Canadian oil sands research keeps production competitive

By Jim Stott
Calgary Correspondent

The future of Canada's continuing capacity to produce and export oil lies in the massive oil sands deposits in the Fort McMurray region of northern Alberta. Recoverable reserves with current technology are estimated at more than 300 billion bbl of bitumen.

They are expected to play a key role in any North American continental energy plan.

Whether oil sands production meets its potential will depend heavily on the ability of a substantial, and often cooperative, research effort by industry, government agencies, and universities to find more efficient and economic ways to harvest, transport, and process the oil sands.

A number of major expansion projects are already under way by existing oil sands operators such as Syncrude Canada Ltd. and Suncor Inc. These, plus projects under development or on the drawing board, are worth an estimated $51 billion (Can.). Current oil sands production of about 600,000 b/d is expected to grow to 1.9 million b/d within a decade. Syncrude, already Canada's largest oil producer with production averaging 210,000 b/d, recently began planning a $4.1 billion third phase that will expand production 110,000 b/d by 2005.

Research has helped make oil sands and heavy oil recovery production costs competitive with conventional crude and other energy commodities. The consistent trend since the late 1970s, with some blips in the graph, has been a steady reduction in production costs, largely attributed to research efforts.

Syncrude, a six-company consortium, says there has been a steady decline in its production costs, from $25.81 in 1979 to $12.64 in 1999. Syncrude is experiencing an increase in costs to $17.45/bbl in 2000 and $21.02 in the second quarter of this year. The group attributes the increase to lower production, maintenance costs, and higher natural gas prices. The massive overhead costs of running an oil sands operation remain the same, even when production drops.

Syncrude spends more than $30 million/year on research and has a state-of-the-art research center in Edmonton with a staff of 90 persons.

Areas of research include analytical chemistry, bitumen chemistry, materials research, measurement and analysis, separation processes, slurry transport, and tailings management.

John Oxenford, Syncrude's manager of research programs, says one of the characteristics of Syncrude has been its ability to continually find ways to develop and implement technology.

"This has been one of the major contributors to our ability, and the oil sands industry in general, to contain and reduce costs year over year," Oxenford says.

"Many of the developments that have come from Syncrude's research have become standards for the industry."

Oxenford says two of the main thrusts of Syncrude research include materials handling and environmental issues.

He said oil sand excavated from the mine face originally was transported to a bitumen extraction facility by conveyors. Development of larger pumps, larger crushers, larger trucks, and a slurrying device called a cyclofeeder makes it possible to move oil sands by pipeline, with a significant cost saving. By 2003, virtually all oil sand will be moved by pipeline or hydrotransport.

Environmental research is focused on reducing energy intensity of processing, reduced emissions, reduced land disturbance, improved tailings disposal techniques, reduced bitumen losses, and improved reclamation. Environmental research becomes increasingly important as activity increases and standards are raised. Oxenford says a significant part of this work is being down through a University of Alberta program and intellectual property developed is placed in the public domain.

Syncrude is also actively involved in research programs with outside partners including the Alberta Research Council, universities, the National Research Council, and suppliers. Topics include materials research, development of catalysts, reducing energy consumption, bitumen conversion yield, and condition/risk-based maintenance.

A large volume of oil sands research by Syncrude, Suncor, and others is shared through the Canadian Oil Sands Network for Research and Development. CONRAD coordinates collaborative research between 15 industry members, five government institutions, two universities, and one industry association. It holds regular workshops to share research results.

Oxenford notes that Syncrude spends more than $350 million/year on maintenance. Studies suggest these costs can be reduced by up to 25% by moving from time-based maintenance practices to condition-based systems. He says 99.9% of data from operating equipment will usually show that conditions are normal. The challenge is to find the 0.1% that indicates a fault before it develops into a catastrophic failure.

Syncrude is also researching intelligent systems/process control, which will detect such problems as lost teeth from a shovel bucket. Some of this work will be done at the Centre for Intelligent Mining Systems to be opened this year at the University of Alberta's Computer Science Department.

Mike Singleton, director of technology planning and integration for Suncor, Canada's second-largest oil sands producer, says production costs that were above $30/bbl in the late 1970s are expected to drop below $10/bbl in the next 2 years. Suncor has estimated its leases contain recoverable reserves of more than 8 billion bbl.

"We believe that research and technology are key levers for the future to reduce our costs and improve environmental performance," Singleton says.

Singleton says fine-tuning changes to the bitumen upgrading process have contributed significantly to cost reductions and he expects many more improvements.

He says industry's switch from draglines to truck and shovel mining operations has cut costs significantly and equipment suppliers have done important research in this area.

Suncor research includes a planned pilot project this year on solvents and steam-assisted gravity drainage work at its Firebag lease.

Singleton says the company is investigating some proprietary upgrading technologies but much of the industry research is shared.

"We're pulling together. I'm not aware of another industry that pulls in mining technologies, bitumen extraction, and upgrading technology and puts them all together," Singleton says.

"That's the trick. There is cooperation between commercial operators such as Syncrude and Suncor, either through joint venture research or sponsored research at universities or CONRAD, formed to bring together these kinds of efforts."

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