Continued Alberta oil sands production growth seen

July 12, 2010
Forecasts are starting to indicate a rebound in activity for developing bitumen production from the oil sands in Alberta.

Forecasts are starting to indicate a rebound in activity for developing bitumen production from the oil sands in Alberta.

Alberta's Energy Resources Conservation Board in its June 2010 update forecasts bitumen production to reach 3.2 million b/d in 2019.1 This rate is an increase from its forecast last year that saw oil sands production increasing to 2.9 million b/d in 2018. Bitumen production from the oils sands in 2009 averaged 1.49 million b/d.

ERCB also has increased its estimate of initial bitumen in place to 1,804 billion bbl from the 1,731 billion bbl shown in its 2009 report.

For determining its current projections, ERCB expects US West Texas Intermediate to average $78/bbl in 2010 and increase to $122/bbl in 2019.

In its June 2009 forecast, the Canadian Association of Petroleum Producers noted the deferral of some oil sands projects.2 The deferrals took place, but its June 2010 forecast says the economic climate has recovered somewhat and some companies are now actively developing phases of their projects previously placed on hold."

CAPP said The pull back of capital spending last year had a limited impact on production growth over the short term, as companies that had already invested in the process continued to move forward."

For its bitumen production forecast, CAPP kept the rate of growth consistent with last year's forecast. It forecast oil sands production to increase to 2.2 million b/d in 2015, 2.9 million b/d in 2020, and reach 3.5 million b/d in 2025.

Oil sands resources

The main deposits discussed in ERCB's report are the Athabasca Wabiskaw-McMurray, Cold Lake Clearwater, and Peace River Buesky-Gething that cover about 54,000 sq miles (Fig. 1).

The three areas contain 15 oil sands deposits.

Fig. 2 shows the ERCB bitumen forecast to 2019 and Fig. 3 shows the disposition forecast for crude bitumen and bitumen upgraded into a synthetic crude oil (SCO).

The report contains the following assessment of bitumen resources in Alberta at yearend 2009:1

• Initial in place - 1,804 billion bbl

• Initial established - 177 billion bbl

• Cumulative production - 6.9 billion bbl

• Remaining established - 170 billion bbl

• 2009 production - 0.544 billion bbl (1.49 million b/d)

• Ultimate potential - 315 billion bbl.

Although ERCB increased the initial bitumen in place, it left the initial established and ultimate potential the same as last year. The production of 1.49 million b/d for 2009 is an increase over the 2008 production of 1.31 million b/d.

For its 2010 report, ERCB's reevaluation of the deposits led to an increase in initial bitumen in place by 28% to 406 billion bbl for the Athabasca Grosmont deposit and to a decrease in initial bitumen in place for the Cold Lake Upper and Lower Grand Rapids deposits by 20% and 5% to 34 and 63 billion bbl.

Unlike the other deposits, which are in sands, the Grosmont deposit is a late-Devonian shallow marine to peritidal platform carbonate. Currently there are no commercial projects in the Grosmont deposit.

In 2009, the mining areas produced 302 million bbl while the in situ areas produced 242 million bbl. ERCB expects the in situ bitumen production to surpass production from mining projects by 2015.

The in situ volumes include production with enhanced recovery methods, such as injection of steam, water, or other solvents into the reservoir to mobilize the bitumen, as well as bitumen and heavy oil produced with primary methods from the Athabasca, Peace River, and Cold Lake regions.

Of the 170-billion bbl remaining established reserves, ERCB considers 80%, or 135 billion bbl recoverable with in situ methods and the remaining 34 billion bbl recoverable with surface mining methods.

The currently active mining developments contain 23.3 billion bbl and active in situ areas contain 3.3 billion bbl of remaining established reserves.

ERCB considers seven mining projects as active (Table 1). The four currently producing are operated by Suncor Energy Inc., Syncrude Canada Ltd, Shell Canada Ltd. (Albian Sands), and Canadian Natural Resources Ltd. (Horizon).

Of the non producing projects, Shell expects to start production from Jackpine in late 2010 or early 2011 and construction of the first phase Imperial Oil Ltd. Kearl project has started, with production expected to begin in 2012 (Table 1). Suncor had deferred the Fort Hills project but now has reactivated the construction.

ERCB estimates that the ultimate potential in situ bitumen recovery is 208 billion bbl from Cretaceous sediments and 38 billion bbl from Paleozoic carbonates.

In situ remaining established reserves in areas under active development are 124 million bbl in Peace River, 957 million bbl in Athabasca, and 2,234 million bbl in Cold Lake.

Production

In 2009, the upgrading of 302 million bbl of mined bitumen and about 12% of the 242 million bbl from in situ projects yielded 279 million bbl of synthetic crude oil (SCO). ERCB notes that 60.6% of the bitumen produce was upgraded in the province.

Average production from the three oil sands areas in 2009 was:

• Athabasca—825,000 b/d mined, 298,000 b/d in situ.

• Cold Lak—318,000 b/d in situ.

• Peace River—46,000 b/d in situ.

The 2009 in situ production by method was 32% by cyclic-steam stimulation, 37% by steam-assisted gravity drainage (including experimental methods), and 31% by primary means (including water and polymer injection).

Mined production in 2009 increased by 14% compared with 2008. Syncrude produced 40% of the mined production while Suncor produced 35%, Albian Sands, 17%, and Horizon 8%.

ERCB noted that 2009 Syncrude's SCO production of 334,000 b/d was 1% lower than in 2008 due to an extended turnaround and some unplanned outages.

Suncor's SCO production increased by 17% over 2008 to 289,00 b/d because of improve reliability and the startup of the Steepbank mine in the third quarter even though a fire at an upgrader curtailed some production in late 2009.

Albian Sands SCO production increased 4% over 2008 to 140,000 b/d, while ramp up of Horizon continued with an average SCO production of 62,000 b/d for the year.

Table 2 shows the projects ERCB includes in its production forecast for mineable projects.

In 2009, Nexen Inc.'s Long Lake project began operations. This was the first project based on in situ bitumen recovery and field upgrading. The project is the only one with a gasification technology that takes waste product (asphaltenes) and transforms it into syngas to create steam for the reservoir and hydrogen for the upgrader.

Long Lake production averaged 50,300 b/d in 2009.

Alberta's five upgraders produce various synthetic products. Suncor produces light sweet and medium sour crudes plus diesel. Syncrude, Horizon, and Long Lake produce light sweet synthetic crude. the Shell upgrader produces intermediate refinery feedstock for its Scotford refinery as well as sweet and heavy SCO.

ERCB forecasts that by 2019 SCO production will increase to 494 million bbl and the portion on in situ production upgraded will increase to 18% from the current 12% (Fig. 3).

Fig. 4 shows the historic in situ production and the number of producing wells. The 2009 average production was 664,00 b/d compared with 583,000 b/d in 2008. The average rate of each of the 9,700 producing wells was 69 b/d.

Companies have drilled most in situ producing wells in the oil sands as deviated wells from pads to minimize the drilling and production footprint. From 1985 through yearend 2008, the oil sands have had 40,701 wells drilled for exploration and development of the resource. In 2009, companies drilled 2,211 wells in the oil sands. Of these, 941 were development wells and 1,270 were exploratory wells.

Pipelines

ERCB expects that the pipeline capacity for oil sands production leaving Western Canada will increase by 1 million b/d after the completion of several major pipelines in 2010. The additional capacity should be enough to handle expected production capacity through 2016, according to the report.

Pipelines coming on stream within Alberta in 2010 include the Inter Pipeline Corridor pipeline expansion project that will increase bitumen blend transport capacity to 465,000 b/d from the current 300,00 b/d.

Fig. 5 shows the main existing and planned pipelines for oil sands production export. Table 3 lists the proposed pipelines with their capacity and start-up dates.

References

1. Albert's Energy Reserves 2009 and Supply/Demand Outlook 2010-2019, ST98-2010, Energy Resources Conservation Board of Alberta, June 2010.

2. Crude Oil Forecast, Markets & Pipelines, Canadian Association of Petroleum Producers, June 2010.

More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com