I think of advocacy—as
pany people, etc.—and we stated at that time
the Conversation Dinner Series, the Innovation
opposed to promoting the industry directly and
we wanted to keep that sort of diverse mix, and
Series, we have a new journal, a new website,
specifically to grow it, and I think for the good of
I think we have.
a member survey, and we also had to come up
the industry, there is a huge opportunity here.
We wanted to maintain the technical events;
with a new financial model to actually have a
Barry Lappin: Part of the big problem was, going
we said at the time that we wanted to look at
full-time staff. These are the things that hap-
back a few years, we didn’t have the resources.
creating an executive within the CHOA office
pened in one year.
We didn’t have staff and that was really the con-
and governance, and [decentralizing] the CHOA,
K.C. Yeung: I think right now, we can say that heavy
straining factor, I think. I think the new Heavy Oil
giving it more than just a Calgary focus, espe-
oil is here. Before, it was all about the future;
101 content is more geared toward that. I think
cially in Edmonton. A lot of what we hoped would
not if, but when. When is now. And it contin-
happen five years ago has actually come to frui-
ues to grow in different places depending on
tion, so I would think five years from now we’ll
how the world turns. But we have to give out
probably be carrying on those same trends.
the message that this heavy oil/oilsands will be
Ab Fink: You’ve got to be nimble to be good—I
the energy resources for Canada and for the
think that applies to us in the sense that we’ve
world for a long time, and it will be sustainable.
got to be cognizant of what our membership
We have to continue to give this message out
wants, make sure that we’re keeping aware of
so people are proud to be part of the industry
that and meeting that need, because otherwise
and proud to be in the CHOA.
Deborah Jaremko is the founding editor of Oilsands Review. She also serves the CHOA as chair of the editorial committee and as a member of the education sub-committee.
Gerry Belyk 2006 APA Engineering (EIT Canada Ltd.)
54
Canadian heavy oil association
Trent Kaiser 2008 Noetic Engineering Inc.
Barry Lappin 2010 FMC Technologies
Connacher congratulates the Canadian Heavy Oil Association on its 25th Anniversary! Connacher is committed to developing strong and sustainable relationships, focusing on excellence, innovation and commitment.
Suite 900, 332 - 6 Avenue SW Calgary, AB Canada T2P 0B2 E: inquiries@connacheroil.com
TSX: CLL WWW.CONNACHEROIL.COM
future in situ technology
photo: photos.com
The evolution and future of in situ oilsands recovery technology
By Ian D. Gates and Jacky Wang Department of Chemical and Petroleum Engineering Schulich School of Engineering University of Calgary
e av y oi l and oilsands reservoirs
40–60 per cent for steam assisted
displayed in Figure 1. Typical original
making bitumen mobile within the res-
gravity drainage (SAGD).
reservoir temperatures range between
ervoir. After the bitumen is mobilized,
in Alberta, host
For cold producible reservoirs, in
7ºC and 13ºC for the majority of oil-
a drive mechanism must be available
approximately
general, the in situ viscosity of the live
sands reservoirs where the viscosity of
to move the mobilized oil to the pro-
1.7 trillion barrels
oil must be lower than approximately
the bitumen is over one million cP. By
duction wellbore. Thus, there are two
of heav y oil and
35,000 cP. With sufficient solution-
raising the temperature to greater than
requirements of technically success-
bitumen. This is a
gas drive, oil can be recovered, with
200ºC, the oil viscosity drops to about
ful oilsands recovery processes: first,
significant fraction of the global
or without sand, from these reservoirs
six cP. Thus, heating bitumen to lower
mobilize the oil, and second, deliver
estimated six trillion barrels of heavy
at economic rates. The majority of
its viscosity provides one means of
the mobilized oil to a production well.
oil and oilsands reserves. The key
unconventional oil in Alberta is con-
challenge faced by operators in
tained in oilsands reservoirs. The
producing heavy oil and oilsands
bitumen contained in these reser-
reservoirs is the viscosity of the
voirs often has very low solution-gas
oil. Permeabilities are relatively
content and, given its viscosity, it is
10,000,000
high, often being between one and
essentially immobile within the res-
eight darcys (D), but oil viscosities
ervoir with virtually no natural drive
1,000,000
range in the tens of thousands of
energy. Thus, to move bitumen to a
centipoise (cP) for heavy oil to the
production well in an oilsands res-
hundreds of thousands to millions
ervoir implies that first the oil must
of cP for bitumen. Consequently,
be mobilized. One key property of
oil recovery factors average at
bitumen is that its viscosity drops by
about 10 per cent for cold heavy oil
five to six orders of magnitude when
10
production, about 25–35 per cent
it is heated to over 200ºC. An exam-
1
for cyclic steam stimulation (CSS,
ple of the dependence of Athabasca
also referred to as huff’n’puff), and
bitumen viscosity on temperature is
56
Canadian heavy oil association
Figure 1: Dependence of Athabasca bitumen viscosity on temperature (Mehrotra and Svrcek, 1986).
VISCOSITY, cP
100,000 10,000 1,000 100
0
50
100
150
200
TEMPERATURE, deg. C
250
300
Another key challenge faced by oil-
within an oil column can be of sim-
steam injection–bitumen production
condensate and mobilized bitumen)
sands operators is the heterogeneity
ilar order of magnitude as that of
cycles are repeated until the overall
are produced from the reservoir
of the reservoirs. Heterogeneity
permeability variations.
process is no longer economic. One
through the bottom well. Typically,
key benefit of CSS is that it uses a
steam is injected at sub-fracture
single well—in field practice, verti-
pressure in SAGD operation. In
within oilsands reservoirs ranges from sub-pore scale to kilometres.
THERMAL RECOVERY METHODS
A list of reservoir features with
Thermal recovery methods, largely
cal, deviated and horizontal wells
SAGD, the major drive mechanism
differing length scales is as follows:
steam-based recovery processes,
are being used. The major drive
is gravity drainage. Thus, SAGD
• Water Films: < microns
have been used to recover bitumen
mechanisms in CSS are forma-
can be done in reservoirs with thin-
• Fines: < microns
from oilsands reservoirs. Currently,
tion recompaction (steam fracturing
ner caprock (required for CSS to
• Pores: microns to tens of microns
two processes have emerged as
dilates the reservoir lifting the over-
withstand steam fracturing) and res-
• Sand Size: 10 to approximately
commercial technologies: CSS and
burden, leading to surface heaves
ervoirs with low solution-gas drive.
SAGD, as shown in Figure 2.
of order of tens of centimetres) and
In practice, steam is usually injected
100 microns • Breccia: millimetres to centimetres • Shale Layer Thickness: millimetres to centimetres to metres
Figure 2: (a) Cyclic steam stimulation and (b) steam assisted gravity drainage.
• Brecciated Intervals: centimetres to metres • Calcite Nodules: centimetres to metres
(a)
(a)
SURFACE
• Intraformational Water Zones: metres to tens of metres • Top/Bottom Thief Zones: metres to tens of metres
OILSAND RESERVOIR
• Oil Column Thickness: metres to tens of metres • Shale Layer and Point Bar Mud • Layer Extents: metres to tens to hundreds of metres
(b)
(b) PRODUCE BITUMEN + WATER
1. INJECT STEAM
2. SOAK
CROSS-SECTION
INJECT STEAM
• Mud Plugs (point bar): tens to hun-
3. PRODUCE BITUMEN + WATER SURFACE
STEAM CHAMBER
OILSAND RESERVOIR
dreds of metres
PAY, H
• Viscosity Variations: metres
INJECTION WELL NATIVE BITUMEN
(vertical variations) to kilometres BITUMEN FLOW
(horizontal variation) • Faults: metres to tens of metres
PRODUCTION WELL
• Depth: tens to hundreds of metres • Reservoir Extent: kilometres to In CSS, wet steam is injected into
solution-gas drive in early cycles,
at a constant or variable pressure
Beyond pore, geologic and
the oilsands formation at pressures
and as the steam depletion chamber
(starting high and reducing as the
structural heterogeneities, there
greater than the fracture pressure
grows within the formation, gravity
process evolves, as described in
are fluid compositional heterogene-
of the reservoir. Steam fracturing
drainage plays a major role in later
Gates and Chakrabarty, 2006).
ities that result in viscosity variations
occurs, which distributes the steam
cycles. In practice, steam is injected
in bitumen reservoirs (Larter et al.,
within the formation without displac-
at a couple megapascals (MPa)
ery processes for bitumen from
2008). Typical viscosity variations
ing a significant fraction of bitumen
above the fracture pressure (e.g.
Canadian oilsands reservoirs has
vertically through oil columns are
from near the well area. After the
11–13 MPa at Cold Lake, Alta.,) and
occurred since the 1960s. Most
between 10 and 20 times; the top
target steam has been injected,
production is done until the bottom-
technologies have focused on steam-
oil is usually lower viscosity than the
the well is put on production until
hole pressure is a few hundred
based recovery processes, although
bottom oil. In the horizontal direc-
the oil rate is no longer economic.
kilopascals (kPa). In SAGD, two
there are many that inject air or oxy-
tion, the viscosity varies roughly two
Thereafter, steam injection restarts
parallel horizontal wells, one located
gen to achieve in situ combustion.
to five times over length scales of
until the target volume is injected
above the other, are used. Steam is
Some have focused on vertical wells,
about 500–1,000 metres. At steam
and then production re-commences
injected into the reservoir through
others on horizontal wells, and some
temperatures, the viscosity variation
until the oil rate is uneconomic. The
the top well and fluids (steam
on combinations of both.
tens of kilometres.
The evolution of in situ recov-
the first quarter century: 1986-2011
57
future in situ technology
Agents for bitumen mobilization
viscosity so that it is easier to produce
The first requirement for a techni-
production (Freeman et al., 2008).
or is potentially producible by cold
cally successful bitumen recovery
Heat sourced from resistance heat-
process is mobilization of the in
ing has been evaluated in oilsands
situ bitumen. Figure 3 presents the
reservoirs (Shell Canada Limited’s
process octagon, which illustrates
in situ upgrading project, E-T Energy
various agents used to mobilize heavy
Limited’s electrothermal dynamic
oil and bitumen, and the recovery pro-
stripping in situ heating process and
cesses associated with the agents.
Athabasca Oil Sands Corp.’s thermal
For bitumen reservoirs, the most-used
assisted gravity drainage (TAGD) pro-
agents are steam (CSS, SAGD) and
cess). Shell’s process uses resistance
steam and solvent, such as solvent-
heaters to upgrade the oil within the
aided process (SAP), expanding
reservoir, whereas E-T Energy’s pro-
solvent SAGD (ES-SAGD) and liq-
cess injects current and water into the
uid addition to steam for enhanced
formation to mobilize and move oil to
recovery (LASER).
production wells. TAGD uses an array
In recent years, there has been
of horizontal resistance heater wells
more interest in air injection (in situ
to heat the well and is being piloted in
combustion) in the form of the toe-
a bitumen-laden carbonate reservoir,
to-heel air injection (THAI) process
where it relies on heat conduction as
(Greaves and Turta, 1997). Petrobank
the mechanism to distribute heat within
Energy and Resources Ltd. con-
the reservoir. The target is not to crack
ducted a pilot project in the McMurray
or upgrade the oil, but simply to heat
Formation. THAI uses a vertical well
it. Other new pilots on the horizon
to inject air or oxygen into the oil-
include the enhanced solvent extrac-
sands reservoir to drive a fire front
tion incorporating electromagnetic
along the trajectory of a horizontal
heating (ESEIEH) process (Laricina
well, into which mobilized bitumen
Energy, 2010). This combines sol-
and other fluids drain. Encana’s air
vent extraction with electromagnetic
injection and displacement process
radio frequency (RF) heating, which,
combusts a top gas zone to drive gas
in theory, effectively replaces steam.
to a production well, and also to re-
RF-based heating processes have
pressurize the formation and heat the
longer transmission length scales than
underlying bitumen zone to reduce its
that of conductive heating.
Figure 4: Example of vertical well process for production of oilsands reservoirs.
STEAM
58
PRODUCED HYDROCARBONS AND WATER WATER
Canadian heavy oil association
Figure 3: The process octagon: agents for bitumen mobilization and processes found in the patent and literature.
AIR
CAPRI CATALYST
CASPER
SAGD/CSS/SF
BREA SAGD + CAT
ES-SAGD STEAM TSS-SAGD SAP LASER SAVEX SAVES SOLVENT
BIOLOGICAL
EM CURRENT ULTRASONIC MICROWAVES
VAPEX PHASR CSP SAGP
BRUTES NON-COND. GAS
SURFACTANTS/ADDITIVES
AI = air injection, BREA = biological recovery of energy assets, BRUTUS = bulk reservoir upgrading technology for unconventional systems, CASPER = catalytic air steam process for enhanced recovery, CAPRI = THAI with catalyst bed surrounding the production well, CSP = cyclic solvent process, CSS = cyclic steam stimulation, EM = electromagnetic, ES-SAGD = expanding solvent steam-assisted gravity drainage, LASER = liquid addition to steam for enhanced recovery (solventassisted cyclic steam stimulation), PHASR = phased steam solvent recovery, SAGD = steam assisted gravity drainage, SAGP = steam and gas push, SAP = solventaided process (essentially the same as ES-SAGD), SAVEX = steam assisted solvent extraction, SAVES = solvent assisted vapour extraction, SCUM = steam and catalyst for upgrading with microwaves, THAI = toe-to-heel air injection, TSS-SAGD = taperered steam and solvent steam assisted gravity drainage, VAPEX = vapour extraction.
Recovery processes with vertical wells
water injection rather than steam
Figure 4 displays examples of vertical
injection. The sensible heat value of
processes for production from oilsands
water is roughly one-quarter that of
formations. The processes range from
the enthalpy of live steam, thus the
single-well schemes—equivalents of
heat-carrying capability of hot water
SAGD, but applied to a single vertical
is small and, with heat losses in the
well—to injection/production well pairs.
injection well, the amount of energy
Most of the processes appear to meet
delivered to the reservoir could be
the two requirements of a technically
insufficient to mobilize enough oil to
successful oilsands recovery process:
make the process economic. There
the oil is mobilized and is delivered to a
are many air injection processes
production well. However, given thermal
that use in situ combustion to heat
conduction length scales are of order
the reservoir to produce upgraded
of tens of metres, if the interwell spac-
bitumen. At present, there is only one
ing is too great, much of the oil column
commercial vertical well process for
between the wells may remain cold
oilsands reservoirs: vertical and devi-
and be practically immobile bitumen.
ated well CSS.
Some processes focus on hot
Recovery processes with horizontal wells
along its entire length and produce
(ES-SAGD), solvent and steam is
have been proposed—the basic unit
along the length of the well—both
injected into the formation (Nasr
in Fast-SAGD-like processes (Cyr et
Figure 5 shows examples of oilsand
processes involve complex in-well
and Isaacs, 2001). Combination
al., 2006; Coskuner, 2009; Arthur et
recovery processes that use hori-
tubing string/packer arrangements.
processes of HWCSS and SAGD
al., 2009) is a SAGD well pair and an
zontal wells. The key benefit that
Shell has used single J-wells for
horizontal wells provide is extended
CSS in the Peace River deposit
reach into the reservoir, enabling
(Brissenden, 2005).
offset CSS well (also
Figure 5: Examples of horizontal well processes for production of oilsands reservoirs.
a sub-fracture injection/production well sometimes referred
greater steam injectivity and fluid pro-
In multiple-well processes, steam
ductivity. Some processes use single
is usually injected into the top well
to as a wedge well).
horizontal wells for both injection
and fluids are produced into the bot-
According to reser-
and production (e.g. horizontal-
tom well. An example is SAGD and
voir models, the CSS
well CSS, or HWCSS, Smith and
J-well and gravity-assisted steam
well helps to grow
Perepelecta, 2004), whereas others
stimulation (JAGD, Gates et al.,
the steam depletion
use multiple horizontal wells posi-
2009). In JAGD, the bottom well
chamber within the
tioned either one above the other
is a J-well and the steam chamber
reservoir beyond what
or laterally offset from each other
starts at the toes of the well pair
would be achieved
within the oil column. In single-well
and grows towards the heels of the
by the SAGD well
processes, two modes of operation
wells: it is a toe-to-heel steam-based
are presented: the first configura-
gravity drainage process. There are
tion is HWCSS, and the second
solvent-only and thermal-solvent
configuration is one where injection
equivalents of SAGD: VAPEX uses
and production occur simultaneously
the SAGD well configuration, but
within the same well. The latter pro-
instead, a vapour solvent is injected
cesses typically either inject at one
that can condense at the edge of
end of the well and produce at the
the depletion chamber (Butler,
other, or inject at the top of the well
1997). In expanding solvent SAGD
alone. Of all of the
SOLVENT INJECTION
horizontal well processes proposed for oilsands reser-
OVERBURDEN
voirs, the only clearly
FORMATION PUMP
VAPOUR OIL DRAINAGE
established commercial ones in the field are HWCSS, J-well CSS and SAGD.
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the first quarter century: 1986-2011
59
future in situ technology
Figure 6: Examples of vertical and horizontal well processes for production of oilsands reservoirs.
Recovery processes with vertical and horizontal wells
CSS wells, there are no currently
Figure 6 displays examples of
processes for oilsands reservoirs.
proposed processes that use com-
12
10
20
22
24
26
RESERVOIR TOP STEAM CHAMBER DRIVE / DRAINAGE 20M
Figure 7 shows examples of pro-
conformance of the injectant
posed processes with complex
along the length of the horizontal
well trajectories. These processes
well. In some processes, the hori-
include the soak radial (Parsons,
zontal well is added to a vertical
2000) and soak radialâ&#x20AC;&#x201C;Haybob-type
well process as an infill well (e.g.
well configurations tested by Shell
horizontal wells between rows of
in the Peace River oilsands deposit
CSS wells). The HASDrive process
(Roche, 2005). These processes
consisted of a vertical steam injec-
were not commercial due to exces-
tion placed at the toe of a horizontal
sive steam to oil ratios. At this point,
production well (Porter, 1984). It
no commercial processes use com-
was tested in the field, but its per-
plex wells with curved trajectories or
formance was not favourable. The
radial arrangements of wells.
to guide the fire front and produce
Recovery processes with multiple injection agents
mobilized bitumen. Other than the
The most commonly used alternative
horizontal well infill wells between
to steam injection is solvent, and for
to inject air and a horizontal well 220-440M
Canadian heavy oil association
zontal wells to enable improved
THAI process uses vertical wells
RESERVOIR BASE
60
use vertical wells along the hori-
wells. Many of these processes
16
vertical-horizontal well combination
Recovery processes with multilateral, radial and curved wells
binations of vertical and horizontal
14
well-established commercial
Figure 7: Examples of complex curvilinear or radial well processes for production of oilsands reservoirs.
Mokrys, 1989) have been tested in oilsands reservoirs with little commercial success (DOVAP Pilot,
SOAK RADIAL - HAYBOB
SOAK RADIAL - TUNING FORK
2004; Encana, 2003). Key issues faced by the VAPEX pilots were the length scales for solvent mass transport and hydrate formation. For post-cold produced heavy oil reservoirs, multi-component solvent-only processes have been tested some with success (the JIVE process). Another heated solvent-only process is the N-Solv process (N-Solv Corp., 2011), which has yet to be tested in the field. Other multiple injec-
SOAK - TUNINGinvolve FORK steam and tantRADIAL processes oilsands recovery processes, the
by Nexen Inc.). In general, the results
have been done on steam and gas
air injection that can be interpreted
most tested solvents in the field are
of thermal-solvent processes in the
push (SAGP) where methane has
as wet in situ combustion processes.
butane (SAP at Senlac and Christina
field have demonstrated uplift in pro-
been added to the injected steam:
For example, CSS followed by air
Lake operated by Cenovus Energy
duction rates and reduction of the
the methane replaces some frac-
injection was done at the Margarite
Inc., and solvent-assisted CSS oper-
steam to oil ratio (although these
tion of the steam and accumulates
Lake (Hajdo et al., 1985) and Morgan
ated by Canadian Natural Resouces
results were not the case for the
at the top of the chamber, lower-
Field (Marjerrison and Fassihi, 1995)
Limited), diluent (gas condensates,
Canadian Natural and Nexen pilots).
ing heat losses with consequent
pilots. These processes appear to
LASER at Cold Lake operated by
Typically, less than five per cent sol-
reduction of the steam to oil ratio
have been technically successful;
Imperial Oil Limited) and Jet-B (jet
vent is added to the steam (on a
(Butler, 1997). Solvent-only pro-
however, they were not pursued
fuel–grade fuel, ES-SAGD operated
volumetric basis). Other field trials
cesses such as VAPEX (Butler and
for larger-scale commercial
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the first quarter century: 1986-2011
61
future in situ technology
implementation. Another multiple-
commercial technologies for recov-
the viscosity variation of the oil is
solvent additives to steam, cold and
injectant system that is being evalu-
ery. These processes use relatively
mapped throughout the reservoir
warm solvent flooding, RF stimula-
ated is the solvent-current process
simple well configurations, with
so the sweet spots can be tar-
tion and electrothermal resistance
ESEIEH (Laricina Energy, 2010).
relatively simple operating strate-
geted first, advanced geological
heating are all restatements of rel-
Although the idea of using RF
gies and relatively simple injectants
modelling and reservoir modelling
atively old existing technologies.
emitters to mobilize bitumen is not
(steam injection at constant pres-
and risk analysis capabilities, and
The next 50 years of process
new, its combined use with solvent
sure or declining pressure as the
4-D seismic imaging methods to
design will be exciting, with not only
appears to be novel. Currently, the
operation evolves or variants with
increase understanding of the res-
requirements on productivity, but
only commercial oilsands recovery
solvent additives). The analysis of
ervoir architecture and locations
also controls on greenhouse and
process that uses multiple-injection
various well configurations pro-
of rich oil and evolution of deple-
acid gas emissions and water con-
agents are the steam-solvent SAP
posed in the patent and literature
tion chambers within the reservoir.
sumption. This means that there will
and LASER recovery processes,
reveals that simplicity is the rule.
The past 50 years of oilsands
be continued focus on water-free
which are steam-solvent variants
There are no clearly established
recovery process design demon-
processes since steam generation
of SAGD and CSS.
commercial in situ technologies that
strates that relatively simple well
is the largest contributor to green-
feature both simultaneous recovery
configurations and injectants have
house emissions in steam-based
and upgrading as of yet.
persisted through time. Complex
recovery processes. Although it is
Other technology advances have
wells, complex injection patterns
not completely certain, given recent
As illustrated on the previous pages,
been made to support oilsands
and specialized well internal infra-
developments in technology, the
there have been many proposed
recovery processes. These include
structure have not been adopted by
future of oilsands recovery pro-
well configurations for recovery
directional drilling, high-temperature
industry. The results suggest that
cesses will most likely involve:
processes of oilsands reservoirs.
pumps that enable low-pressure
the majority of new recovery pro-
• Improved monitoring of steam
Horizontal wells have been a major
SAGD processes, limited-entry per-
cesses that have evolved through
chambers, including the use of
enabling technology for oilsand
forations and other complex well
time are incremental adds on exist-
nanosensors and nanoreporters
recovery processes. Currently,
completions, smart well technol-
ing technologies. For example, wet
• Tailored steam-solvent or solvent-
CSS (vertical, deviated and hori-
ogies with interval control valves,
in situ combustion, infill (wedge)
only process design with op-
zontal well) and SAGD are the major
mobility mapping methods where
wells, non-condensable gas or
timized injection conditions to
Evolution and future of recovery process design
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62
Canadian heavy oil association
ensure solvent recovery and reuse
• In situ gasification of oilsands
• Electrical recovery processes,
reservoirs to produce energy in
including RF ones (in combination
the form of hydrogen and syn-
with steam/water/solvent)
thesis gas
• Steam-air or air-only injection processes
• Biological processes (e.g. methanogenesis: oil to gas), and
capabilities with improved forecasting capabilities (integrated
• Improved geological and fluid
feedback between geological and
compositional mapping through
reservoir simulation models and
• Nanotailored emulsion injectants
geological modelling, and more
operations so models evolve as
or conformance control agents
detailed reservoir simulation
operation evolves).
Ian D. Gates is an associate professor in the Department of Chemical and Petroleum Engineering at the University of Calgary. He worked for seven years in the industry prior to joining the university. His primary research interests are in 1. thermal and thermal-solvent methods (SAGD, CSS, ES-SAGD and SA-CSS) and optimization of these technologies for in situ heavy oil and bitumen recovery, energetics and efficiency, emissions and water use, 2. well wormhole models for cold production with sand, 3. imaging reservoirs by using white noise reflection processes, 4. application of smartwell technologies for adaptive production of heavy oil fields, 5. support vector machine learning for reservoir characterization, 6. in situ gasification (in-reservoir reaction engineering), and 7. biofilm development in porous media. Dr. Gates holds a B.Sc. from the University of Calgary, a M.A.Sc. from the University of British Columbia and a PhD from the University of Minnesota, all in chemical engineering. He is a registered professional engineer in Alberta.
Jingyi (Jacky) Wang is a research engineer in the Department of Chemical and Petroleum Engineering at the University of Calgary, specializing in unconventional resource recovery process design and numerical simulation. He has more than 10 years of combined chemical engineering and reservoir engineering experience working with industry and research, with expertise in the areas of thermal reservoir simulation, cold production, VAPEX, CO2 sequestration, hydrate recovery reactive numerical modelling, enhanced oil recovery and production optimization. He holds a B.Sc. in chemical engineering from East China University of Science and Technology and an M.Eng degree in reservoir engineering from the University of Calgary. He is a professional member with the Association of Professional Engineers, Geologists and Geophysicists of Alberta and the Society of Petroleum Engineers.
the first quarter century: 1986-2011
63
future in situ technology
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References
2008. The origin, prediction and
Arthur, J.E., Gittins, S.D., and
impact of oil viscosity heterogeneity
Chinna, H. 2009. US Patent 7556099.
on the production characteristics of tar
Athabasca Oil Sands Corporation.
sand and heavy oil reservoirs. Journal
2011. http://www.aosc.com/upload/
of Canadian Petroleum Technology,
media_element/75/03/first-energy-
47(1):52-61.
capital-2011-east-coast-energy-
Marjerrison, D.M. and Fassihi,
conference—mar-10-2011.pdf.
M.R. 1995. Morgan pressure cycling
Brissenden, S.J. 2005. Steaming
in-situ combustion project: performance
Uphill: Using J-Wells for CSS at Peace
and modelling, in De Haan, H.J. (ed.),
River. Paper 2005-107 presented at
New Developments in Improved Oil
Canadian International Petroleum
Recovery, Geological Society Special
Conference, Jun 7-9, 2005, Calgary,
Publication. 84:275-286.
Alberta.
Mehrotra, A.K., and Svrcek, W.Y.
Butler, R.M. and Mokrys, I.J. 1989.
1986. Viscosity of compressed Athabasca
Solvent Analog Model of Steam Assisted
Bitumen. Cdn. J. Chem. Eng. 64:
Gravity Drainage. AOSTRA Journal of
844-847.
Research, 5:1.
N-Solv Corporation. 2011. http://
Butler, R.M. 1997. GravDrain’s
www.n-solv.com/process.htm.
Blackbook: Thermal Recovery of Oil and
Nasr, T. and Isaacs, E. 2001. US Patent
Bitumen; GravDrain Inc., Calgary, AB.
6230814.
Butler, R.M. 1997. The Steam and Gas
Parsons, L.J. 2000. US Patent
Push (SAGP). The Petroleum Society,
6050335.
Paper No. 97-137, pp 1-15, Jun. 8-11.
Coskuner, G. 2009. US Patent
Porter, L.T. 1984. US Patent 4460044. Roche, P. 2005. Poised For Growth.
Application US 2009/0288827.
Shell’s Peace River Project Is One Of
Cyr, T., Coates, R., and Polikar, M.
Alberta’s Oldest Thermal Bitumen
2006. US Patent 6257334.
Developments.After Decades Of
ET-Energy Inc. 2011. http://www.
Innovation, The Company Is Gearing
e-tenergy.com/et-dsptechnology.php.
Up For Expansion. New Technology
Freeman, L.W., Nzekwu, B.I., and
Magazine, January 2005.
Belgrave, J.D.M. A Breath of Fresh
Shell. 2008. http://www.shell.
Air—Encana’s Gas Displacement
com/static/investor/downloads/
Solution to the Gas Over Bitumen
presentations/2008/bichsel_csfb_
Issue. Paper 2008-497 presented at the
london_18032008.pdf.
World Heavy Oil Congress March 2008,
Smith, R.J. and Perepelecta, K.R.
Edmonton, Alberta.
2004. Steam Conformance Along
Gates, I.D. and Chakrabarty, N. 2006.
Horizontal Wells at Cold Lake. Journal
Optimization of Steam-Assisted Gravity
of Canadian Petroleum Technology,
Drainage (SAGD) in Ideal McMurray
43:11.
Reservoir. Journal of Canadian Petroleum Technology, 45(9):54-62.
Gates, I.D., Larter, S.R., and Adams, J.J. 2010. US Patent Application US2010/0065268.
Greaves, M. and Turta, A. 1997. US Patent 5626191.
Hajdo, L.E., Hallam, R.J., and Vorndran, L.D.L. 1985. Hydrogen generation during in situ combustion. SPE Paper 13661.
altusgroup.com energy@altusgroup.com
Laricina Energy Ltd. 2010. http:// www.laricinaenergy.com/uploads/news/ news_06_30_10.pdf.
Larter, S.R., Adams, J.J., Gates, I.D., Bennett, B., and Huang, H. 64
Canadian heavy oil association
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CHOA HALL OF FAME
Contributions of a lifetime CHOA inaugurates the first three members of its Hall of Fame
ver a span of 25 years, the
the top priority, CHOA has reached professional
Canadian Heavy Oil Association
maturity in stages.
(CHOA) has helped nurture and
As part of the celebration of its first quarter
shape an industry that was largely
century, CHOA has established a Hall of Fame.
unformed. In the mid-1980s, there
The board of directors chose the three inaugural
wasn’t a critical mass of people
honorary lifetime members to get the ball rolling,
fuelling momentum. Those involved
but going forward, members will be asked each
in heavy oil, isolated in their companies, saw a need
spring to submit nominations by early fall so the
to come together to create a body of knowledge
selections can be announced annually at CHOA’s
and a community.
Fall Business Conference.
These people built the CHOA as a uniquely
Whether nominees are low-key or prominent,
collaborative model, a grassroots membership of
board secretary Bill Whitelaw says, “We are looking
individuals devoted to sharing discoveries and in-
for contributions that rise above the great career
formation. The CHOA has grown up alongside the
dynamic, people who contribute by research,
sector, hurting when the industry hurt and thriving
policy innovation and technological innovation
in the good times. With value to members always
in ways that further the industry.” the first quarter century: 1986-2011
67
CHOA HALL OF FAME
Edward E. “Ned” Gilbert By Melanie Collison
Photo: Canadian Petroleum Hall of Fame
As a far-seeing 29-year-old back in the fall of 1951, Ned
where I can, if I am the first to apply for a tar sands permit, obtain proven
Gilbert, formally known as Edward E. Gilbert, went over his boss’
oil reserves for less than $1.40 per acre....”
head—in writing—to campaign for the opportunities the Athabasca tar sands held for Sun Oil Company of Philadelphia. Gilbert had been posted to Calgary in 1945, Sun Oil’s sole employee in
Known for his concern about the eventual decline of conventional oil production in the United States, Pew listened to Gilbert and himself became a champion of the oilsands. The rest, as they say, is history.
western Canada. He was to develop geological prospects, file reports and
Gilbert has a track record of converting his broad exposure to the explor-
make recommendations to head office. In his quest to understand the big
ation business into opportunities that people with more specific knowledge
picture in this energy frontier, he was witness to the Leduc No. 1 gusher in
often missed, and he has contributed to the growth of the industry through
1947 and soaked up knowledge from earth scientists on the leading edge,
academia and professional organizations.
such as Cam Sproule in the Arctic islands and Northwest Territories and Karl Clark in the Athabasca bitumen belt.
In 1986, Gilbert became the first industry director and instructor of the newly created petroleum land management program at the University of Calgary.
After his first foray out west, Gilbert headed home to finish his geology
Active in the Canadian Society of Petroleum Geologists, he was made
degree at the University of Wisconsin. He returned to act as a landman while
an honorary member in 1995. In 1999, he was named winner of the J.C.
George Dunlap came on board to run the business side of the branch office.
Sproule Memorial Plaque from the Canadian Institute of Mining, Metallurgy
The success at Leduc and the ease of producing light oil were hogging the
and Petroleum for his contributions.
spotlight to the degree that even Clark feared the oilsands might be valued
Two years later, Gilbert became an honorary member of the American
only as a backup when the easy fluids bled dry, but Gilbert wasn’t fazed. He
Association of Petroleum Geologists, a position bestowed upon individuals
started picking up permits in the Bitumount region north of Fort McMurray and,
distinguished by their service and devotion to the science and profession
in 1949, began scouting locations for a Sun Oil oilsands processing plant.
of petroleum geology.
The following year, he directed a three-year corehole drilling program
The sole remaining initial member of the Alberta Landman’s Association,
before acquiring Lease 86—the site of Suncor Energy Inc.’s base oilsands
Gilbert is in the Canadian Association of Petroleum Landmen Hall of Fame
operation today.
and in the fall of 2011 was inducted into the prestigious Canadian Petroleum
Gilbert ran into pushback, though. His local boss, Dunlap, and the Sun Oil board of directors in Philadelphia were of the opinion that developing the resource was too expensive. Undaunted, Gilbert wrote straight to Sun Oil chairman J. Howard Pew, sending copies to everyone else, saying, “I will not attempt to speak for the engineers and geologists, but I know of no other place in the world 68
Canadian heavy oil association
Hall of Fame. Ned Gilbert was selected as one of the inaugural honorary lifetime members of the CHOA in recognition of the instrumental role he played in the early development of Canada’s oilsands. Not one to rest on his laurels, Gilbert is currently focusing on Saskatchewan’s oil shale industry through his company, Burning Rock Oil Shale Ltd.
Dr. Roger Butler By Qi Jiang
Photo: Canadian Petroleum Hall of Fame
As Dr. Roger Butlerâ&#x20AC;&#x2122;s last student and one of his last
of commercial SAGD projects by drilling two horizontal wells in close prox-
colleagues, I am honoured to have had the privilege of working with
imity to one another, injecting steam into the upper well and collecting oil
him on both academic research and industry projects.
in the lower one.
Dr. Butler was a tremendous mentor, researcher and engineer with
Dr. Butler had the ability to apply general principles of physics in solv-
profound knowledge, not only in the petroleum industry, but also in
ing different engineering problems and his original theory describing the
fundamental science and engineering subjects. Indeed, it was his sweeping
SAGD process was an excellent example, involving a practical predictive
intellectual curiosity and his ability to combine perspectives from a variety
model developed after many years of observation from extensive experi-
of scientific disciplines that made it possible for him to bring about so many
mental tests and a deep understanding of the complicated physics. His
revolutionary improvements to the petroleum industry. Dr. Butler is well
ability to approach problems from fresh angles and to think about things in
known for his invention of steam assisted gravity drainage (SAGD) and
ways others simply could not was a source of inspiration to me and contin-
research on vapour assisted petroleum extraction (VAPEX) and steam and
ues to inspire so many students and engineers, particularly those working
gas push (SAGP) processes, each representing a significant breakthrough.
in the petroleum industry.
But what is not as well known is that early in his career, while working
During his long professional career, Dr. Butler authored over 130 publica-
in Sarnia, Ont., he became one of the first people ever to implement a
tions and two books, as well as more than 10 patents. In the late 1980s and
computer control system at a refinery.
early 1990s, he made several tours and spoke worldwide on the subjects
Dr. Butler was innately more than just a thinker; he was a doer and a
of horizontal well and SAGD technologies. He received several prestigious
builder who consistently executed his ideas into reality, and in the end he
awards from the Society of Petroleum Engineers (SPE) and the Canadian
lived a life of extraordinary contribution both to industry and to the world of
Society for Chemical Engineers for his pioneering work and innovative
academic research. Perhaps most importantly, Roger exhibited the charac-
research in oilsands development, using SAGD and related solvent pro-
ter of a true gentleman with humble manner, high integrity and professional
cesses such as VAPEX.
standards. He earned the full respect of the people he worked with, both in the academic world and in his ordinary life circle.
Looking back on Dr. Butlerâ&#x20AC;&#x2122;s life, it is hard to imagine what our petroleum industry would be like today without his many contributions. As we
When he first proposed the SAGD method in the late 1970s for the
witness the commercial success of oilsands development using SAGD
recovery of heavy oil and bitumen, he often faced doubt and disbelief about
and its related technologies, and the resulting transformative effect on
its practicability from colleagues who viewed the idea with amusement.
the petroleum industry and the economy of our nation, Dr. Butler will
Roger persisted until his theoretical prediction of the commercial SAGD
always be remembered for his influence on the hearts, the minds and
rates was verified at the Underground Test Facility in the late 1980s. And
the imaginations of me and so many of my colleagues. He passed away
to date, billions of barrels of bitumen have been produced from a number
in May of 2005. the first quarter century: 1986-2011
69
CHOA HALL OF FAME
David J. Theriault By Melanie Collison
Photo: Joey Podlubny
A 1980 graduate of the University of Alberta’s bachelor of
Theriault is active in the Association of Professional Engineers, Geologists
science program in mineral (petroleum) engineering, David Theriault
and Geophysicists of Alberta (APEGGA), the Canadian Institute of Mining,
was only six years into his career when CHOA was founded as a networking
Metallurgy and Petroleum, and the SPE. He has also served on the board
organization devoted to bringing technical information to a diverse membership
of the Alberta Chamber of Resources.
in a fledgling industry.
That’s in his free time.
Within the decade, he had already stepped up to the challenges of lead-
Theriault has carried corporate leadership roles for many years, working
ership and, as CHOA president for two consecutive years, he introduced
in oilsands, heavy oil, conventional oil and natural gas exploration, exploita-
new ideas to ensure the all-volunteer association survived the tough in-
tion, development and operations.
dustry downturn of the mid-1990s. In accordance with his belief that “sharing learnings floats all boats,” Theriault bolstered the collegial atmosphere of CHOA and set up opportunities for members to contribute their knowledge through less formal presentations than had been the practice in other organizations. In addition to being known for serving on CHOA technical com-
Currently senior vice-president, in situ and exploration, for the innovative Laricina Energy Ltd., Theriault signed on there as chief operating officer and vice-president in 2006. He put together his team, added 1.2 billion standard barrels of recoverable in situ oilsands resources and completed a 71-well resource delineation core hole program—in his first year.
mittees and its board of directors, Theriault has contributed to the
Theriault built his knowledge and experience and established his repu-
evolution of the heavy oil industry through long-term multi-stakeholder
tation for efficient capital and operating expenditures, as well as growth in
committees.
reserves and production in parallel with his involvement in CHOA.
He has been a prominent interpreter of industry-regulated practices such
Fresh out of school, Theriault joined Canada Cities Service Ltd. (now
as gas-over-bitumen production protocols, an issue that arose in 1996. He
Nexen Inc.) as an enhanced recovery engineer, doing reservoir and produc-
gave evidence at the 1999 Surmont regulatory hearing and, since 2000,
tion engineering for heavy oil thermal and enhanced oil recovery projects.
has been facilitating the industry-government gas-over-bitumen technical
He moved on to Husky Oil Operations Ltd. to become a project engineer
solutions committee.
at Lloydminster, doing project management and production engineering;
He also sat on the regional advisory committee that shaped the Lower Athabasca Regional Plan and the Alberta Land-use Framework, and was recognized by the Canadian Association of Petroleum Producers for his dedication and commitment. 70
Canadian heavy oil association
drilling and completions, facility design, construction and start-up for thermal oilsands projects. The next move was to Alberta Energy Company Ltd. (now Cenovus Energy Inc.) as a staff engineer leading a multidisciplinary team and directing
Energy Services Box 67 Site 20 RR2 Strathmore, AB T1P 1K5 600 - 105 21st Street East Saskatoon, SK S7K 0B3 steve@rockinghorseinc.com
Steve Marshman
“Safe to the Core”
President
(403) 934-1222 (Alberta) (306) 261-4609 (Sask)
exploration, exploitation, development and operations for thermal oilsands projects. By 1995, he was ready to launch his own consulting company, Triangle Three Engineering Ltd., which focused on primary, thermal, and mining and extraction projects. Theriault stepped out of Triangle to take the position of director of oilsands at Gulf Canada Resources Limited (now ConocoPhillips Canada), guiding its Surmont SAGD pilot, 100,000-barrel-per-day commercial projects, Syncrude Canada Ltd. interests, upgrading initiatives and meeting the gas-over-bitumen challenge. In 2001, Theriault focused again on Triangle and became involved with the management team that built Deer Creek Energy Limited. Deer Creek was sold to Total E&P Canada Ltd. in 2005 for about $1.7 million. When the Deer Creek management group moved on to found Laricina, he joined them. Laricina operates on the cutting edge of oilsands technology, including pioneering SAGD in the potentially vastly prolific bitumen carbonates.
Qi Jiang is a manager of enhanced oil recovery and reservoir engineering at Osum Oil Sands Corp. Dr. Jiang has over 25 years of research and industry experience, including reservoir studies, operation and management of the piloting and commercial activities for the recovery of heavy oil and bitumen from clastic and carbonate reservoirs. He has published more than 20 technical papers on the subject of thermal and non-thermal recovery processes, including SAGD, VAPEX, CSS and SAGP. Dr. Jiang holds PhD and M.Sc. degrees from the University of Calgary in chemical engineering. He is a member of SPE and APEGGA.
Melanie Collison is a senior freelance contributor to Oilsands Review magazine. She has made a specialty of reporting on technological advances in the oilpatch and the resulting improvements in environmental impacts, with a particular focus on profiling the personalities driving change.
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the first quarter century: 1986-2011
71
The Port of Thunder Bay Canada’s Gateway to the West
On behalf of the owners and staff of Three Streams Engineering, we congratulate
25 years
on of providing technical knowledge to the heavy oil and oilsands marketplace.
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“providing engineering solutions to any challenge” W W W. Th r E E S Tr E A M S.C O M
We Congratulate CHOA for 25 Years of Service to Industry! In the last 25 years Coen Company has provided the industry with leading edge, low NOx combustion solutions to SAGD and OTSG applications. Coen equipment has delivered innovative combustion solutions, exceeding compliance expectations in the wake of continuous reduction in allowable emission limits.
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COEN is a registered trademark of Coen Company, Inc. in the US and other countries. ©2012 Coen Company, Inc.
The Canadian Heavy Oil Association at a glance Technical Program Technical Luncheons: •Reservoir and Production •Facilities and Upgrading •Drilling and Completions •Environment •Business, Transportation and Marketing
Conferences: •Slugging it Out •Fall Business Conference Heavy Oil 101 Beer and Chats
rking Opportuni o tie tw s Ne Technical Program
Social Program
Social Program
Golf Tournament Lobster Night Curling Funspiel Conversation Dinner Series
Publications
Publications CHOA Handbook Quarterly Journal of the Canadian Heavy Oil Association Heavy Oil and Oilsands Guidebook Innovation Series
Website directory and advertisers’ index Air Products and Chemicals Inc
www.airproducts.com..................................................... 21
Aker Solutions
www.akersolutions.com. ...............................................
61
Altus Group Ltd
www.altusgroup.com...................................................... 64
Arnett & Burgess Pipeliners Ltd
www.abpipeliners.com. .................................................. 13
AVEVA Canada
www.aveva.com.........................................................18-19
HOCS Projects
Schlumberger Canada Limited
Hunting Energy Services (Canada) Ltd
Serpa Petroleum Consulting Ltd
www.hocs.ca................................................................... 34 www.hunting-intl.com..................................................... 62
Indeck Power Equipment Company
www.indeck.com............................................................. 24
Kenwood Electronics Canada Inc
www.kenwood.ca.............................................................. 5
Cenovus Energy Inc
www.adifferentoilsands.com.......................................... 49
Sulzer Turbo Services Canada Ltd
www.suncor.com. ...............................inside back cover
www.laricinaenergy.com................................................. 48
www.cedagroup.com...................................................... 55
www.snc-lavalin.com...................................................... 27
Laricina Energy Ltd
Bantrel Co
CEDA International
SNC-Lavalin Inc
www.sulzerts.com. ......................................................... 13
www.kochmixer.com.................................................44-45
www.bantrel.com............................................................ 60
www.serpaconsulting.com............................................. 66
Koch-Glitsch Canada Company
Baker Hughes Canada Company
www.bakerhughes.com..................... inside front cover
www.slb.com....................................outside back cover
Loring Tarcore Labs
www.tarcore.com.......................................................16-17
Maxxam Analytics
www.maxxamanalytics.com........................................... 63
Suncor Energy Inc
Technip Canada Ltd
www.technip.com. .......................................................... 41
Thermal Energy Services Inc
www.thermalenergy.ca..............................................14-15
Three Streams Engineering Ltd
Coen Company, Inc
Nexen Inc
Connacher Oil & Gas Ltd
NGC Product Solutions
Thunder Bay Port Authority
Devon Canada Corporation
Oil Sands Imaging Inc
Upside Engineering Ltd
Dover Operating Corp
Oilflow Solutions Inc
Viking Pump of Canada Inc
PennWell Publishing Company
Voice Construction Ltd
www.coen.com. .............................................................. 72 www.connacheroil.com. ................................................. 55 www.devonenergy.com.................................................. 74 www.doveropco.com...................................................... 13
Environmental Refuelling Systems Inc
www.envirofuel.ca............................................................. 8
G & L Slotco Oil Field Services
www.gl-slotco.com. .......................................................... 3
Gemini Corporation
www.geminicorp.ca. ....................................................... 25
Golder Associates Ltd
www.golder.com. ............................................................ 65
Halliburton
www.halliburton.com...................................................... 42
www.nexeninc.com........................................................... 6 www.ngc-ps.com.............................................................11 www.oilsandsimaging.com............................................. 35 www.oilflowsolutions.com. ............................................ 20 www.pennwell.com. ....................................................... 37
PwC Management Services LP
www.pwc.com. ............................................................... 32
RAE Engineering & Inspection Ltd
www.raeengineering.ca.................................................. 66
Rocking Horse Energy Services Inc www.rockinghorseinc.com. ............................................ 71
www.threestreams.ca..................................................... 72 www.portofthunderbay.ca. ............................................. 72 www.upsideeng.com. ..................................................... 31 www.vikingpumpcanada.com......................................... 65 www.voiceconstruction.com. ......................................... 36
Volant Products Inc
www.volantproducts.ca. ................................................. 59
WorleyParsons Canada Ltd
www.worleyparsons.com. ................................................ 4
Zirco (1989) Ltd
www.zirco.com................................................................ 26
the first quarter century: 1986-2011
73
Isn’t it time your career picked up a little steam? Thermal Heavy Oil is an exciting growth area for Devon. It is part of our future and we’re working hard to significantly grow production over the next decade. With a significant acreage position in the southern Athabasca oil sands, demonstrated technical expertise and positive stakeholder relationships, Devon has earned the reputation of an industry leader. In addition to the award winning Jackfish facility and its two look alike projects, Devon is in the early stages of multiple development phases of a new program called Pike. In order to help us reach our goal, we need more great employees. If you’re interested in joining our growing team, please see the Careers section at jobs.dvn.com.
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Commitment Runs Deep
We see the possibilities. For Suncor Energy, growth brings opportunity and a set of new challenges. The biggest one of all: balancing increased development with the need to live up to our social and environmental responsibilities, both as an individual company and collectively as part of Canada’s oil sands industry. We believe the key is collaboration. A great example is the Oil Sands Leadership Initiative where Suncor works closely with four companies to improve environmental, social and economic performance in the oil sands industry. With a shared commitment to excellence and innovation, we can work together to build a more sustainable energy future.
36
%
decline
in amount
of fresh water Suncor has withdrawn from the Athabasca River since 2004*
Vincent Saubestre, executive director, Oil Sands Leadership Initiative
50
%
decrease
in GHG
emission intensity at Suncor’s oil sands operation from 1990 levels*
1.2
$
billion
actual and
planned investments in Suncor’s new tailings technology
performance partnerships possibilities
Find out more about Suncor’s track record and how we are planning to responsibly develop North America’s energy supply. www.suncor.com/sustainability
*As at December 31, 2010. ™ Trademark of Suncor Energy Inc.
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