Almost 2 decades of joint government-industry oilsands research in Alberta will move a step closer this year to a multi-billion barrel payout.
The key to success is buried in a mine using new technology at a test facility operated by the Alberta Oil Sands Technology & Research Authority (Aostra).
Pilot projects under way at the Underground Test Facility (UTF) 37 miles north of Fort McMurray in the Athabasca oilsands region are only two of scores that the agency has sponsored since it was established by the provincial government 18 years ago with $100 million in seed funding (see map and diagram).
But authority spokesmen say the UTF tests are the most promising techniques to date to finally bring billions of barrels of bitumen reservoir within economic reach.
A horizontal well in situ steam injection process designed as a precommercial pilot will begin producing at a rate of 2,000 b/d in September or October. It is a follow-up to a smaller proof of concept pilot project that produced 130,000 bbl of bitumen over several years.
The Athabasca, Peace River, and several other bitumen and heavy oil deposits in Alberta hold an estimated 2.5 trillion bbl of oil in place, about 40% of the world's known bitumen. But only about 5% of the Alberta deposits can be tapped by existing surface mining techniques.
Two existing commercial oilsands plants in the Fort McMurray region have extracted and processed almost 950 million bbl of synthetic crude since 1967. But the technical challenge and cost of extracting and processing bitumen compared to conventional crude have always been stumbling blocks to extensive exploitation. Several large scale proposals for new oilsands plants or expansions are on hold because oil prices don't warrant their operation.
THE PROJECT
Aostra says it is close to an underground mining method that will reach more of the reservoir than current methods do at competitive prices and with minimum environmental disruption.
The research authority was established by the Alberta government in 1974 and since then has spearheaded a billion-dollar research effort into oilsands, heavy oil, and enhanced oil recovery and processing.
Aostra has pumped more than $600 million of public money into the effort with matching contributions from industry participants for a wide range of research programs. It initiated the project in the early 1980s.
Partners in the current pilot project with Aostra include Esso Resources, Petro-Canada, Amoco, Chevron, Conoco, Shell, Mobil, and Japex. Aostra Chairman William Yurko says discussions are under way with another international participant.
Yurko says there will be a limit of 12 partners, each of which will earn an 8 1/3% interest in the lease for participating. But Aostra also expects to sign up associate partners that will have interests in the technology but not the lease.
The Aostra chairman notes that a critical factor in oilsands development is the amount of front-end capital required. For example, he says, the proposed OSLO development project in the McMurray oilsands under consideration by partners in the Syncrude Canada Ltd. oilsands operation could cost $4-5 billion.
Yurko says capital costs for the underground process will be considerably lower. In addition, underground mining, by not requiring large tailings ponds, helps relieve environmental concerns.
J. C. O'Rourke, project manager for the UTF, says steam generating and bitumen processing capacities are being increased at the site in preparation for production. O'Rourke says the project could start expanding by 1996 into the first stage of a commercial-scale operation if tests go well.
PROCESSES AND ECONOMICS
The steam-assisted gravity drainage process involves horizontal wells located low in the oilsands formation with injector wells above. Steam, injected through the upper wells, heats the sand and bitumen.
The mobilized bitumen and condensate drain by gravity to the lower production wells and are pumped to the surface for processing.
The paired horizontal wells in the current pilot project are 1,968 ft long and spaced 230 ft apart. Each pair consists of a production well 6.5-16 ft above the base of the oilsands and a steam injection well about 16 ft above the production well.
O'Rourke says the horizontal well operation is a technical breakthrough with the potential to recover 470 billion bbl of bitumen, which can't be reached by existing surface mining techniques. The target sands lie be neath more than 230 ft of overburden and have net pay zones thicker than 50 ft.
O'Rourke says the horizontal mining process could cut recovery costs by 30% for a new oilsands project. Based on test data, he estimates a 10,000 b/d underground facility could produce bitumen at a cost of $10.88/bbl (Canadian). A 50,000 b/d operation would reduce the projected cost to less than $7/bbl.
He says an existing upgrader could then process the bitumen into high quality synthetic crude for about $7/bbl.
These projected economics would put bitumen recovery in the competitive range of conventional crude or oilsands surface mining techniques. The underground mining operation also involves minimal surface disturbance.
Conventional crude production costs are about $7/bbl, plus finding costs ranging from $7/bbl to $20/bbl.
Current extraction cost for surface oilsands mining operations, such as the Syncrude and Suncor Inc. plants now in operation, are $10-12/bbl.
Aostra's Yurko, a professional engineer and former Alberta cabinet minister, expects large scale development based on the new techniques to begin within a decade. He expects that operating oilsands plants such as Syncrude and Suncor will become regional upgraders processing bitumen from underground mines.
O'Rourke says the current $79 million, 4 year test program will generate detailed data by March 1994. The next step would be a commercial operation, possibly in 1996.
OTHER PROCESSES
In addition to the process being tested by Aostra and partners, the underground facility has been used to test a process being developed by Chevron Canada Ltd.
The Chevron HASDrive system-heated annulus steam drive process-employs a combination of steam drive and gravity drainage.
Three wells are used: a long, horizontal heating pipe with a vertical steam injector at one end and a producer at the other.
Steam is circulated in the horizontal pipe-or HAS pipe-to provide a heated communication path in the surrounding oil sands.
Differential pressure between the injector and producer drives production along the heated annulus to the producer.
Mobilized bitumen and condensate drain by gravity to the heated annulus and are pressured to the producer.
Chevron has acquired a lease and is considering a demonstration project based on the technology.
ATP PROCESS
Another Aostra project that has been gaining international attention recently is the Taciuk Process (ATP) to extract and partially upgrade bitumen from oil sands.
The process, developed by inventor William Taciuk, uses a horizontal, rotating vessel and several stages of heat treatments to upgrade a wide variety of feedstocks. Development was a joint venture by Aostra and Umatac, the industrial processes division of UMA Engineering Ltd.
Research into bitumen upgrading has produced spin-off technologies for treatment of oily wastes and an oil shale processing method that is close to development of a commercial application.
More than 15,000 metric tons of oilsands, oil shales, and oily waste materials have been tested in an Aostra pilot plant in Calgary. The operation has included scale-up development testing of the ATP technology for field demonstration of its applications.
Aostra says ATP is a technically, environmentally, and economically viable alternative to current hot water extraction technology for bitumen processing.
A 5 ton/hr mobile ATP plant has been developed for field demonstrations of processing of mined oilsands to produce partially upgraded bitumen and clean sand.
The mobile unit will be ready for commercial demonstration soon. The unit will also be used for cleanup of hydrocarbon-contaminated sites, oil shale processing, and testing on processing rubber tires and municipal solid wastes.
As a result of Calgary tests of Australian oil shales from Queensland, Southern Pacific Petroleum and Central Pacific Minerals NL, of Australia, plan construction of a 6,000 ton/day shale processing plant in Queensland.
It will be designed to produce more than 4,000 b/d of oil shale products. Capacity eventually might climb to 60,000 b/d.
The ATP technology has been licensed for commercial use in the U.S. A 240 ton/day processor has been used to clean up 38,000 tons of PCB-contaminated soils near Buffalo, N.Y., and will be used for a similar clean-up of contaminated soils at Waukegan Harbor in Illinois.
The technology developed via Aostra programs is owned by the authority and is available for license from Aostra. Research programs by the authority have resulted in more than 90 patents or patent applications in North America and elsewhere for work in oilsands, heavy oil, and enhanced oil recovery applications.
Yurko says the advantage of Aostra's owning the technology is that it can be made widely available nationally and internationally, rather than remaining the property of one company.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.