Despite much wishful thinking to the contrary, the world’s economies rely heavily on oil and will continue to do so into the foreseeable future. Although there has been some limited progress in obtaining energy from new and renewable sources, we continue to consume oil at a rate that has never been higher, and every year the consumption rate grows. We find it hard to produce enough conventional oil—the liquid oil that is pumped from oil fields and offshore platforms. The pure black oil that gushed under pressure from young wells is all but gone. We now need to pump it from deeper wells, going further into untapped regions, like the Arctic, and this entails spending more money to find new sources.
But world economies cannot be sustained by conventional sources of oil. With tougher sanctions aimed at Iran soon, there is the potential for shortfalls in the world oil market. In view of this and other geopolitical unrest or natural calamities that we might face, getting a grip on rising oil prices is a particularly pressing need, and to do this, we need to increase the world’s oil supply. We must turn to unconventional oil—biofuels, synthetic fuels, and oil sands—to complement our energy needs. Among all available sources of unconventional oil, Canada’s oil sands stand out as the most attractive solution, taking into account environmental, ethical, and energy security concerns.
According to projections, the Canadian oil sands will exhibit solid growth and have the potential to contribute 3 to 6 million barrels per day (about 4.5 percent of global oil supply, assuming 4.5 million barrels per day) of oil by 2035, up from a current share of around 1.6 million barrels per day (1.8 percent of global oil supply). To further illustrate the vast potential of the Canadian oil sands, one must take a look at the initial Oil in Place (OIP), proven oil sands reserves, cumulative oil sands production, and remaining proven oil reserves. The initial OIP is around 1,800 billion barrels of oil sands, out of which 177 billion barrels are proven oil reserves. Of the 177 billion barrels, at the end of 2011, only 8.1 billion barrels (cumulative production) or 4.5 percent of the initial established crude bitumen reserves have been produced since commercial production started in 1967. Therefore, the remaining recoverable oil, using current technologies, is 169 billion barrels, which, assuming a current production rate, will last for more than 250 years.
The Canadian oil sands were formed millions of years ago, like many other sources of petroleum. In Canada, the oil sands formations straddle the Alberta and Saskatchewan border, with the majority of them in Alberta. To date, the industry has produced only 4.5 percent of the recoverable 177 billion barrels of oil using current technologies, and it is already facing tough opposition from the environmentalists. Before we delve into various environmental issues including the social impact of the oil sands development, it is important to understand the properties of oil sands and how bitumen is recovered using different technologies.
In this article, I will look briefly at what the oil sands are, how they were formed, their properties, their location, and how oil is produced from the oil sands deposits.
The Canadian oil sands began their formation process many millions of years ago when Alberta was covered by a warm tropical sea. Plants and marine organisms, such as plankton, accumulated carbohydrates in their bodies and, when they died, sediments containing their remains accumulated in the bottom of those seas. More and more layers were added, and the sediments were buried deeper. Heat, pressure, and the activity of bacteria transformed the carbohydrates into hydrocarbons, and crude oil was formed. This oil was composed of both light and heavy hydrocarbons, the latter being more heavily loaded with carbon. In northern Alberta, many rivers flowed away from the sea and deposited sand and sediment. When the Rocky Mountains formed, geological pressures pushed the deposits of crude oil toward the surface, and the oil was squeezed northward and seeped into the sand, forming the oil sands.
Oil sands are a naturally occurring mixture of sand, minerals, water, and bitumen. Bitumen is a thick form of crude oil, which, at room temperature, looks much like cold molasses and has an API gravity of 8° to 14°. The American Petroleum Institute gravity, or API gravity, is a measure of how heavy or light petroleum liquid is compared to water. It is so viscous that it will not flow unless heated or diluted with lighter hydrocarbons, and it needs to be upgraded before it can be used by refineries to produce fuels such as gasoline and diesel. The amount of bitumen in an oil sands mixture can range from 1 to 20 percent, with an average of 10 percent bitumen. Oil sands producers use a variety of methods to separate bitumen from the rest of the mixture.
Most of Canada’s oil sands are located in the provinces of Alberta and Saskatchewan, with the largest deposits concentrated in northern Alberta: the Athabasca oil sands (which extend a little into Saskatchewan), the Peace River deposits, and the Cold Lake deposits (Figure 1). The Athabasca oil sands area, of about 40,000 square kilometers, is the largest and most accessible reserve, and the one that contains the most bitumen. Some of the deposits near Fort McMurray and others in the Wabasca area are close to the surface and can be mined using surface-mining techniques. The Cold Lake oil sands area, of about 22,000 square kilometers, has Alberta’s second largest reserve of bitumen held in deep deposits. Presently, some of these deposits are being explored using in-situ technology. The Peace River oil sands area, of about 8,000 square kilometers, is the smallest of Alberta’s oil sands areas. As at Cold Lake, the bitumen is being recovered using in-situ methods. These areas combined together compose the largest single deposit of oil in the world, containing 1,800 billion barrels of OIP.
Although there are oil sands deposits in Saskatchewan, production is not yet underway, and commercial viability has yet to be established, although there is significant commercial and government interest in developing the resource. An estimated 27,000 square kilometers of northwestern Saskatchewan—almost 5 percent of the province—has some level of potential for oil sands exploration, and an independent estimate has put the size of the province’s oil sands resources at as much as 2.7 billion barrels of bitumen. Official estimates of the size of these resources are not yet available, but lands have been leased, and exploration and development are proceeding. A private company (Oilsands Quest) is actively defining unconventional oil resources in three areas: Axe Lake (Saskatchewan), Wallace Creek (Alberta), and Raven Ridge (Alberta), with over 100,000 barrels per day of long-term production potential. In early 2010, Oilsands Quest submitted a regulatory application to the government of Saskatchewan for a SAGD pilot project that would become the first stage of 30,000 barrels per day for the commercial oil sands development at Axe Lake, but the company needs capital to advance their assets to the next stage. Oilsands Quest prepared detailed plans for the pilot plant, but is currently seeking a partner to mitigate the risk of development.
The oil from oil sands does not come gushing out of the sand the way it does in any conventional oil production. Oil production from oil sands involves one of two recovery methods: Surface mining (also known as pit mining) has been around for about four decades and is what people tend to think of first when oil sands projects are mentioned. The second approach is a newer method of drilling for the oil, known as in-situ.
Roughly 20 percent of recoverable Canadian oil sands reserves can be extracted using surface mining, which can only be used when deposits are less than 75 meters from the surface. In mining, the first step involves the removal of trees and vegetation to clear the area. Then large earth-moving equipment removes the overburden (i.e., the clay, earth, and any materials that lie over the bitumen). The exposed layer of oil sands is then excavated, using massive electric or hydraulic shovels that scoop the sand onto 400-ton heavy hauler trucks. The trucks transport the oil sand to a crusher that breaks big lumps of sand into small particles. Oil sand is mixed with hot water to form slurry, which is hydrotransported (pipelined) to separation vessels in extraction plants.
In extraction plants, the bitumen is separated from the sand. In the separation vessels the slurry separates into three distinct layers: coarse sand settles on the bottom, middlings (fine sand, clay, and water including some bitumen) sit in the middle, and a thin layer of bitumen froth floats to the surface. The bitumen froth is skimmed off and spun in centrifuges and/or inclined plate separator (IPS) units to remove the remaining sand and water. The leftover sand, clay, and water is pumped to large storage areas called tailings ponds, and the water is recycled back into the extraction plant for re-use. Collected bitumen froth typically contains 60 wt% bitumen, 30 wt% water, and 10 wt% fine solids. The froth is further processed by the addition of solvent or diluent (usually naphtha) to make it more suitable for marketing or further processing.
About 80 percent of recoverable oil sands deposits are too deep for surface mining to be economical. These deeper deposits are recovered using the same drilling techniques used in heavy oil production: in-situ. Reservoir heating is essential to this method of bitumen recovery and steam injection has been the most successful thermal technique so far. Steam injection can be achieved through cyclic (huff-and-puff) or continuous injection. The huff-and-puff method is known as cyclic steam stimulation (CSS), and continuous steam injection is known as steam-assisted gravity drainage (SAGD).
The CSS method is a three-stage process that is based upon drilling a single vertical well into an oil sands formation. In the beginning, high-temperature steam is injected into the formation through the well to heat the bitumen. This is called the soak cycle. After several weeks of soaking, the bitumen-water mixture is pumped above ground through the same well. After recovering the bitumen, typically over a six- to eight-month period, steam is injected again into the well, and the cycle repeats until the cost of injecting steam becomes higher than the value of the product, at which point the well is considered depleted. Using CSS methods, about 25-35 percent of the bitumen-in-place is recovered, which is relatively low compared to other methods.
SAGD is the most commonly used method for in-situ bitumen production. Built on the success of horizontal drilling technology in other fields, the SAGD process uses a parallel pair of horizontal wells: one for steam injection and one for oil recovery. Steam is injected into the upper well, creating a high-temperature steam chamber. The steam lowers the viscosity of the thick bitumen and allows it to flow downward into the reservoir to the second horizontal well (called the production well), located below the steam injection well. The heated, thinner bitumen is then pumped to the surface via the production well. Throughout the process, steam is continuously introduced through the upper injection well, as the bitumen is recovered using the production well. On average, up to 45-55 percent bitumen recovery is possible using SAGD.
Bitumen production using both surface mining and in-situ techniques is rising. In 2011, surface mining and in-situ produced 892,000 barrels per day and 852,000 barrels per day of bitumen, respectively. CERI estimates that by 2035, under realistic production scenarios, in-situ bitumen will account for 57 percent of total production volumes, or 2.8 million barrels per day, as compared to mined bitumen, which produces 2.1 million barrels per day (Figure 2). After its production, bitumen is either processed in the refineries directly or converted into SCO in upgrading facilities, before it is processed in refineries to produce gasoline and other fuel. When we compare the overall performance of mining and in-situ technologies, both have advantages and drawbacks. Mining is the more efficient of the two recovery methods, with up to 90 percent of the bitumen being recovered from the processed oil sands. But oil sands mining tends to capture the bulk of negative media and public attention due to its bigger footprint. In-situ drilling has a much smaller footprint because it can cluster many wells on one pad, taking up much less space. However, a downside of in-situ development is that it often requires tremendous amounts of energy. Most of the energy comes from burning natural gas to heating water to make steam, which, of course, generates unwanted GHG emissions.
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