The oil industry goes through many boom-and-bust cycles. Some cycles are global in nature, affecting the entire industry. Other cycles impact only certain regions as discoveries are made, produced, and depleted. And then possibly a region revives again with introduction of new technologies and insights or changes in economic conditions.
Alberta's oil sands sector currently is in a boom period, with some forecasts expecting an 11% ultimate recovery from the 1.6 trillion bbl of bitumen in place, using current technologies and at anticipated economic conditions. Recovering bitumen involves both mining and in situ techniques.
Current production is about 1 million b/d, and most forecasts predict that rate will double in the next decade. Two articles in this issue's special report on Canadian oil sands, beginning on p. 43, discuss the ongoing and proposed projects as well as some of the recovery techniques involved.
But to arrive at this point required much time and money.
A brief history
Various historical sources say that the first oil sands boom started in 1912 around Fort McMurray in the Athabasca area, with "lots selling for $200 or more." But the first mention of the oil sands in Canada's history dates from 1719, when an aboriginal brought a bitumen sample to a Hudson Bay Co. outpost. The aboriginals used the tarlike substance to waterproof canoes.
The first wells, drilled in 1906, encountered oil sands, but the drillers believed that salt deposits below were a more exploitable resource.
The 1920s saw the first open pit bitumen mine start up. Bitumen, in this period, served as a substance for paving roads and as tar for roofing.
The first in situ steam test was in 1926.
Alberta's involvement in commercializing these deposits started in 1921 with formation of the Scientific and Industrial Research Council of Alberta.
Bitumount was the site of the first commercial processing plant that by the mid-1930s used a solvent and hot-water extraction process to recover 250 tons/day. Later the company expanded the plant's processing capacity to 400 tons/day.
Unfortunately this plant burned down, and although rebuilt, the company's financial situation led to the takeover of the plant by the Alberta government. In the 1950s, Alberta sold the plant to a Calgary company for use as a test site.
It was not until the 1960s that the first large-scale commercial project started with the construction of the Great Canadian Oil Sands Ltd. separation plant and mine.
The project had an initial design capacity of 31,000 bo/d.
Suncor Energy Inc., which now operates the project, describes the Sun Oil Co. investment in the project as "the biggest gamble in history" and a "daring venture into an unknown field." It notes that this was the largest single private investment in Canada at the time.
The plant officially opened in 1967.
In 1978, Syncrude Canada Ltd., a joint public-private venture at the time, officially opened a second mine and plant near the Suncor operation. Its initial design called for producing 125,000 bo/d.
Suncor at first used massive bucketwheel excavators, and Syncrude introduced gigantic draglines.
But Suncor now relies on the more cost-effective method of shovels and trucks, some with a 400-ton capacity. Syncrude plans to be converted entirely to a truck-and-shovel operation in 2005.
In situ recovery
Large scale in situ projects developed more slowly, although most bitumen lies at depths uneconomic to mine. Over the years, various in situ methods failed commercially in the Athabasca area, although the Cold Lake area saw successful bitumen production with cyclic steam injection.
Alberta's establishment in 1974 of the Alberta Oil Sands Technology and Research Authority (AOSTRA) invigorated the quest to prove out new in situ techniques and develop more cost-effective upgrading processes.
In 1983, AOSTRA began work on the underground test facility that demonstrated the effectiveness of steam-assisted gravity drainage (SAGD). The project involved drilling horizontal laterals from an underground mine shaft.
But concurrently during the late 1980s and through the1990s, the industry developed techniques for drilling horizontal laterals from surface. These techniques, instead of underground mine shafts, now form the basis for SAGD operations.
But even with the success of SAGD, other technologies and techniques are under test and may offer better ways to realize the energy bounty locked up in Alberta oil sands, especially if oil prices remain high.