CHOA 35th Anniversary Edition Journal - Issue 3 by CHOA

February 2022

PATHWAYS

FORWARD

IF WE ARE NOT CAREFUL, THE GREAT RESET COULD BECOME THE GREAT REGRET ENERGY MINUTE – CARBON CAPTURE PAST, PRESENT, AND FUTURE APPLICATIONS OF GEOPHYSICS IN OIL SANDS - PART 2 OF 2 A SYSTEMATIC MULTIDISCIPLINARY APPROACH FOR OPTIMIZATION IN BROWNFIELD SAGD PROJECTS - PART 1 OF 2 INNOVATIONS TO SECURE THE FUTURE OF CANADA’S OIL SANDS INDUSTRY IN A NET ZERO EMISSION WORLD ENERGY OPTIMIZATION: A KEY TO COMPETITIVENESS THROUGH THE ENERGY TRANSITION

THE MESSAGE FROM CHOA

ROLLING WITH THE PUNCHES CHOA’S HEART IS THE PEOPLE CHOA’s heart is its people, members,

volunteers, sponsors, who care deeply about contributing to the future. CHOA relies on talented and dedicated professionals, leaders within their fields - content contributors, speakers, event organizers and sponsors, advocates, and its board of directors and committee members.

LOOKING UP, MOVING FORWARD Our industry enters 2022, looking up, and moving forward, after withstanding a pummeling of policy jabs and oil price uppercuts. Same for CHOA.

CHOA is fortunate to have the support of diverse of a group of leaders; individuals of all specialities and demographics and businesses of all disciplines across the entire value chain. Join us, as an industry professional or student, and we will provide you with a multitude of networking opportunities and ways to be a part of the transformation. Our numerous volunteer opportunities can make all the difference for industry professionals in transition.

Now is the time!

That is how we will keep rolling with the punches. We will have our hands up, ready to block, in case they never stop coming, eh?

WITH THE PEOPLE, FOR THE PEOPLE

“Transforming our industry’s future ... that’s how we’ll keep rolling with the punches.” 1 CHOA JOURNAL — February 2022

An additional note as we start the year: I joined CHOA as an Operations Manager not long time ago, and I love working with CHOA’s people. I would like to hear from you about how we can do it better.

CHOA’s virtual doors are open 24/7 – drop us a line at office@choa.ab.ca.

Or join our group of 30+ annual sponsor organizations, partnering with us to shape our vision for industry, influence next steps and amplify all that we have to offer.

We chose to change. Our focus has sharpened and our delivery has been targeted. We pledge to do our part in transforming our

industry’s future.

“Let us know how CHOA can support your business objectives or professional advancement.”

CHOA is fuelled by the resilience, creativity, and drive for meaningful change of all its supporters – the people. CHOA thanks you!

We know we are stronger, together. Share your ideas, your projects, your content, your struggles, your lessons learned, with the broader CHOA community. Let us know how CHOA can support your business objectives or professional advancement.

Andreea Munteanu CHOA Operations Manager

CONNECT. SHARE. LEARN. LEAD.

DID YOU KNOW? We have refreshed the CHOA website: https://choa.ab.ca/ We extend particular thanks to volunteers Leah Miller and Adam Singfield, for their elegant, creative work on this project.

THE JOURNAL OF THE CANADIAN HEAVY OIL ASSOCIATION OCTOBER 2021 February 2022

Table of Contents 3

CELEBRATING CHOA

IF WE ARE NOT CAREFUL, THE GREAT RESET COULD BECOME THE GREAT REGRET

ENERGY MINUTE – CARBON CAPTURE

PAST, PRESENT, AND FUTURE APPLICATIONS OF GEOPHYSICS IN OIL SANDS - PART 2 OF 2

A SYSTEMATIC MULTIDISCIPLINARY APPROACH FOR OPTIMIZATION IN BROWNFIELD SAGD PROJECTS - PART 1 OF 2

INNOVATIONS TO SECURE THE FUTURE OF CANADA’S OIL SANDS INDUSTRY IN A NET ZERO EMISSION WORLD

ENERGY OPTIMIZATION: A KEY TO COMPETITIVENESS THROUGH THE ENERGY TRANSITION

CHOA.AB.CA /CANADIAN-HEAVY-OIL-ASSOCIATION /CANADIANHEAVYOILASSOCIATION @CDN_CHOA +1 403 269 1755

The Canadian Heavy Oil Association extends deep thanks to the volunteers who have been creating this 35th Anniversary series of the CHOA Journal. The Journal’s Editorial Committee for formal technical articles comprises KC Yeung, Mark Savage, Catherine Laureshen, Subodh Gupta, Adrian Dodds, Eugene Dembicki, and Bruce Carey. The Layout Team comprises John Whitnack, Irina Reilander, and Darci-Jane McAulay. Caralyn Bennett, Gordon Holden, and Andreea Munteanu provide CHOA Board and Operations support.

Statements and content herein are those of the authors and contributors, and do not necessarily reflect the views of CHOA, the editors, or organizations with which the authors or contributors may be affiliated. Dissemination of information by CHOA does not indicate CHOA’s endorsement of any product, technology, strategy or company presented herein.

CHOA JOURNAL — February 2022 2

Celebrating CHOA along with our MEMBERS, VOLUNTEERS and SPONSORS

It’s a BIG DEAL. We’re 35 and we wouldn’t be here without YOU! Here’s to our shared future. Transforming energy, making a difference. En route to Canada becoming the most responsible and innovative energy resource developer in the world. We are STRONGER, TOGETHER!

3 CHOA JOURNAL — February 2022

CHOA JOURNAL — February 2022 4

To: CHOA Board of Directors & Staff

35th Anniversary Congratulatory Letter

On behalf of the Alfaluz team, I would like to thank CHOA for its continued leadership in the Canadian heavy oil and oil sands sectors. The progress this industry has made over the past 35 years is in no small part thanks to CHOA’s continuing efforts in bringing together like-minded leaders to engage in ongoing networking, collaboration, and technological development.

As an innovative engineering and manufacturing company bringing economical and green solutions to the production and commercialization of bitumen and heavy oil, Alfaluz is committed to contributing to the progress that CHOA has spearheaded for decades. By building strong partnerships with other innovators in this space, Alfaluz´s disruptive technology will contribute to the transformation of the global heavy oil and oil sands industry by making it more profitable, efficient, and environmentally-friendly.

It’s not an exaggeration to say that the Canadian heavy oil and oil sands industries wouldn’t have made the advancements that they have without CHOA’s decades of leadership driving it forward. We are proud to be affiliated with this world-class organization, and look forward to continued collaboration with CHOA and its esteemed members who will help drive technological innovation and green energy adoption for decades to come.

Sincerely,

Scot von Bergen CEO

5 CHOA JOURNAL — February 2022

January 24, 2022

To: The Canadian Heavy Oil Association Re: 35th Anniversary On behalf of the Canadian Society of Geophysicists (CSEG) I would like to congratulate the Canadian Heavy Oil Association (CHOA) on the 35th anniversary of their esteemed association. CHOA’s volunteer organization has strived to transform the Heavy Oil and Oil Sands industry into one of the most advanced and innovative resource developers in the world. In addition, the association’s efforts on the forefront of education, technology and network gatherings have expanded the knowledge base of its membership and successfully guided and enhanced their careers for many decades. Through its individual members, dedicated sponsors and other followers, CHOA has managed to connect and inform a broader audience on the achievements and challenges of an ever-evolving industry. We are confident the CHOA will continue to support and provide its members and the industry the opportunities and technological know-how to make the industry sustainable, relevant and a success for many years to come. Congratulations to all! Nanna Eliuk CSEG President

PO Box 520 Station M Calgary, AB T2P 2J2.2J2. Phone: (403) 262-0015 • Fax: (403) 262-7383 • email: office@cseg.ca • website: www.cseg.ca

CHOA JOURNAL — February 2022 6

7 CHOA JOURNAL — February 2022

CHOA plays a pivotal role in helping the sector evolve In current global energy conversations, there is tremendous "buzz" around the notion of "energy transition". To the degree that it is important dialogue, it cannot be ignored or discounted as the world maps to its next-generation of energy development and use. But the reality is that energy systems are in a constant state of transition and change – ideally on a progressive basis. There's no better example than Canada's heavy oil sector. For more than 100 years, smart minds have challenged themselves to better and more responsibly develop the country's bitumen and heavy oil resources. Each advance in technological and social change has been about effective transition forward, with a key focus on environmental performance. For 35 of those years, the Canadian Heavy Oil Association has played a pivotal role in helping the sector progressively evolve. The CHOA has played a key leadership function at critical junctures of that evolution, with a particular focus on the rate and pace of technological change. The CHOA has been an important interface between industry and government, industry and the public and between various facets of the sector itself. The CHOA’s value proposition is multi-dimensional. But at the nexus of its diverse service are its people and the passions and professionalism they bring to programming, board services and overall volunteering. As the world continues to contemplate its own heavy oil resources over the next 35 years, the expertise on which the CHOA has shone a spotlight will undoubtedly continue to responsibly influence global transition dynamics.

Bill Whitelaw Managing Director, Strategy & Sustainability geoLOGIC systems ltd. & JWN Energy

#1500, 401 – 9th Avenue SW, Calgary, Alberta T2P 3C5

403-262-1992

info@geologic.com

CHOA JOURNAL — February 2022 8

The corporate history written about CHOA will start with responsible Canadian Energy and continue into the future with Innovation to Navigate the ever-changing Energy Landscape. Madala drives innovation through physics-based analytics. A modern computing platform to deliver physics to the oil and gas industry. Whether optimizing well design for peak production or production surveillance to meet target. Madala has the tools to drive your business. CHOA has brought so many successes for our industry through programming, events and networking. Members don’t need to look far to find inspiration! May you continue to inspire us for many years to come! Happy Anniversary.

9 CHOA JOURNAL — February 2022

*IFVYEV] 8S XLI 'EREHMER ,IEZ] 3MP %WWSGMEXMSR 3R FILEPJ SJ 4IXVSPIYQ 8IGLRSPSK] %PPMERGI 'EREHE 48%' ERH SYV QIQFIV SVKERM^EXMSRW - [SYPH PMOI XS WMRGIVIP] GSRKVEXYPEXI XLI 'EREHMER ,IEZ] 3MP %WWSGMEXMSR ',3% SR 35 years of strengthening Canada’W IRIVK] WIGXSV CHOA’s many programs and initiatives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sustainable development of Canada’s energy industry through collaborative innovation. 3RGI EKEMR GSRKVEXYPEXMSRW SR ]IEVW SJ GSRXVMFYXMSR XS XLI IRIVK] MRHYWXV] ERH [I PSSO JSV[EVH XS XLI GSRXMRYIH GSPPEFSVEXMSR FIX[IIR 48%' ERH ',3% 7MRGIVIP] 7SLIMP %WKEVTSYV 4L ( 4 )RK *'%) *'-1 4VIWMHIRX 4IXVSPIYQ 8IGLRSPSK] %PPMERGI 'EREHE WEWKEVTSYV$TXEG SVK

CHOA JOURNAL — February 2022 10

CHOA Platinum Sponsors

11 CHOA JOURNAL — February 2022

ESSENTIAL REPRINTS A NEW SECTION OF THE CHOA JOURNAL. We weren’t the first to publish it. But we know you’ll want to read it. CONNECT. SHARE. LEARN. LEAD.

13 CHOA JOURNAL — February 2022

ESSENTIAL REPRINT INTRODUCTION BY CARALYN BENNETT, PRESIDENT, CANADIAN HEAVY OIL ASSOCIATION When I posted Mac Van Wielingen’s opinion piece “If we are not careful, the Great Reset could become the Great Regret” on LinkedIn a month ago, the response was eye-opening – almost 10,000 views, more than 80 reactions, and great commentary, some reflecting on the concept of the triple bottom line: people, planet, and profit. As we strive to create a low climate-risk future, minimize environmental impacts, and deliver effective and inclusive social change and value, all in a fair and trustful way, are we at the same time setting society up for profound unintended consequences? As Mac states, “energy runs through all that we do as a society and the economics of energy has relevance to all stakeholders”. When it comes to achieving desirable outcomes, the relevance of economics, in particular energy economics, is well understood; profit, metaphorically representing one leg of the three-legged triple bottom line stool. In other words, without considering economics, why would we expect a stable outcome for people and planet? If we focus narrowly on one variable in a complex system, what price will society pay? Are recent European energy prices the canary in the coal mine? If we want to achieve better outcomes, don’t we need to have the proverbial difficult conversations, to find ways to balance multiple competing objectives, identifying synergies, so that we can move forward holistically? Please enjoy this essential reprint, as published in the Calgary Herald December 31, 2021, and check out Mac’s referenced paper “What is the Future of Canada’s Energy Sector? Emerging Themes of an Optimal Pathway”.

If we are not careful, the Great Reset could become the Great Regret BY MAC VAN WIELINGEN The Great Reset movement promulgated by the World Economic Forum is fundamentally a shift towards non-economic priorities, notably towards environment, social, and governance (ESG) aspirations. It is presented as a new economic and social order, a New Deal, with an emphasis on decarbonization, sustainability, equality, inclusivity and resiliency, and is often referenced as some form of a Green New Deal. ESG, resiliency and sustainability are fantastic essential aspirations. But to become real they must be grounded in the practical realities of economics. Absent this understanding, the Great Reset movement invites

disillusionment, a further breakdown of institutional trust, and could become the Great Regret. The foundation of the ESG movement fundamentally makes sense and indeed will serve and support a positive future for society. But the construct is limited in a profound way, which is creating distortions and constraining the value of its application. This is a central point of my paper, “What is the Future of Canada’s Energy Sector? Emerging Themes of an Optimal Pathway” prepared for The School of Public Policy at the University of Calgary.

“ESG, resiliency and sustainability are fantastic essential aspirations. But to become real they must be grounded in the practical realities of economics. Absent this understanding, the Great Reset movement invites disillusionment, a further breakdown of institutional trust, and could become the Great Regret.”

CHOA JOURNAL — February 2022 14

All of us in our communities and in society want a clean environment. We have a legitimate essential interest in a low carbon, low climate risk future; clean water and air; and, minimal adverse environmental impacts associated with development. We also aspire for social value through public services, education, health, safety, diversity and the full inclusion of Indigenous peoples. Further, the idea of governance excellence as an aspiration rests on the fundamental importance of ethics, fairness and trust, which are foundational to the effectiveness and functionality of capital markets, our institutions and indeed the prosperity and functionality of our nation. All of this is unquestionably what we want and need. But the mainstream ESG construct is severely limited by the exclusion of a fourth fundamental — the ever present and always important reality of economics. Nowhere is this more clear than in energy policy. The sourcing and use of energy runs through all that we do as a society and the economics of energy has relevance to all stakeholders. z

Consumers are concerned about costs, affordability, reliability and security, all of which link directly or indirectly with economics.

Employees within the energy sector need opportunities and income.

Indigenous peoples aspire for resource project ownership as a path out of economic dependency.

Investors are concerned about appropriate returns on dollars at risk.

Lenders worry about loans being fully serviced and repaid.

Corporate executives and directors are accountable for the allocation of capital entrusted under their authority.

Governments require a tax base to sustain public services and to meet debt obligations.

Economics includes finance and Canada is now one of the most indebted countries of the world; this poses risks and challenges for all citizens of Canada, particularly given the current context of stubbornly high inflation and the expectation of rising interest rates. Economics should be an explicit and integral part of ESG, not an afterthought; accordingly, ESG should be expanded to include economics. Economics should be an explicit and integral part of ESG, not an afterthought; accordingly, ESG should be expanded to include economics. The new construct thus becomes E-ESG, “economicsenvironment, social and governance.” This broadened framework captures the full range of essential stakeholder interests consistent with the idea of stakeholder capitalism and corporate stakeholder governance. The broad practical implication of the E-ESG framework is that it clarifies that policy must solve for multiple outcomes to serve all essential interests of society.

“Economics should be an explicit and integral part of ESG, not an afterthought; accordingly, ESG should be expanded to include economics ... E-ESG.” Specific to energy, the desired outcomes of policy are simply not singular; they are multiple, overlap, are often in conflict, but can potentially operate synergistically. An extreme focus on a single desired outcome is just that — extremism. The fact that essential interests or priorities may be in conflict does not negate the importance of one outcome, for example the importance of environment. This creates complexity but it is reality. This framework and these understandings point to the need to find an optimal path through the complexities of competing objectives, varying interests and the necessity of linked sequencing and contingencies in what most agree will be a multi-decadal transition, built on existing advantages and multiple technologies. Simplistic, shallow narratives that sound good don’t offer much value in the context of this complexity and will contribute to consequences that we may regret. The imperative for all countries of the world is to find the optimal path to decarbonize and yet meet all essential aspirations, where supply and price shocks, such as what is currently occurring in Europe and Asia, can be avoided. Otherwise, the broad climate and decarbonization movement will lose credibility. If it loses credibility globally, one can reasonably expect that it will lose credibility and public support within Canada. The narrowness of policy-driven decarbonization must be placed within the comprehensiveness of market-based economics and all other essential environmental, social and governance aspirations. Otherwise, the haunting spectre of the Great Regret will increasingly take hold. Original Publication

Mac Van Wielingen

Mac Van Wielingen is chair, Viewpoint Investment Partners; founder and partner, ARC Financial; and chair of the Business Council of Alberta.

15 CHOA JOURNAL — February 2022

LIKE THE JOURNAL? LIKE TO PUBLISH THE JOURNAL? CHOA is now accepting content proposals for 2022 issues of the Journal. • • • • •

Full Technical Articles (peer-reviewed) Business Articles Opinion Pieces Tech Flashes Industry Briefs

CONNECT. SHARE. LEARN. LEAD.

ESSENTIAL REPRINT

Energy Minute – Carbon Capture

READ MORE 17 CHOA JOURNAL — February 2022

The 30th Annual Slugging It Out Conference - 26 April 2022

KEENER, LEANER, GREENER Slugging It Out connects a broad range of heavy oil professionals and illuminates current key industry topics. This year’s content will cover both macro and local scale topics that will enable our industry to adapt, thrive, and continue to grow responsibly. • Slugging It Out provides a unique environment for collaboration with industry professionals, sharing knowledge and promoting the success of all projects. • Presentations are focused on project updates, performance and reservoir case studies, new and emerging ideas and technologies, facility design and project economics. • The format of the event encourages open dialogue with both attendees and presenters, maximizing knowledge sharing and learning. This year’s event will frame major challenges and how to address them in ways that allow our industry to emerge leaner, greener and more profitable! REGISTRATION OPENING SOON! at SPE/CHOA In-Person Slugging It Out Conference taking place in-person on 26 April 2022. CHOA members receive significant discounts on Slugging It Out tickets. Venue: Hudson, 200 8 Avenue SW, 6th Floor, Calgary, AB T2P 1B5, Canada Organizers: The Society of Petroleum Engineers (SPE) The Canadian Heavy Oil Association (CHOA)

MEMENTOS A NEW SECTION OF THE CHOA JOURNAL. You might not remember it. But it’s the once was of who we now are. And context for where we are going next. CONNECT. SHARE. LEARN. LEAD.

19 CHOA JOURNAL — February 2022

In the early 1960s, coffee was $0.25 a cup. WTI was $2.91 a barrel. Canada’s oil sands were an idea soon to become reality. Always a surface mine. 60ish years later, much is the same – yet everything is different. SAGD. Indigenous partnership. Bitumen beyond combustion. Decarbonization. Concepts that weren’t in the oil patch lexicon then are now key definitions for the path forward.

What will the list look like in another 60? CHOA JOURNAL — February 2022 20

CHOA Gold Sponsors

21 CHOA JOURNAL — February 2022

TEXT:

403-266-HELP (4357)

CHAT:

PHONE:

DistressCentre.com

403-266-HELP (4357)

DistressCentre.com

TECHNICAL ARTICLES THE CORE OF THE CHOA JOURNAL. Impactful technical and business insight. Deep. Or broad. Solid. Peer-reviewed.

CONNECT. SHARE. LEARN. LEAD.

23 CHOA JOURNAL — February 2022

TECHNICAL ARTICLE

Past, Present, and Future Applications of Geophysics in Oil Sands - Part 2 of 2 BY DRAGA TALINGA, DAVID GRAY, HONG FENG, DON C. LAWTON, AND BRIAN WM. SCHULTE This paper is dedicated to Dr. Larry Lines (1949-2019), who was involved with seismic imaging and inversion, reservoir characterization, conventional oil and gas exploration, geophysical studies of heavy oil, oil sands, and monitoring effectiveness of steam assisted gravity drainage (SAGD), and who mentored us all. We also acknowledge the graduate students who worked on theses over the years with the University of Calgary Consortium for Research in Elastic Wave Exploration Seismology (CREWES) and Consortium for Heavy Oil Research by University Scientists (CHORUS), both groups which conducted research into application of geophysics in heavy oil.

INTRODUCTION This is the second part of a two-part paper. This part of the paper explores some of the most recent advances in using seismic data for oil sands reservoirs. These are Time-lapse (4D) Inversion for SAGD; Predicting where Bitumen has been Liquified using PS-4D Seismic Data; 4D Time-Lapse Full Waveform Inversion for the SAGD Steam Chamber Imaging; 3D DAS FWI for the SAGD Steam Chamber Imaging; The role of Geophysics in Emission Reductions; Conclusions. The goal of this paper is to look at the present and future work of seismic in heavy oil. Time-lapse (4D) Inversion for SAGD In time-lapse seismic analysis, seismic inversion combined with rock physics modelling is particularly useful to understand and interpret the changes in the elastic properties of the reservoir that result from changes in pressure, temperature, and fluids during SAGD operations. The SAGD method consists of steam injection in horizontal wells to heat the bitumen and reduce its high viscosity to increase mobility. For oil-sands reservoirs that are thick and have been heated and produced for a longer time, updating the initial low-frequency models becomes particularly important to eliminate artifacts outside production areas and obtain more accurate magnitudes of property changes. Updating the low-frequency models could be realized using different approaches such as scaling the models based on horizon shifts (with an example shown later in this paper, from Gray et al, 2017), or using time shifts measured between the baseline and monitor survey (with an example from Reine et al, 2020).

“In 4D seismic, seismic inversion combined with rock physics modelling is particularly useful to understand and interpret the changes in the elastic properties of the reservoir that result from changes in pressure, temperature, and fluids during SAGD operations.” Figure 13 a) and b) show an example of facies classification of a nonuniform development of a steam chamber from a time-lapse seismic monitoring study within the McMurray reservoir (from Reine et al (2020)). Often, intra-reservoir shale bodies act as barriers to steam propagation and impede the development of the steam chamber. In this study, quantitative interpretation of baseline and monitoring PP data could directly image the fluid changes and flow outside the well areas by imaging and interpreting anomalies related to the SAGD steam chamber. Integrating the time-lapse inversion results with well rock physics data and other reservoir information such as well logs, temperature, pressure, and core measurements, provided an excellent correlation between the seismic classes and the temperature logs.

When converted PS data are not available, we can still update the S-wave initial model for the monitor by using rock physics modelling and PP time-shifts. Figure 12 shows an example from Reine et al (2020), who calculated corrections for the density and P- and S-wave velocity models from the maximum injection conditions of pressure, temperature and water saturation expected over the different lithologies.

CHOA JOURNAL — February 2022 24

Figure 12: a) Time shift from dynamic warping between baseline and monitor data, used in corrections of the initial density, Vp and Vs models for the monitor survey. b) and c) Crossplot template of density changes versus P-impedance using rock-physics data, shown with seismic inversion data from areas outside (b) and inside (c) the steamed area. Point size is proportional to steam saturation and colored by temperature. (From Reine et al, 2020).

Figure 13: a) Classified seismic section through the available temperature logs. The highest temperatures are in the centre of the reservoir above the level of the injectors (not shown). b) A horizon slice 30 ms below the Wabiskaw horizon showing the distribution of increased temperatures. (From Reine et al, 2020).

25 CHOA JOURNAL — February 2022

Predicting where Bitumen has been Liquified using PS-4D Seismic Data Recently Gray et al (2017) demonstrated that liquid bitumen could be identified using the changes in seismic shear wave properties between surveys that can be identified in 4D seismic analysis that compares two PS surveys. The principle behind this is that the bitumen has a small amount of rigidity or shear strength in its natural state, making it “a “quasi-solid” (Han and Batzle, 2008). Once the bitumen is heated to a liquid state, that rigidity, or ability to shear, goes away. In fact, the definition of the bitumen becoming a liquid could be its loss of rigidity. Because the rocks in oil sand formations tend to be unconsolidated, they have low levels of rigidity as well. Therefore, change from quasi-solid to liquid bitumen causes a large drop in the shear properties of the rock (Figure 14, green line). This large drop shows up in the PS seismic as a large change in the PS reflection amplitude, and a significant delay in the timing of the PS reflection below the liquified bitumen between the PS surveys taken before and after heating, leaving a large PS-4D seismic response (which geophysicists will call 3C-4D for 3-component – one component for pressure and two orthogonal components for shear). The reflectivity change can be detected using AVO effects as described above, but the time delay cannot. The time delay is caused by the decrease in the shear properties, which includes decreases in the shear wave velocity through the entire liquified interval. Therefore, the converted, reflected S-wave moves significantly more slowly through the sand with the liquified bitumen, causing the seismic wave to arrive later. This time delay can be used to estimate the average slowdown through the sands with the liquified bitumen, which then allows the estimation of the average change in shear properties through that zone (Gray et al, 2017).

This information can be incorporated into inversions, as described above. In particular, using AVO and PS data, geophysicists can estimate the change in S-Impedance (a function of seismic velocity, rigidity, and density), which is one of the most significant changes in the rock due to this liquefication (Figure 14). As can be seen in Figure 14, the change in shear properties seen by the inversion of the data after heating tell us whether the bitumen is liquid at any given point in the subsurface, if the shear impedance has decreased by 13%, in this case. If it is liquid, all that is required is a production well to produce the already liquid bitumen in that area. No further heating, i.e., no injection well, is required. Furthermore, the production well can be targeted to optimally produce the bitumen already liquified.

“The change in shear properties seen in the seismic inversion after heating tell us whether the bitumen is liquid at any given location in the subsurface.”

Figure 14: Percent changes in elastic properties, Vp, Vs, density, and Vp/Vs with temperature, saturation, and pressure. Indicated are where quasi-solid bitumen is being heated (green, with decreasing S-Impedance), the mobile bitumen zone (blue, with flat S-Impedance), and the steamed zone (red), where all elastic properties drop at steam temperature. (After Todorovic-Marinic, 2017, and Gray et al, 2017).

CHOA JOURNAL — February 2022 26

Figure 15: On the left is the Vp/Vs ratio from the baseline. On the right are the Vp/Vs responses of the PS-4D monitor with interpretations of the states of the fluids from the combination of the conventional PP-4D (Figure 3) and PS-4D Vp/Vs differences in the boxes. The range is 1.5 – 4.5. (After Gray et al, 2017).

Figure 16: On the left is the P-impedance from the baseline from the conventional PP-4D. On the right the P-impedance response of the monitor with interpretations of the states of the fluids from the combination of the conventional and PS-4D differences. Range is 3000-7000 m/s*g/cc. (After Gray et al, 2017).

A geophysicist would likely interpret the location of the liquid bitumen by using PS-4D displays like the ones shown in Figure 15 and Figure 16. The images on the left of the figures are before heating, and on the right are after. Large decreases in P-impedance (Figure 14, red) show us where the bitumen has been replaced by steam. Large increases in Vp/Vs, caused by decreases in S-impedance (Figure 14, green), show us where the bitumen is liquid. This interpretation can be converted in a manner similar to the facies inversion shown in Figure 13 or by using AI methods, as was done in Figure 17. Now the spatial distribution of the steam chamber (Figure 17, red), the spatial distribution of the liquid bitumen (Figure 17, red), and bitumen that has been heated, but is not liquid yet (Figure 17, green), can be displayed on a workstation and an infill well plan can be developed based on this display. Gray et al (2017) found correlations of greater than 90% between the size of these distributions and the actual production of the reservoir, which suggests that these spatial distributions are reasonably accurate. 4D Time-Lapse Full Waveform Inversion for the SAGD Steam Chamber Imaging During the SAGD process in oil sands production, 4D time-lapse seismic is widely used to monitor the steam chamber development (Lumley, 2001; Maharramov et al, 2016). Standard 4D seismic attributes such as travel time delay and NRMS difference are typically used to qualitatively interpret the thickness of the steam chamber and the location of the steam front. For most cases, it may be possible to pick a top steam chamber event on the stack reflection data. However, these interpretive attributes have difficulties to determine the geometry of the steam chamber in detail. The inverted velocity difference from the Full Waveform Inversion (FWI), which runs on the raw shot gathers with the possibility of a short 4D turnaround time, provides an efficient way for faster decision-making on production optimization and future well plans. Also, applying the FWI derived velocity model to create a PSDM volume can significantly improve imaging quality.

Figure 17: Quantitative interpretation of the steam chamber (red), mobile bitumen (blue), and heated quasi-solid bitumen (green) (After Todorovic-Marinic, 2017).

27 CHOA JOURNAL — February 2022

“The inverted velocity difference from the Full Waveform Inversion provides an efficient way for faster decision-making on production optimization and future well plans.” Full Waveform Inversion initially emerged as an advanced tool for complex velocity model building (Crase et al, 1990; Warner and Guasch, 2014; Kotsi and Malcolm, 2017). The FWI-derived velocity model coupled with advanced imaging algorithms, such as PSDM and RTM, can dramatically improve the subsurface imaging from extremely complicated structures that exhibit abrupt vertical and lateral velocity changes (Zhang and Zhang, 2011; Zhang and Huang, 2013). The oil and gas industry have seen very successful applications of FWI in different geologic settings, such as the complex subsalt targets in the offshore Gulf of Mexico. However, FWI has yet to extend its full potential to the land seismic data, especially the 4D time-lapse seismic surveys during the SAGD operation in Oil Sands areas. The application of FWI to the land seismic remains challenging mainly due to lacking low frequencies, limited offsets, high amplitude elastic waves, and source wavelet estimation. To mitigate these effects on the time-lapse FWI, the doubledifference workflow (Bian et al, 2017) was applied using a cost function mainly targeting the baseline match and the waveform difference match between the baseline and monitor surveys. The input data to the 4D time-lapse FWI algorithm are raw shot records (baseline and monitor) and an initial velocity model with an objective of deriving a final velocity model that would produce matching simulated shot records in both phase and amplitude using the finite-difference method. The output from 4D time-lapse FWI is the velocity difference volume between the baseline and monitor surveys. Velocity changes are a function of saturation, temperature, and pressure, with the greatest velocity change associated with a gas phase. As a result, the velocity difference between the baseline and the monitor surveys can be used for the direct interpretation of the developed steam chamber. The preliminary analysis of the inverted 4D time-lapse FWI velocity

difference shows a very encouraging image of the steam chamber inside the reservoir, which is crucial for understanding the heterogeneity of the reservoir and future development plans. The inverted FWI velocity difference was validated with vertical well temperature logs, top/base steam chamber events from the reflection seismic volume, the time delay map, and the surface heave map. (Feng et al, 2020) The validation and analysis of the FWI velocity model involve comparing with time delay map, vertical observation well temperature logs, and production data. The inverted FWI velocity differences agree with the temperature logs and have a good alignment with the horizontal trajectory. A map view of a depth slice of the FWI velocity difference at 16 m above the producers reveals a strong velocity drop along the horizontals (Figure 18a). A 3-D perspective view of a steam chamber geobody illustrating the velocity difference volume with horizontal and vertical slices over producing SAGD pads (Figure 18b). 3D DAS FWI for the SAGD Steam Chamber Imaging Distributed acoustic sensing (DAS) using fiber optic cables is known in the oil and gas industry for monitoring the fluid inflow in wellbores. Full-waveform inversion, also known as full-wavefield inversion, is a data processing technique that has been employed in the oil and gas industry in seismic surveying, primarily in offshore 3D surveying of the complex subsurface structures. However, the application of FWI to 3D DAS on horizontal tubing-deployed fiber-optic cables is relatively uncommon. 3D DAS FWI is an innovative technology that could be applied to thermal bitumen projects as a potential alternative or complementary tool for steam chamber monitoring due to the low cost and operational efficiencies, and by using existing DTS cables as receivers, the surface impact is significantly reduced.

Figure 18: Map view of a depth slice of the FWI velocity difference at approximately 16 m above the producers (a) and a 3-D perspective image of a velocity difference volume with horizontal wells (b). (From Feng et al, 2020, published with permission).

CHOA JOURNAL — February 2022 28

Figure 19: PSDM section image (a), Velocity difference section from 4D surface seismic FWI (b), and the section image of the FWI velocity from 3D DAS along the horizontal (c). (From Feng et al, 2021, published with permission). The geometry of the 3D DAS survey is very different from conventional surface seismic programs in that the source points are on the surface, and the receivers are underneath the steam chamber target depth. 3D DAS FWI uses supercomputers and an advanced algorithm of FWI, processing the full wavefield including all the seismic wave types (refracted and diving waves, reflected waves, scattered waves, etc.) through the computer simulation to get a subsurface earth model in rich details in the depth domain. The input of the 3D DAS FWI workflow is the large quantities of the shot gathers recorded from the 3D DAS survey with a minor precondition of the data, and the output of the workflow are the subsurface rock properties, mainly P-wave velocity. The inverted P-wave velocity can be used as a direct indicator of the steam chamber. A substantial amount of 3D DAS shot gathers were recorded on one SAGD pad where fiber-optic sensors were installed along each horizontal well for Distributed Temperature Sensing (DTS) measurements. There are six fiber cables with 100 m spacing. The fiber gauge length is 15 m, and the fiber channel interval is 1 m. The input data to the FWI algorithm are raw shot records with an objective of deriving a velocity model that would produce matching simulated shot records in both phase and amplitude. A Ricker wavelet with the center frequency at 35 Hz is used in generating the synthetics. The first breaks were picked to perform travel time tomography to get a starting model for the FWI. Although ﬁner resolution of velocity could be achieved with a dense sampling along the horizontal direction, the inadequate illumination from the shadow zone in the 3D DAS survey due to the sparse fiberoptic receiver lines imposes challenges on 3D DAS FWI. The inverted velocity along the horizontals shows a higher resolution image in the inline direction compared with the crossline direction, which has an inadequate illumination. The preliminary analysis of the inverted 3D DAS FWI velocity shows a high-resolution velocity result where the illumination is highest. On the other hand, the 3D DAS FWI velocity at

29 CHOA JOURNAL — February 2022

the edge of the survey shows some artifacts and poor results due to the inadequate illumination. The inverted velocity from the 3D DAS FWI is shown in Figure 19. 3D DAS FWI, as an innovative and cost-effective alternative to the conventional 4D time-lapse surface seismic, can deliver the velocity volume in the depth domain directly from the raw shot gathers with minor pre-processing of the 3D DAS shot gathers, which can result in a significantly reduced turnaround time to implement timely production decisions. To mitigate the illumination issue in the 3D DAS technology, DAS fiber on the surface or surface seismic can be used to resolve the illumination issue in the 3D DAS.

“3D DAS FWI is an innovative technology that could be applied to thermal bitumen projects as a potential alternative or complementary tool for steam chamber monitoring due to the low cost and operational efficiencies.”

“Alberta is very well positioned for CO2 storage and utilization at a large scale due to its geology and the technical expertise within the Alberta oil and gas workforce.”

The role of Geophysics in Emission Reductions Many countries, including Canada, have set goals for large reductions of anthropogenic GHG emissions. Canadian oil sands operations currently contribute about 25% to Alberta’s greenhouse gas emissions (www. alberta.ca/climate-oilsands-emissions.aspx). Therefore, Canadian oil sands companies announced the Oil Sands Pathways to Net Zero Initiative with the goal of reaching net zero emissions by 2050 (https:// www.newswire.ca/news-releases/canada-s-largest-oil-sandsproducers-announce-unprecedented-alliance-to-achieve-net-zerogreenhouse-gas-emissions-866303015.html). Previous sections of this article have described the important role of geophysics in optimizing oil sands reservoir management, many aspects of which reduce the steam-oil ratios that are a proxy for reduced GHG emissions. Applications of geophysics in this way meaningfully contribute to reductions in GHG creation at the heart of thermal oil sands operations. One of the key, proven technologies towards achieving reductions in GHG emissions is through Carbon Capture and Storage (CCS), which may include Utilization (CCUS), e.g. https://royalsociety.org/-/media/ policy/projects/climate-change-science-solutions/climate-sciencesolutions-ccs.pdf. This is a practical option to significantly reduce emissions from oil sands production. Carbon capture consists of the separation of CO2 from operations emissions and then utilization is converting the CO2 to useful products or using it for enhanced oil recovery as long as the produced oil has reduced carbon intensity. The latter has been proven, for example in the Weyburn Field, allowing the operator to be carbon negative, https://www.cbc.ca/news/business/ bakx-ccs-enhance-whitecap-david-keith-1.5884107. Alberta is very well positioned for CO2 storage and utilization at a large scale due to its geology and the technical expertise within the Alberta oil and gas workforce. For the Athabasca Basin, a challenge for implementing CCS is that the current regulations do not permit CO2 injection and storage at depths of less than 1 km. This restriction is based on maintaining the CO2 in a supercritical state for maximum storage efficiency and also for a high level of confidence that the CO2 would not easily find a pathway to the ground surface and thus potentially contaminate potable groundwater or escape into the atmosphere.

Geophysics has a key role in CCS in terms of contributing to the Measurement, Monitoring and Verification (MMV) program to ensure security of storage and to map the CO2 plume within the injection zone. Geophysical methods including seismic, electrical resistivity tomography (ERT), electromagnetic (EM) and gravity have all been used for monitoring CCS projects in Canada (e.g., Macquet et al, 2019). Seismic can also be critical in finding storage (porosity) in deep saline aquifers. Conclusions AVO techniques have a tremendous utility in the characterization of the oil sands reservoirs, despite the myriad complications affecting the seismic amplitudes (some of them discussed here). Experience has shown that one of the most robust strategies is integrating the seismic reflection data with AVO inversion and rock physics modelling. The key properties in the facies analysis are the density and Vp/Vs. They are lithology-dependent, with bitumen sands having higher densities and lower Vp/Vs and shales having lower densities and higher Vp/Vs. In SAGD operations, time differences between baseline and monitor surveys provide useful information for updating the initial models for time-lapse inversion, necessary to obtain magnitudes consistent with the fluid, temperature and pressure changes and suppress the noise outside the heated areas. In the absence of converted PS data, we can obtain corrections for the interval values of Vp/Vs via rock physics modelling studies. In addition, even though the full-waveform inversion of DAS time-lapse seismic data cannot recover the shear information, and therefore the elastic properties, it has a wider frequency bandwidth and higher resolution and can complement the conventional seismic data. Implementing CO2 sequestration in the Athabasca Basin remains challenging. Through quantitative interpretation studies, we can obtain more accurate and detailed reservoir information, both laterally and vertically, which can help make better judgements, avoid costly mistakes, and significantly improve reservoir planning and economic outcomes.

CHOA JOURNAL — February 2022 30

Acknowledgements

REFERENCES

We are thankful to the companies that provided the primary data and permitted sharing the results with the geoscience community. Draga Talinga would also like to acknowledge Sound QI Solutions for encouraging to share some of the case studies and Carl Reine for providing some of the figures used in this article.

Comprehensive references for this article are located online.

Draga Talinga

Draga Talinga is a consulting geophysicist, focusing on reservoir characterization. With over 20 years in research, oil and gas and consulting, Draga has extensive experience in a wide range of projects in basins around the world. Draga holds a B.Sc. and an M.Sc. from the University of Bucharest, a Ph.D. from the University of Calgary, and a Postdoctoral Fellowship from Simon Fraser University, all in Geophysics. Her current professional interests include using integrated quantitative analysis for subsurface geological, geomechanical and petrophysical characterization.

David Gray

David Gray frequently lectures on geophysics and has presented over 100 papers at technical conferences and luncheons. His career has included positions at Veritas, CGG and Nexen, and he has made notable contributions to quantitative seismic interpretation, seismic geomechanics, and seismic fracture characterization. He holds numerous patents. David received a Bachelor of Science degree in Honors Geophysics from the University of Western Ontario and a Masters of Mathematics degree in Statistics from the University of Waterloo. David is a consultant, and currently a member of SPE, SEG, CSEG and APEGA.

Hong Feng

Hong Feng obtained his B.Sc. in Geophysics from Yangtze University and an M.Sc. in Geophysics from each of the China University of Petroleum and the University of Calgary. Hong has worked for PetroChina, Sinopec, Sproule Associates and Husky Energy. Currently at Cenovus Energy Inc., he is working as a reservoir geophysicist on SAGD reservoir characterization and 4D time-lapse steam chamber imaging. He has authored/ co-authored several papers at SEG, EAGE, and GeoConvention on AVO analysis, Full Waveform Inversion (FWI), and Distributed Acoustic Sensing (DAS). Hong is a member of the SEG, CSEG and EAGE.

Don C. Lawton

Don Lawton is Director of the Containment and Monitoring Institute at Carbon Management Canada and is Professor Emeritus of Geophysics at the University of Calgary. His research activities include acquisition, processing and interpretation of seismic data, advancing monitoring methods for geological storage of CO2 and integrated geophysical and geological studies in complex geological settings. He was co-recipient of an NSERC and the Conference Board of Canada University/Industry Synergy Award (2000), was awarded the Canadian Society of Exploration Geophysicists Medal (2000) and received Honorary Membership in the Society (2014). Brian Wm. Schulte

Brian Wm. Schulte graduated from the University of Calgary with a Bachelor of Science in Geology (Geophysics Minor). Brian has worked in seismic processing, acquisition, interpretation, rock physics, and petrophysics. He has worked for companies including Gale-Horizon, Schlumberger, Vastar (division of Arco), BP, Explora Seismic Processing, Geokinetics, Talisman, and Repsol. Brian is a consultant who also volunteers to train graduate students studying Geoscience, Engineering, and Public Policy in soft skills not taught at university, with an emphasis on projects involving low carbon energy, integration and thinking out of the box.

31 CHOA JOURNAL — February 2022

REDUCED CARBON CEMENT BLENDS DELIVER WELL INTEGRITY AND ESG BENEFITS SANJEL ENERGY SERVICES’ industry leading ECOproteus thermal cement blends provide sustainable cementing solutions, reducing the environmental footprint of our operations, while maintaining the performance and productivity of the wells being treated. www.sanjel.com

CHOA MEMBERSHIP = PRIVILEGES

Access to exclusive members-only content. Discounts for most CHOA technical and networking events. Unique CHOA volunteer opportunities. And so much more. https://choa.ab.ca/my-account/

CONNECT. SHARE. LEARN. LEAD.

TECHNICAL ARTICLE

A Systematic Multidisciplinary Approach for Optimization in Brownfield SAGD Projects - Part 1 of 2 BY SHAHBAZ MASIH, P. ENG. AND MARK SAVAGE P. L. GEO. This article is the first half of a paper that focuses on a multidisciplinary optimization approach for brownfield SAGD development, i.e., optimization at existing SAGD production operations. This part of the article addresses optimization of existing pads by modifications in well completions and operational strategies. The article’s second part, planned for the CHOA Journal’s next issue, will discuss how a multidisciplinary approach can be used for adding infill wells, pad extension wells and/or farmer wells based on updated reservoir characterization, heat transfer and other observations from operational performance data.

INTRODUCTION Operators of oil sands projects need to be prudent about capital intensity and focus on operational efficiencies in all oil price environments. Optimized capital intensity is equally important for new projects (greenfield) and projects in operation (brownfield). Steam oil ratio (SOR) and oil production rate are the main parameters that determine the economics of a steam assisted gravity drainage (SAGD) project. Both are influenced by reservoir characteristics, well placement, design, completions, and surface and subsurface operational practices. Optimization of greenfield and brownfield projects in any of these parameters can improve the SOR, oil production rate, and GHG intensity of production. Improvement in oil production and SOR of brownfield projects can be attained by either optimization of existing wells or adding more wells, e.g., infill wells, extension wells, farmer wells (new horizontal wells above base of pay and below the horizontal production well), and sustaining well pads. Previous studies have examined parameters that could impact optimization of SAGD performance at different stages of the process, e.g., by Gittins et al2, have evaluated modification of SAGD process by using solvent co-injection, e.g., by Gupta et al3, and proposed improvement of the process mechanism, e.g., by Edmunds et al1. In this article, the SAGD process is divided into surface and subsurface systems to ensure a systematic approach across disciplines to look for suitable optimization solutions. The systems approach facilitates root cause analysis by identifying the critical parameters and the disciplines involved. This systematic approach also helps form a multidisciplinary methodology to address operational issues

33 CHOA JOURNAL — February 2022

“Operators of oil sands projects need to be prudent about capital intensity and focus on operational efficiencies in all oil price environments. Optimized capital intensity is equally important for new projects (greenfield) and projects in operation (brownfield).”

“SAGD projects consist of complex and interrelated surface and subsurface entities. It is prudent to break a project into major systems, identify the disciplines responsible for oversight of those systems and use a multidisciplinary approach for optimization.” MULTIDISCIPLINARY APPROACH FOR OPTIMIZATION

other impurities and adds diluent to bitumen, which can consist of an inlet degasser, free water knockout (FWKO) vessels and oil treaters, including associated chemical feed systems;

Systems, Disciplines and Their Roles SAGD projects consist of complex and interrelated surface and subsurface entities. It is prudent to break a project into major systems, identify the disciplines responsible for oversight of those systems and use a multidisciplinary approach for optimization. SAGD projects in the operation phase consist of the following major systems (Figure 1).

A bitumen storage and delivery system where bitumen is diluted for storage and delivery, which can consist of storage tanks, loading terminals, trucks, or pipelines;

A water treatment system that can include skim tanks, induced gas flotation (IGF) units, oil removal filters (ORFs), warm lime softeners (WLS), and ion exchange (IX) water softeners. The processed water is recycled and sent to steam generation system. Mechanical vapour compression (MVC) and evaporators are being used at some SAGD facilities as components of water treatment systems;

Water supply system that provides water for steam generation which can consist of source water wells, aquifer, ponds, and booster pumps;

A series of well pads placed throughout the pool and well completions which can include wellhead, casing, tubing, artificial lift, and flow control devices;

A disposal system can consist of disposal wells, and/or disposal trucking; and

The Reservoir includes reservoir fluids and reservoir rock (framework, matrix, and clays);

An oil treatment system that separates bitumen from water, gas and

In the future, systems for carbon capture and transportation or storage for GHG emissions reduction. This article does not address CCUS systems, as the subject merits a separate paper.

Figure 1: Main components of a brownfield SAGD Project

CHOA JOURNAL — February 2022 34

These systems work holistically to achieve a fully optimized SAGD operation. For example, if disposal by trucking or injection is halted for a substantial period, it directly affects the amount of steam injected into wells. Depending on steam chamber maturity and the duration of the disposal issue, this could affect steam chamber pressure, oil production rate and SOR, resulting in suboptimal or even disrupted operation. The impact of these effects on a project’s economics can be minimized by using a multidisciplinary approach and preplanning for these situations. An increase in SOR and a decrease in bitumen production can be minimized by producing from the wells that are less steam intensive and have a low water cut, to generate minimum disposal volumes. A multidisciplinary collaboration by reservoir engineering, production engineering and site operations is needed to build an optimization plan. Figure 2: The roles of different disciplines in the operation phase During the operations phase, geoscience, reservoir engineering, production engineering, drilling and completions (D&C) and site operations and maintenance (O&M) are the key players. The role of each discipline in the major elements of a SAGD project operational phase includes, but is not limited to, those illustrated below in Figure 2. For optimization to generate an effective and positive impact on the project economics, a multidisciplinary approach is required.

“...analysis, evaluation, and implementation of potential solutions should be a collaborative effort coordinated by the discipline assigned to the task. After identification of the root cause, the remedial action should be executed in collaboration with all related disciplines.”

OPTIMIZATION METHODOLOGY Root cause analysis and remedial action are key to solving most technical problems. The analysis, evaluation and implementation of potential solutions should be a collaborative effort coordinated by the discipline assigned to the task. After identification of the root cause, the remedial action should be executed in collaboration with all related disciplines. Remedial action should include the economic justification, roles, responsibilities, and timelines. If the diagnostics and remedial action consist of several steps, the execution can be tuned to the availability and readiness of the facility equipment related disciplines. The disciplines should be kept informed of the results of the remedial action until the end of execution and follow up assessment. If the issue is not resolved, other remedial actions should be discussed by the multidisciplinary teams (Figure 3). The multidisciplinary approach will be discussed in more detail by using examples in the discussion section. Figure 3: Multidisciplinary approach for optimization

35 CHOA JOURNAL — February 2022

EXAMPLES AND DISCUSSION Example 1: Inefficient steam chamber conformance along the length of the well in early SAGD phase Poor steam chamber conformance is a significant challenge in SAGD operation. It is recognized by cold intervals or high subcools along the horizontal well length after start-up (6 months – 3 years of SAGD phase). Conformance impacts the two key economic parameters, oil production and SOR. Heat distribution along the well length depends on the quantity of heat delivered by steam and its propagation into the reservoir. Heat distribution is influenced by steam injection rate, steam quality, well/ completions design, steam injection strategy and the reservoir geology. Figure 1 shows these parameters belong to steam/power generation system, wells/well pads operation and reservoir characterization. Reservoir and production engineering disciplines manage wells/well pad operation. O&M controls the steam/power generation system. Reservoir characterization is conducted by geoscience (Figure 2). Collaboration of the disciplines concerned is needed on the remedial action to determine the economic viability and strategize to implement the solution. Because steam injection strategy and rate can be easily modified, and steam quality can be tested, these parameters can be investigated first to look for solutions. If the wellhead steam quality is suboptimal, steps should be taken to improve the steam quality, e.g., safely lowering steam generator pressure. After confirming good steam quality at the wellhead, steam injection rate and strategy should be investigated, e.g., injection pressure and a sufficient split of steam between the heel and toe.

“If the wellhead steam quality is suboptimal, steps should be taken to improve the steam quality, e.g., safely lowering steam generator pressure. After confirming good steam quality at the wellhead, steam injection rate and strategy should be investigated, e.g., injection pressure and a sufficient split of steam between the heel and toe.”

Geoscience should revisit reservoir characterization. If reservoir geology is found to be suitable for steam propagation and steam quality is optimal, the next course of action lies with reservoir and production engineering. However, if reservoir geology isn’t suitable for steam propagation, as characterized by the horizontal log while drilling (LWD) data, observation well data, and 4D seismic surveys or other geoscientific tools, then well design modification options should be evaluated to optimize resource recovery. Figure 4 illustrates how variations of reservoir top of pay and base of pay can lead to uneven heat distribution along the well length and poor steam chamber conformance. D&C manages the well design modifications, and should be included in the identification of solutions and remedial actions. Modification of well design should be reviewed by all disciplines based on respective roles and responsibilities, e.g., economic viability and installation of tubing deployed flow control devices or modification of injector or producer tubulars. For example, geoscience can update the geological model for studying well design modification options with reservoir simulation done by reservoir engineering. D&C can look at the operational viability of the proposed well modification. Production engineering can share learnings and observations from historic well operations, such as steam breakthrough, to analyze proposed solutions and economic viability. After implementing the well modification, disciplines should be updated with new results of the heat propagation analysis, e.g., temperature logs, and well performance (oil production rate and SOR). If the well modification improves heat distribution along the well length and enhances production, the multidisciplinary Figure 4: Uneven heat distribution caused by reservoir characteristics

CHOA JOURNAL — February 2022 36

“Water treatment issues can limit the amount of total fluid produced, which can impact wells and well pad operations, steam generation system, water disposal system, water supply system and bitumen storage and delivery system. The severity and duration of these issues can pose a significant challenge in maintaining production, steam supply and meeting production and budget targets.” optimization can be considered complete. If heat distribution has not improved after the well modification, then alternative remedial actions can be reinvestigated with a multidisciplinary approach.

Example 3: Low subcool issue

Example 2: Water treatment issues

Evaluation of recommended low/optimum subcool: A well going into low subcool mode can be a major challenge to bitumen production. The optimum subcool can be defined by a collaborative analysis of operational parameters by reservoir engineering and production engineering including:

Produced water with emulsion is treated and recycled to generate steam. The Alberta Energy Regulator (AER) put limits on makeup water and water disposal volumes. Water treatment issues can limit the amount of total fluid produced (Figure 1), which can impact wells and well pad operations, steam generation system, water disposal system, water supply system and bitumen storage and delivery system. The severity and duration of these issues can pose a significant challenge in maintaining production, steam supply and meeting production and budget targets. The water treatment system can have a range of mechanical and chemical issues. Analysis, evaluation, and remedial action associated with these issues can take time. Some issues can be resolved with reduced production from wells/pads and others need total plant and production shut down. O&M handles the water treatment system and should coordinate the resolution. Because water treatment issues are impacted by the volume of produced water, its temperature and chemical composition, reservoir engineering and production engineering should be involved in analysis of the produced fluids. If reduced production of total fluid is required, then the volume of produced water is critical. To keep the oil production high, the production can be limited to low water cut wells. Well selection can be coordinated between reservoir and production engineering. Since low water cut wells usually make the most efficient use of steam, it can help to achieve the most efficient oil production and SOR. A proactive measure to address various production scenarios would be to build and provide dynamic well lists to O&M. If the issue prevails for too long, the steam shortage will require changes in steam volumes to individual wells. The most efficient use of steam based on the well’s performance and operational strategy, can be managed with collaboration between reservoir and production engineering. To efficiently and safely manage steam quantity and quality, O&M (steam generation) should be involved in discussion of the steam cuts. Also, O&M (bitumen storage and delivery) should be involved to manage the impact on bitumen sales and on diluent usage. Water management team can be informed of changes in makeup water usage and disposal rates to keep processes aligned with the regulations depending upon the severity and timeline of the issues.

37 CHOA JOURNAL — February 2022

The systematic and multidisciplinary approach for low subcool has been divided into two parts.

Fluctuation in pump current draw and emulsion production rate;

Pressures at the heel and toe of the producer;

Temperatures along the producer;

Reservoir subcool (based on steam chamber pressure);

Simulation results for optimum subcool considering heat efficiency;

Phase behaviour to differentiate between gas and steam; and

Well test results to identify changes in production at different subcools.

These parameters help operators to identify the difference between gas and steam influx, keep the integrity of the liner and other equipment intact, and perform the economic and risk analyses of running at low subcools. Since the recommended low subcool involves an analysis of so many parameters, it can vary from one well to another. In consideration of the impact on economics and on the business model, tolerance for running at a lower than optimum/recommended low subcool limit can be confirmed with management. Operational challenge: Running a well at a lower-than-recommended subcool limit can compromise well integrity, lead to costly well repairs/redrills and lower oil production. Production engineering is accountable for achieving production goals. Production engineering should coordinate and manage the well integrity and operation, and the optimization process. During operations, subcool along the well length is influenced by the balance between well productivity, withdrawal rates, and heat distribution along the well length. Heat distribution depends upon steam injection rate, steam quality, well/completions design, steam injection strategy and the reservoir geology. The unevenness in heat distribution can be resolved by modifying well design or operational philosophy by using a multidisciplinary approach as discussed in Example 1. Well productivity depends upon reservoir characteristics,

e.g., pay thickness and quality, reservoir heterogeneity, and permeability, and is determined with reservoir analysis by reservoir engineering, production engineering and geoscience. If the withdrawal rates are too high compared to well productivity, sometimes even at the lowest pump speed, the next pump deployed should be designed in consideration of updated well productivity data and in coordination with D&C. Conclusions Brownfield SAGD projects are a complex and integrated mixture of surface and subsurface equipment and facilities. It is prudent to break these complex projects into functional systems. This systems approach can help root cause analysis and planning optimization strategy. A systems approach can also help form a multidisciplinary methodology to address operational issues. The effective multidisciplinary approach requires effective communication between disciplines involved and the development of processes across organizations to use the best available expertise in each discipline for root cause analysis, planning and implementation of remedial action and for determination of criteria for success. References 1.

Edmunds, N., and Gittins, S., “Effective Application of Steam Assisted Gravity Drainage of Bitumen to Long Horizontal Well Pairs”, Journal of Canadian Petroleum Technology, 1993

Gittins, S., Gupta, S., and Zaman, M., “Simulation of Noncondensable Gases in SAGD Steam Chambers”, Journal of Canadian Petroleum Technology, 2011

Gupta, S. and Gittins, S., “An Investigation Into Optimal Solvent Use and the Nature of Vapor/Liquid Interface in Solvent-Aided SAGD Process With a Semianalytical Approach”, SPE Journal, 2013

“...subcool along the well length is influenced by the balance between well productivity, withdrawal rates, and heat distribution along the well length. Heat distribution depends upon steam injection rate, steam quality, well/completions design, steam injection strategy and the reservoir geology.”

Shahbaz Masih, P. Eng.

Shahbaz Masih is an APEGA-registered professional engineer with a Master in Data Science and Analytics from the University of Calgary, and an M.Sc. from the University of Regina (Canada) and a B.Sc. from UET Lahore (Pakistan), both in Petroleum Engineering. He has worked in the Canadian oil industry for more than ten years with Cenovus Energy, Statoil Canada Ltd., and Sunshine Oilsands Ltd. And Dynamic Risk Assessment Systems. Highlights of his work experience include financial modeling, machine learning, data analytics, project development through economic analysis, operational optimization through reservoir and production engineering techniques and an NSERC research project focused on porous media flow in SAGD. Shahbaz is currently working as a lead data scientist at ATB Financial. Mark Savage, APEGA P.L.Geo

Mark has been in the oil sands industry since 2000. Mark started his oil sands career with Petro-Canada working on the Lewis, MacKay River and Fort Hills projects. Since leaving Petro-Canada in 2008, he has been actively engaged in various in situ oil sands assets with Ivanhoe Energy Ltd., Statoil Canada Ltd. and Athabasca OilCorporation. He has collaborated on and led in situ geoscience, operations and development teams.

CHOA JOURNAL — February 2022 38

CHOA Silver Sponsors

39 CHOA JOURNAL — February 2022

The Canadian Heavy Oil Association (CHOA) and the Society of Petroleum Engineers (SPE) Calgary Chapter are pleased to announce their collaboration in cross-promoting select events to benefit the members of both associations. We know we are … stronger, together. This CHOA - SPE partnership will promote innovation, building and sharing knowledge to ignite and drive advances, and cross-industry collaboration to inspire our current and future leaders. With the combination of CHOA’s heavy oil and oil sands focus and SPE’s breadth including its data science Special Interest Group, members of our industry and beyond will have access to an enhanced range of events, information, and networking. Result: More opportunities to evolve and thrive in our continuously changing business environment. Join us. www.choa.ab.ca www.specalgary.com

Image courtesy of Athabasca Oil Corporation

INDUSTRY BRIEFS TECH FLASHES A NEW SECTION OF THE CHOA JOURNAL. Shorter, newsier content. Business and technical.

CONNECT. SHARE. LEARN. LEAD.

41 CHOA JOURNAL — February 2022

INDUSTRY BRIEF

Innovations to Secure the Future of Canada’s Oil Sands Industry in a Net Zero Emission World BY DR. JOHN ZHOU, VP CLEAN RESOURCES, ALBERTA INNOVATES INTRODUCTION

also be discussed.

Governments and businesses around the world have been making pledges to reduce greenhouse gas (GHG) emissions to net zero. Net zero emissions (NZE) for a country, business or other entity means it will either emit no GHG emissions or completely offset its emissions.

Follow-up papers are to be developed for presentation of detailed information on selected areas identified in this high-level summary.

Society will continue to demand crude oil and natural gas while the energy transition takes place and in an NZE world. The future of the hydrocarbon industry in an NZE world may be secured if NZE can be achieved across the life cycle of production through to consumption of the oil and gas. The combined environmental, social, and governance (ESG) performance of the oil sands industry has improved over recent decades to become one of the best in the world (Dziuba et al., 2021.). GHG emission intensity in oil sands production decreased by 20% between 2009 and 2018 (IHS Markit, 2018) and the emissions intensity from some large oil sands assets is comparable to the average U.S. barrel of oil (Sleep et al., 2020). However, the growth of the oil sands industry production has been outpacing the rate of decrease in GHG emissions intensity, so absolute GHG emissions in oil sands production have been increasing. Total GHG emissions from oil sands extraction were 83 million tonnes

“The future of the hydrocarbon industry in an NZE world may be secured if NZE can be achieved across the life cycle of production through to consumption of the oil and gas.”

Decarbonizing Bitumen and Fuel Production Processes In the coming decades of energy transition, while there are still large demands for oil, bitumen can be positioned as the preferred barrel by targeting bitumen as “the NZE crude oil” or the crude oil with the lowest GHG production intensity. Bitumen-to-fuel refinery processes will also require decarbonization. Recently, six oil sands operators, representing 95% of Canada’s total bitumen production, committed to the goal of achieving net-zero emissions from the companies’ oil sands operations by 2050 (https:// www.oilsandspathways.ca/). Their Oil Sands Pathways to Net Zero initiative will position Canada as the supplier of choice for responsibly produced oil needed to meet the world’s energy demand. Significant technology developments in last 15 years have enabled meaningful reductions of GHG emissions from oil sands production. Continued future GHG emission reductions in the industry can be achieved through combining multiple innovations in the next two-tothree decades, including: z

Energy efficiency and process improvements, particularly for in situ projects. These include increased use of cogeneration, more energyefficient water treatment and steam generation, digital oilfield tools, steam additives, non-condensable gas cap, etc. In combination, these may lead to up to a 20% reduction in upstream direct GHG emissions.

Electrification and fuel substitution in drilling, mining equipment and vehicles, etc. In oil sands mining, these have the potential to reduce upstream GHG emissions by more than 10%.

Carbon capture, utilization, and storage (CCUS). Natural gas combustion is responsible for 50 - 85% of direct GHG emissions in bitumen production. CCUS has the potential to greatly reduce such emissions. CCUS has been commercially demonstrated for flue gases with high CO2 concentrations in emissions from upgrading and refinery facilities; however, CCUS requires more development and demonstration for applications at lower CO2 concentration streams from natural gas combustion (once-through steam generators, co-generation, and natural gas combined cycle).

Low emission hydrogen including blue hydrogen produced from natural gas coupled with CCUS. Blue hydrogen may reduce GHG emission by 50% in upgrading and refinery processes.

in 2019, representing 11 per cent of Canada’s overall GHG emissions (Environment and Climate Change Canada, 2021). This paper highlights a range of key innovations required for the oil sands industry to achieve NZE from production to end use. Emphasis is placed on direct GHG emissions (Scope 1) created during the production of bitumen and fuel production. Indirect GHG emissions (Scope 2) in bitumen and fuel production operations (typically utilities provided to the operations), and emissions from product consumption (Scope 3) will

CHOA JOURNAL — February 2022 42

underway to use solar energy at a refinery (Shell Canada, 2021).

“Natural gas combustion is responsible for 50 - 85% of direct GHG emissions in bitumen production. CCUS has the potential to greatly reduce such emissions.” z

New recovery technologies. These include non-aqueous extraction (NAE) and in-pit extraction in mining processes, and solvent enhanced SAGD, steam-solvent hybrid, pure solvent, and electromagnetic heating assisted recovery for in situ production. These technologies have the potential to achieve 20 - 90% direct upstream GHG emission reductions. Most of them will require further development and commercial demonstration.

The technologies summarized above will not be able to achieve complete NZE in bitumen and bitumen-derived fuel production. At a high level, these technologies address only direct (Scope 1) GHG emissions in bitumen and fuel production and none can achieve 100% Scope 1 emissions reduction. None of the above technologies addresses indirect (Scope 2) emissions that include imported electricity, indirect natural gas, diesel, gasoline, and diluent, land use, fugitive emissions, etc., that may contribute up to 50% of the total upstream emissions (Sleep et al., 2020). To achieve NZE in bitumen and fuel production, additional zero-emission and off-set technologies are required. These technologies include renewables, small modular nuclear reactors (SMNRs), bioenergy CCUS (BE-CCUS), and direct air capture (DAC). z

Renewable energy can be used for oil sands operation. At least one project is already

43 CHOA JOURNAL — February 2022

Oil sands and pipeline companies are studying the feasibility of SMNRs in oil sands operations. SMNR technology is getting mature and would meet the needs for heat and power in oil sands operations. SMNRs also can help reduce Scope 2 emissions for oil sands operations.

Oil sands companies have been producing biofuels and are adding more capacity. Bioenergy production fitted with CCUS can result in overall negative emissions. BE-CCUS can be either on-site, or off-site to generate off-set credits for oil sands operations.

DAC can generate negative emissions and therefore offsets for oil sands emissions. However, DAC operation is energy intensive. The data provided by a leading developer (Keith et al., 2018) indicate that a one megatonne per year emissions reduction will require 366 GWh electricity plus 5,250,000 GJ natural gas. If the electricity is provided by solar, a 278 MW photovoltaic solar facility will be required to provide the electricity.

Projected timelines for commercial deployment of various emission reduction technologies are illustrated above. Most energy efficient and process improvement technologies (located in the top, yellow area of the diagram) are commercial, but need to be more widely deployed to impact emissions. Technologies identified in the blue mid-zone can contribute to emissions reduction in the oil sands industry as they are commercialized, but not all technologies will be successful or be deployed on the projected timeline.

Considering the magnitude of emissions reduction required, CCUS and SMNR (in the bottom green zone of the diagram) are particularly important high-impact pathways for oil sands to reach NZE. Product Diversification Towards Net Zero The discussion so far applies entirely to Scope 1 and 2 emissions. The long-term viability of the oil sands industry will require Scope 3 emissions reduction and can be improved if bitumen is used to make non-combustion products. Bitumen beyond combustion (BBC) provides the industry an opportunity to diversify and grow during energy transition and even in an NZE world (Alberta Innovates, 2021). The central concept of BBC is that the heavy fraction in bitumen will be diverted from fuels production and instead be used to make materials and products of high value and with growing demand around the world. Key BBC products include carbon fibre, asphalt binder, and high-value carbon materials such as activated carbon, graphene, carbon nanotubes, metal carbides and synthetic graphene. In BBC, the heavy fraction in bitumen becomes an asset instead of a value discount, and carbon from the bitumen remains sequestered within the products and is not released to the atmosphere through combustion. Although at the early stage of development, significant progress has been made in BBC. Commercial demonstrations are taking place for asphalt binder and activated carbon production from bitumen. A dozen technology pathways are being pursued to produce carbon fibre using asphaltene.

BBC products can make transportation more energy efficient, infrastructure less energy-intensive and long-lasting, and renewable electricity generation and energy storage more economic. Instead of contributing to the emissions problem, bitumen can contribute to energy efficiency solutions.

“In BBC, the heavy fraction in bitumen becomes an asset instead of a value discount, and the carbon from the bitumen remains sequestered within the products and is not released to the atmosphere through combustion.”

CHOA JOURNAL — February 2022 44

The value creation potential in BBC is significant – BBC could create a multibillion-dollar industry in Canada. In the near- and mid-term, BBC represents a diversification and value-add opportunity for the industry. By its role in addressing Scope 3 emissions, BBC may provide a pathway for long-term sustainability of the oil sands industry in NZE scenarios.

References

The comprehensive November 2021 Alberta Innovates report, entitled “BITUMEN BEYOND COMBUSTION I How Oil Sands Can Help the World Reach Net-Zero Emissions and Create Economic Opportunities for Alberta and Canada” can be accessed here.

Dziuba, J. et al (2021). Survivor Canada: The Unparalleled Position of Canadian Oil in a Transition Challenge. BMO Equity ResearchCapital Markets. https://research-ca.bmocapitalmarkets.com/ documents/6252713E-D2A4-482B-A9A2-B99FE0A4F4AF.PDF

Summary

Environment and Climate Change Canada (2021). National Inventory Report 1990–2019: Greenhouse Gas Sources and Sinks in Canada. Government of Canada. https://publications.gc.ca/collections/ collection_2021/eccc/En81-4-2019-1-eng.pdf

Although there will be continued demand for oil and gas in the coming decades, the world is transiting its economy toward net zero emissions. The long-term sustainability of oil sands depends on industry’s ability to be a global leader in producing clean hydrocarbons from source to end use. Innovation has been a key enabler of oil sands development to date and created the oil sands as a major economic driver for Canada today. Future innovation can help the industry to achieve net zero emissions in bitumen production and fuel production, and innovation in BBC specifically can help secure a prosperous future for the oil sands industry in a net zero emission world.

Alberta Innovates (2021). Bitumen Beyond Combustion: How Oil Sands Can Help the World Reach Net-Zero Emissions and Create Economic Opportunities for Alberta and Canada. https://albertainnovates.ca/wpcontent/uploads/2021/11/AI-BBC-WHITE-PAPER__WEB.pdf

IHS Markit (2018). Greenhouse gas intensity of oil sands production today and in the future. Keith D.W., Holmes, G., St. Angelo, D., Heidel, K. (2018). A Process for Capturing CO2 from the Atmosphere. Joule, Vol 2., 1573-1594. https://doi. org/10.1016/j.joule.2018.05.006 Sleep S., Dadashi Z., Chen Y., Brandt A.R., MacLean, H.L., Bergerson, J.A. (2020). Improving robustness of LCA results through stakeholder engagement: A case study of emerging oil sands technologies. Journal of Cleaner Production, Vol. 281. Shell Canada (2021). https://www.shell.ca/en_ca/about-us/projects-andsites/scotford/shell-and-silicon-ranch-to-build-solar-project-in-canada. html.

Zhihong (John) Zhou Ph.D., P.Geol. John is the vice president, Clean Resources at Alberta Innovates and is responsible for developing strategic programs and making investments in agrifood, cleantech, energy, environment, and bioindustry materials. Previously, John served as Executive Director, Chief Technical Officer, and Acting CEO at Alberta Innovates – Energy and Environment Solutions. He is a board director for the Petroleum Technology Alliance Canada and a guest board director for the Alberta Chamber of Resources. John developed the vision for Bitumen Beyond Combustion (BBC) in 2016 and is leading the effort to create a multibillion-dollar advanced materials industry in Alberta using bitumen.

LIKE THE JOURNAL? LIKE TO CREATE THE JOURNAL? Contact us if you’d like to volunteer to be part of • • • •

project managing graphics or layout writing/bringing in content marketing and advertising

CONNECT. SHARE. LEARN. LEAD. 45 CHOA JOURNAL — February 2022

Ideas that make a difference.

Helping clients build a better future. Find out what we can do for you. bmocm.com ®

Registered trademark of Bank of Montreal in the United States, Canada and elsewhere. ™ Trademark of Bank of Montreal in the United States and Canada.

TECH FLASH

Energy Optimization: A Key to Competitiveness Through the Energy Transition BY DAVID ANDERS

The need to adapt to a changing energy and regulatory landscape while maintaining competitiveness is a key challenge for the oil and gas industry. New technologies are providing increasingly cost-effective solutions to mitigate the impact of carbon, and optimizing energy use to improve efficiency has the potential to generate a positive return on investment in the near term while simultaneously working towards a low-carbon future. Energy optimization can include both improvements to equipment and facilities but also operational optimizations, productivity, fuel switching, and self-generation. The scope of energy optimization encompasses a holistic review of energy consuming systems to optimize performance, improve resilience, and enhance environmental sustainability. Moreover, minimizing energy cost and future cost risks has a direct impact on competitiveness in a commodity industry.

“... optimizing energy use to improve efficiency has the potential to generate a positive return on investment in the near term while simultaneously working towards a low-carbon future.” 47 CHOA JOURNAL — February 2022

“... energy optimization encompasses a holistic review of energy consuming systems to optimize performance, improve resilience, and enhance environmental sustainability.” The scope and objectives of an energy optimization engagement can vary widely depending on a company’s business objectives, external policy, and economic drivers, as well as a company’s starting point in terms of understanding energy use within its operations. Understanding energy use and costs The initial step in any energy optimization study is an analysis of the types, quantities, and costs of energy inputs. This may include fuel, electricity, water, purchased steam, and hot or chilled water. Energy use and cost intensities can be calculated to benchmark facilities against similar operations. The structure of energy rates and tariffs needs to be well understood; this may include volume or capacity-based pricing, and firm or variable supply options. A project may improve energy costs through shifting usage patterns or switching to a more cost-effective rate option.

Cost variability, as well as increases over time, should also be considered. GHG-related costs (e.g., carbon tax or credits) are becoming increasingly relevant to the consideration of fuel switching or electrification. A thorough understanding of energy use patterns and costs is an essential prerequisite to assessing energy optimization opportunities. Funding and incentives Many utilities and governments provide incentive programs that fund energy studies or capital investment. Engaging utilities early in the process can facilitate understanding funding options and utilities may collaborate on projects that can improve power quality. Currently in Alberta, Greenhouse Gas (GHG) regulations are providing an incentive for regulated emitters to reduce emissions, including from energy use. In addition, programs funded through Alberta’s Technology Innovation and Emissions Reduction (TIER) fund are providing support to businesses to implement solutions to improve efficiency and reduce emissions, such as the Industrial Energy Efficiency and Carbon Capture Utilization and Storage Grant program.

Measures are defined at a high level including approximate costs, energy savings estimates, and payback periods. This level is a good first step to evaluate the level of the potential savings opportunity, and to justify investment and resources for further studies. A detailed audit typically incorporates a more detailed site survey of energy consuming equipment and a more detailed breakdown of energy use by area, potential energy savings measures, and costs, enabling a higher degree of certainty in the business case. Further engineering analysis may be required for capital-intensive measures to further reduce uncertainty and understand implementation and life cycle costs, project benefits, and project risks in greater detail.

“A basic screening audit is the initial step in understanding the scope and nature of the operations and identifying key areas for energy optimization ...”

Various financing models are possible to support energy optimization projects, including as a traditional capital investment, with or without incentive funding, or partnering with an energy services company that can fully fund project capital costs and guarantee a minimum level of savings as part of a longer-term operating contract. The availability of capital and/or appetite for taking on capital or operating risk needs to be balanced against the value of expected savings or returns. In considering either approach, the experience, financial strength and capabilities of solutions providers and financing counterparties should be evaluated, and the technical solution design developed sufficiently to mitigate project risks. Facility audits

Depending on the nature of the proposed measures, the additional work required to advance the design to implementation stage will be scoped. This may include developing a detailed feasibility study as an immediate next step or proceeding to preliminary and detailed engineering design. In this stage, it’s often beneficial to collaborate with consultants to develop specifications, select vendors and equipment, and assist with a request for proposal process to finalize cost estimates and schedules. Change management requirements should also be considered in the implementation scope of work in order to minimize any operational impacts and ensure that the benefits associated with the project are maximized. Third party expertise brings value to project implementation in a variety of ways, including independent engineering, procurement, project and construction management, and monitoring services.

“A detailed audit typically incorporates a more detailed site survey of energy consuming equipment and a more detailed breakdown of energy use by area, potential energy savings measures, and costs ...”

The initial step to understanding energy use is to perform an energy audit. The level of detail and effort of the audit can vary depending on a company’s needs. An audit typically begins with a desktop review of energy use and cost data, equipment lists, drawings, and operational records. A basic screening audit is the initial step in understanding the scope and nature of the operations and identifying key areas for energy optimization, based on a desktop review of information, discussions with staff, and a walk-through of the facility.

Project implementation

Measurement and verification

A critical component of any energy optimization project is measurement and verification (M&V) of performance. M&V ensures that energy savings are quantified post-implementation by comparing actual energy use against an appropriate baseline and considering operational and external variables, as well as any major operational changes. This way, the project business case can be validated, and any problems or issues are identified and addressed as early as possible. An M&V plan should be created prior to implementation, establishing the performance baseline, proposed approach, metering and monitoring requirements, and the roles and responsibilities.

CHOA JOURNAL — February 2022 48

Figure 1: Energy Optimization and Management begins with the definition of clear objectives, and follows a process of evaluating energy use, studying alternative options, implementing solutions and verifying results. A continuous process ensures that lessons and experience are integrated into future planning. Best practices Some of the best practices to consider when planning an energy optimization study include: z

Clearly articulate the organization’s objectives for energy optimization to ensure alignment with the scope of energy optimization studies. Depending on whether the drivers are cost reduction, operational improvements, or reducing GHG emissions, the focus and approach should be customized to ensure the right results.

The quality of analysis and recommendations from an energy audit depend on strong communication and access to information. Ensure that information and personnel are available to facilitate an accurate assessment of energy use and operations.

When assessing potential energy savings, energy use data for a minimum of one-year is typically required to establish a reliable baseline. It’s critical to understand the nature of operations during this baseline period, as well as the expectations for future operations. Any operational trends or changes that can impact energy use should be noted.

“Considering the current economic, environmental, and social challenges ... energy optimization is not only imperative, but a key opportunity that can effect positive change.”

Energy optimization is a cross-functional domain that can have impacts on operations, management, administration, as well as tenants and service providers. At the outset of an energy audit or energy optimization study, the relevant stakeholders and parties should be identified within and outside the organization to ensure their input is incorporated.

Many opportunities exist for external funding, incentives and financing, and programs are continuously updated. Many of these are delivered through the local utility, which may also provide some initial analysis at no cost or be able to suggest alternate rate plans. Companies should ensure that they contact their utility account managers to ensure funding opportunities or utility-side issues are identified at the outset.

Considering the current economic, environmental, and social challenges and opportunities facing businesses, in particular the shift towards low carbon energy infrastructure and the increasing cost of conventional energy supply, energy optimization is not only imperative, but a key opportunity that can effect positive change. Prioritizing efficiency improvements can result in immediate savings, while minimizing future costs associated with carbon mitigation. For these reasons, understanding energy use and identifying efficiency opportunities is foundational to sustainable business leadership in the 21st century.

David Anders, Consultant, Energy Management

David is an energy management consultant at Hatch with over fourteen years’ experience. He has worked with large energy consumers in the commercial, industrial, and government sectors to identify opportunities for energy optimization and decarbonization, develop transformational and continuous improvement strategies for managing energy and sustainability, and implement alternative energy, distributed generation, and energy storage projects.

49 CHOA JOURNAL — February 2022

NEVER ENOUGH TIME TO KEEP UP WITH • • • •

Noteworthy News and Technical Publications? Key AER Regulatory Applications? AER In Situ Project Performance Reviews? Important Patents?

SOLUTION: SKIM CHOA’S PROJECT UPDATES Made for you, by CHOA. Most months. https://choa.ab.ca/project-updates/ PS: You’ll need to be a CHOA member ;o) https://choa.ab.ca/my-account/

CONNECT. SHARE. LEARN. LEAD.

CHOA Bronze Sponsors

51 CHOA JOURNAL — February 2022

Your Company Delivers Results. – SO DOES OUR MARKETING – Through deep strategy, extensive research, industry insight, and bold creative, William Joseph’s branding and marketing services attract fresh business to keep you running.

williamjoseph.com

February 2022

CONNECT. SHARE. LEARN. LEAD. STAY TUNED FOR THE NEXT ISSUE OF THE CHOA JOURNAL, COMING TO YOU IN APRIL 2022

CHOA 35th Anniversary Edition Journal - Issue 3

Articles inside

A Systematic Multidisciplinary Approach for Optimization in Brownfield SAGD Projects - Part 1

ENERGY OPTIMIZATION: A KEY TO COMPETITIVENESS THROUGH THE ENERGY TRANSITION

IF WE ARE NOT CAREFUL THE GREAT RESET COULD BECOME THE GREAT REGRET

INNOVATIONS TO SECURE THE FUTURE OF CANADA’S OIL SANDS INDUSTRY IN A NET ZERO EMISSION WORLD

PAST, PRESENT, AND FUTURE APPLICATIONS OF GEOPHYSICS