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State Of The Industry Review
Updated June 2011

Once a footnote in the story of world oil production, Canada's oil sands are part of the solution to declining conventional oil reserves elsewhere in the world. Canada has over 170 billion barrels of oil recoverable with today's technology, making it second only to Saudi Arabia as an oil resource country. There are an estimated 2.5 trillion barrels of bitumen in the Canadian resources and it is possible to produce 2.5 million barrels of oil per day for over 200 years. That is more than enough to supply all of Canada's needs and make a significant contribution to America, China and other oil importers for generations to come.

Read the Canadian Oil Sands Industry Review
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Oil Sands


Oil sands are a mixture of sand/clays, bitumen and water. Each grain of oil sand has three layers: a layer of water surrounding the grain of sand, with bitumen surrounding the water to form the outer layer. The bitumen is much heavier than other crude oils. Oil sands are often referred to as tar sands or bituminous sands – all these terms are equivalent. However the use of the word "tar" to describe bitumen deposits is inaccurate. Tar is a man-made substance produced by the destructive distillation of organic material. Bitumen may look like tar, but it is naturally occurring. Oil sands is the correct term for the bitumen deposits of northern Alberta.

Oil sands exploration incorporates both mining ("conventional" methods) and in-situ (“non-conventional”) production methods. Mining of the oil sands involves excavation of the bitumen-rich sand using open pit mining methods. This is the most efficient method of extraction when there are large deposits of bitumen with little overburden. In-situ methods involve processing the oil sand deposit so that the bitumen is removed while the sand remains in place. These methods are used for oil sands that are too deep to support surface mining operations to an economical degree. 80% of the resource in Northern Alberta lies deep below the surface.


Bitumen


The Government of Alberta Department of Energy defines bitumen as “a thick, sticky form of crude oil that is so heavy and viscous that it will not flow unless it is heated or diluted with lighter hydrocarbons.” It contains high amounts of sulfur. Indeed, bitumen is the oil component of oil sands.

In its natural state, bitumen is not recoverable by pumping from a well. It has to be removed from the sands using either open pit mining or in-situ methods. In the mining method, once the oil sands are excavated the bitumen needs to be extracted from the sands. This is achieved by using a four-step process: conditioning, separation, secondary separation, and froth treatment. Oil sands companies use slightly different separation and froth treatments. For example, Syncrude uses a single-stage separation and toluene as a solvent in the froth treatment, whereas Albian Sands uses a three-stage separation and naphtha as a solvent. The bitumen also has to be upgraded to synthetic crude oil before it can be refined into common petroleum products such as gasoline and kerosene.

There are five in-situ methods of bitumen extraction: SAGD, CSS, VAPEX, THAI, and Cold Flow. These are described in detail below.

Bitumen Extraction Methods

The following are the five in-situ methods of bitumen extraction currently used in the oil sands industry. The most common ones are the SAGD and CSS methods. The other ones are still new but several companies are experimenting with them.

Source: Japan Canada Oil Sands Ltd
Steam Assisted Gravity Drainage (SAGD) involves the drilling of two horizontal wells, one at the bottom of the formation and another about 5 metres above it. The upper well injects steam into the reservoir. The resulting heat melts the bitumen which allows gravity to assist it to flow to the lower well, and the bitumen is pumped to the surface. SAGD is cheaper than CSS, allows very high oil production rates, and recovers up to 60% of the oil. Some of the projects where SAGD is used are Suncor’s Firebag project, Petro-Canada’s MacKay River project, and Encana’s Foster Creek project.



Source: Encana
In the Cyclic Steam Stimulation (CSS) method, the well is put through cycles of steam injection, soak, and oil production. First, steam is injected into a well, at a temperature of 300 degrees Celsius, for a period of several weeks or months. The well is allowed to sit for several days to let heat enter the oil sands. The hot bitumen is then pumped out of the well, which may take weeks. When the production rate falls, the well is put through several more cycles of injection, soak, and production, until the cost of injecting steam exceeds production costs. Recovery factors are around 20-25%, but the cost of injecting the steam is high. This method began to be commercially used in 1985 by Imperial Oil at Cold Lake. It is also being used at Shell Canada’s Peace River project.


The Vapor Extraction Process (VAPEX) is similar to SAGD, but instead of steam, hydrocarbon solvents are injected into the upper well to dilute the bitumen and allow it to flow. It is much more energy efficient than steam injection and some partial upgrading of the bitumen to crude oil occurs right in the sands. This method is new and more expensive than the above but oil companies are experimenting with it.

Note that SAGD, CSS, and VAPEX are not mutually exclusive. For example some wells go through a CSS cycle to condition the formation before the SAGD production method is used. Some companies are also starting to combine VAPEX and SAGD to improve recovery rates and decrease energy costs


The Cold Flow production process involves the pumping out of the bitumen without heat, often using specialized pumps called progressive cavity pumps. This method only works well in areas where the bitumen is fluid enough to pump. It is most commonly used in Venezuela, but also in parts of the Athabasca-Wabasca region and the southern part of the Cold Lake region. This is the cheapest method but only recovers about 5-6% of the bitumen. Several years ago, Canadian oil companies discovered that if the sand filters are removed from the wells, and as much sand as possible is produced with the oil, the production rates improved considerably. This technique became known as Cold Heavy Oil Production with Sand (CHOPS). Research showed that pumping out sand opened wormholes in the sand formation, allowing more oil to reach the borehole. Wormholes are permeable sand tubes of very high porosity which extend out from the borehole. The advantage of this method is better production rates and recovery (about 10%). The disadvantage is the problem of disposing the large quantity of sand. At first the sand was spread on rural roads, however governments became concerned about how thick the roads were becoming. In recent years, the sand is commonly stored in underground salt caverns.

In each of the above methods, the bitumen that is pumped to the surface is in the form of a bitumen-rich froth. This froth is processed through a stripper which removes the air bubbles and moves the bitumen to froth storage tanks. The sand particles in the froth settle to the bottom and are pumped to the tailings processing system.


THAI Bitumen Recovery Process
Toe to Heel Air Injection (THAI) is a new and experimental method where a vertical air injection well is combined with a horizontal production well. To begin the process, bitumen around the “toe” of the horizontal well is heated with steam. Once this approximately three-month heating cycle in a bitumen reservoir is complete, the steam is shut off and air is injected into the vertical well to create a combustion reaction in the reservoir.

Through the controlled injection of air, an estimated two metre thick combustion front begins to move along the horizontal well at about 10 inches (25 centimetres) a day toward the “heel” of the horizontal well. As it heats up, the bitumen drains into the horizontal production well and brought to the surface through natural pressure. Because the combustion front heats the bitumen to 400 degrees, the oil is also partially upgraded underground. The heat causes a portion of the asphaltine content of the oil to be left behind as coke that is the fuel for the continued combustion.

This process has been patented by Petrobank Energy and Resources. It has shown to produce more of the resource, while significantly limiting the environmental footprint. While it uses some water for the intitial steaming, that water and more is returned to the surface, treated and returned to the environment.

After being proven at Petrobank’s Whitesands pilot project south of Fort McMurray, the technology is poised for commercialization in other oil sands and heavy oil reserves in western Canada and around the world.



For a complete glossary of oil sands terms, take a look at Alberta Energy's site.

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