A day at Cenovus - a SAGD story
In situ projects overtake open-pit mining as the main producer of oil sands crude, continue to grow in LLB area
Cenovus Energy wants to tell you a story about SAGD.
The company’s Foster Creek project, located east of Lac La Biche County in the Cold Lake Air Weapons Range, was the first commercial operation to use Steam Assisted Gravity Drainage, or in situ, technology to suck deeply-buried bitumen out of the earth for refining. Since 2001, Foster Creek’s SAGD process has used superheated steam to loosen up the sticky crude buried 400 or more metres underground—which can then be refined into gasoline, diesel, and other petroleum products.
Since Foster Creek started production, SAGD has grown from a new technology and now produces more barrels of oil a year, 52 per cent, than conventional open-pit mining in the oil sands. Northeast of Lac La Biche by Conklin is now home to several SAGD sites, including Devon Energy’s Jackfish projects and CNRL’s Kirby Lake site.
“In situ is going to dominate oil sands production,” said Al Reid, Cenovus’ Senior VP for Christina Lake.
Reid, along with other Cenovus employees and a representative from Canadian Association of Petroleum Producers (CAPP), led local, national, and international media—including the Lac La Biche Post, National Post, Fort McMurray Today, Global National, and TV Tokyo—on a tour of the Christina Lake site last Wednesday.
Christina Lake is carved out of the rugged tamarack and larch landscape near Conklin, and bears, caribou, and other wildlife are frequent visitors. Around 300 employees are employed in operations with another 1,200 working on site construction. There are full-time residences—complete with a modern cafeteria, gym, games room, library, and a trout pond—for the hundreds of operations and construction workers.
Starting in the plush-leather chairs of one of the camp’s movie rooms, Reid painted a picture of a booming industry that is only just scratching the surface. CAPP estimates that there are 170 billion barrels of recoverable crude in the province’s oil sands—the vast majority of it too deeply buried for traditional open-pit mining.
“About 80 per cent of the oil sands is recoverable only through in situ methods,” Reid said. “And 97.5 per cent of the land area of all recoverable oil sands is only accessible through in situ.”
Today, Foster Creek and Christina Lake produce more than 160,000 barrels of oil per day (bpd). Reid said he expects the Foster Creek site to produce 300,000 bpd within 20 years.
BIG OIL, BIG MONEY
That production means big profits for oil sands companies. In the first quarter of 2012, Cenovus recorded $904 million in cash flow, up 30 per cent from the year before. Reid said that big chunks of money are going to surrounding communities, with an estimated $80 million spent in Lac La Biche County and Conklin; and $240 million going to the Cold Lake area.
“That includes everything from trucking to vehicle repair to oilfield consulting, environmental services and even groceries,” said Cenovus’ spokesperson Brett Harris. “We also make a significant number of community investments in programs in the areas where we operate. A great recent example in Lac La Biche was the kick-off for the Oilers Hockey Clinic presented by Cenovus at the Bold Center on May 4.”
After a video on the oil sands the invited media were given a tour of the Christina Lake site.
Fired by massive natural gas furnaces, the steam plant produces the 300-degree-celcius steam that travels via pipes to the 44 well heads throughout the site. The steam is then pumped 400 metres deep underground, then runs a kilometre horizontally releasing steam and loosening up the bitumen so it can seep into another tube and be sucked up to the surface.
A separate set of thick pipes brings the water-oil mixture to huge separating tanks, where the production-grade oil is skimmed off the top—ready to be sent to Enbridge’s twin 350,000-barrel holding tanks then pumped south to the pipeline hub in Hardisty before going to refineries across North America.
Throughout the tour—which also included a visit to a mobile drilling rig that was burrowing new wells—the Cenovus reps detailed the company’s commitment to environmental sustainability. According to company information, the Foster Creek and Christina Lake plants have some of the lowest steam-to-oil ratios in the industry, meaning less energy used per barrel of oil produced.
Cenovus’ statistics state that they only use five per cent fresh water in their operations, the rest being salty brackish water piped up from deep underwater reserves. The company also claims a 90 to 95 per cent water recycling rate, with the remaining wastewater then pumped hundreds of meters underground.
Reid said the environment-friendly measures also benefit their bottom line.
“It decreases up-front costs when you do things like reducing the amount of energy used,” he said. “It’s better economically to take these environmental measures.”
However, there are some who are still concerned about the growing number of in situ operations in Alberta’s previously untapped northeast. Jesse Cardinal, a Kikino Metis Settlement resident and member of water-advocacy group Keepers of the Athabasca, said there are too many questions about the environmental effects of SAGD.
“I don’t think the cumulative effects have been properly taken into account,” Cardinal said. “One project on its own might seem innocent, but taken together there are so many unknowns: how is this affecting the wildlife, how is it affecting groundwater, and how is it affecting the traditional way of life and treaty rights of First Nations people?”
Cardinal, along with the rest of the Keepers of the Athabasca, wants to see a moratorium on new projects until more scientific studies and research is devoted to the possible effects of SAGD. That would mean pumping the brakes on an industry that has been steadily expanding for years.
“We don’t know enough about how the groundwater and surface water interact,” she said. “We need to find these things out before we go ahead and start adding more and more of these projects. We need a proper assessment of the cumulative risks. We don’t need to be in such a huge rush to get the oil out of the ground—it’s been there millions of years, it’s not going anywhere—but if we don’t understand the risks we could be heading to disaster.”
But Reid said that any energy production—whether it’s SAGD, traditional open-pit mining, or wind and solar energy—affects the environment.
“That’s the reality,” he said. “But we’re leading the industry when it comes to getting our environmental footprint smaller.”
SAGD SET TO GROW
The day of the tour, Cenovus announced the approval of their third Conklin-area SAGD project—called Narrows Lake, with ground work on the project expected to start this fall. With numerous projects in the approval or planning stages—including CNRL’s Grouse Project, Devon Energy’s Pike 1 Project, and Blackpearl Resources’ Blackrod—SAGD is the future of oil sands development.
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