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canadian heavy oil association

The first quarter century of knowledge sharing and business networking

1986-2011


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Table of Contents page 9

welcome from the government of alberta Ted Morton, Minister of Energy

page 12

Editor’s note page 14

page 10

Heavy oil and oilsands timeline

Gerald Bruce, President 2011-12

page 73

Welcome from choa

CHOA at a glance

FEATURES page 22

Mining Pioneers How entrepreneurs and scientists made the conventional oil industry stand up and take notice By Mary Clark Sheppard

page 28

From obscure to essential Heavy oil and oilsands come of age By Gordon Jaremko

page 33

In situ heavy oil and oilsands technology How we got here By David Theriault and Neil Edmunds

page 38

CHOPS and SAGD: revolutionizing in situ heavy oil By Maurice B. Dusseault

page 43

The regulator’s role in the development of Alberta’s heavy oil and oilsands By Neil McCrank, Q.C.

page 46

The oilsands and the aboriginal community Working together to reach consensus and achieve shared aims By Jim Boucher

page 50

CHOA past, present and future A collection of past presidents reflects on what was and what is to come By deborah jaremko

page 56

About the Canadian Heavy Oil Association

The mission of the Canadian Heavy Oil Association is to provide an appropriate technical, educational and social forum for those employed in, or associated with, the heavy oil and oilsands industries.

Suite 400, 500-5 Ave SW Calgary, Alberta T2P 3L5 p: 403.269.1755 f: 403.453.0179 e: office@choa.ab.ca www.choa.ab.ca

The evolution and future of in situ oilsands recovery technology By Ian D. Gates and Jacky Wang

PAGE 67

Contributions of a lifetime CHOA inaugurates the first three members of its Hall of Fame By Qi Jiang and Melanie Collison

Published by JuneWarren-Nickle's Energy Group in partnership with the Canadian Heavy Oil Association

the first quarter century: 1986-2011

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W H I T E H O R S E


WELCOME FROM THE GOVERNMENT OF ALBERTA The history of the oilsands in Alberta is reflected in the

As minister of energy, I believe I have an advocacy

25-year history of the Canadian Heavy Oil Association.

role on behalf of responsible development of our energy

Through the years, the association has acted as a bridge,

resources. I believe we are in a position to show leader-

offering networking opportunities, technical briefings

ship towards a sustainable and diversified clean energy

and conference events. With a focus on connecting

future. I believe that in order to obtain maximum benefits

the many facets of the industry, the association has

from our resources, we need to find and access addi-

become a world-class medium for all things relating to

tional markets for our energy products.

the heavy oil industry. When it comes to energy, Alberta has a strong story to

On behalf of the Government of Alberta, congratulations on your 25th anniversary.

tell. Today, Alberta’s energy story, and therefore Canada’s energy story, stands at a crossroads. The resources

Ted Morton

under our feet represent economic stability for this and

Alberta Minister of Energy

future generations, if these resources can be responsibly developed and transported to markets.

the first quarter century: 1986-2011

9


WELCOME FROM CHOA For 25 years, the Canadian Heavy Oil Association

resources is evolving as research and development

(CHOA) has been the premier organization for the

programs enable new discoveries to position the in-

exchange of technical knowledge in the heavy oil and

dustry for a bright future.

oilsands industry, also providing membership with

The people that have dedicated their efforts and

invaluable networking opportunities. We have become a

careers contributing to the success of the heavy oil

world-class forum, fostering the advance of technology in

industry have much to be proud of, as Canada is now

support of more sustainable operations. Today, CHOA,

receiving due recognition as a global energy supplier

with over 1,700 members, is the largest association in

fuelled by the expanding role that heavy oil plays in our

the world dedicated solely to heavy oil and oilsands.

energy production portfolio.

To highlight our 25th anniversary, CHOA has pro-

From humble beginnings in 1986, over the last 25

duced this special legacy publication. Developed in

years the CHOA has been an active participant in the

collaboration with JuneWarren-Nickle’s Energy Group,

evolution and development of the heavy oil industry.

this special volume showcases the heavy oil industry’s

Through the technical talks, networking and social

evolution from a niche curiosity to a key contributor to

activities that are the foundation of the association, we

global energy security and supply.

are excited to see how far the industry has progressed

This publication captures the developmental history from the early industry pioneers to the key people who

in such a short time, and look forward to the next 25 years of development and prosperity.

are making a significant contribution to the industry

I trust you will develop an appreciation of how this

today. The evolution and application of technology to

industry is based on the contribution and commitment

the heavy oil and bitumen resources have enabled the

of individuals with a passion for heavy oil, as show-

industry to develop, grow and prosper through the

cased in the publication.

economic cycles to become a significant source of

10

Canadian heavy oil association

the molecules needed to satisfy the world’s energy

Gerald Bruce

needs. The role that technology plays to ensure reliable

CHOA President

and sustainable production of heavy oil and oilsands

2011-12


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EDITOR’S NOTE Welcome to the Canadian Heavy Oil

wells per township. By the end of this five-year

Association’s (CHOA’s) 25th anniversary

study period, mapping was moving from 2-D to

commemorative publication. I was somewhat

3-D characterization, along with 3-D geostatis-

disconcerted when I was first asked by the CHOA

tical modelling, and drilling density by industry

to help coordinate and organize this volume—how

was increasing significantly, along with techno-

do you cover 25 years of a technical organization

logical advances in both CSS and SAGD. For

in such an exponentially growing business as the

a full discussion of the evolution of these differ-

Canadian heavy oil industry? How do you balance

ent in situ techniques, see the articles “How we

the different facets—from government, industry

got here” by Dave Theriault and Neil Edmunds,

and academia? I felt the weight of the responsi-

and “CHOPS and SAGD: revolutionizing in situ

bility of leading such a distinguished publication,

heavy oil” by Maurice Dusseault.

but also knew this anniversary would focus the

In the early to mid-2000s, conflicting resource

issues at hand, offering a broader perspective.

development became an issue, with a request

At the same time, it is a joyous celebration.

to the Alberta Energy Resources Conservation

In the past 25 years, the vast heavy oil and

Board (ERCB) by bitumen producers to shut in

oilsands deposits of Alberta have been recog-

associated gas production in the Athabasca.

nized as one of the major unconventional energy

The ERCB formulated a policy of bitumen con-

resources of the world, and an integral part of the

servation, which resulted in outcomes, which

global energy mix. Steam assisted gravity drain-

are summarized by Neil McCrank in his article

age (SAGD) and cyclic steam stimulation have

on page 43.

moved beyond the pilot and experimental schemes

Next we look to the future in two articles. The

to full commercial-scale operations. Bitumen,

first, “The oilsands and the aboriginal commu-

heavy oil and synthetic crude oil (derived from

nity: working together to reach consensus and

the upgrading of bitumen) have surpassed con-

achieve shared aims” by Fort McKay First Nation

ventional oil and gas production in the province.

Chief Jim Boucher, examines the joint journey

This commemorative publication is an im-

taken by the aboriginal community and industry

portant piece of the CHOA’s history. To begin,

in the Athabasca region. The second, “The evo-

we thought a chronology of heavy oil and oilsands

lution and future of in situ oil sands recovery

development in Canada would be useful. This

technology” by Ian D. Gates and Jacky Wang,

is followed by historical reviews by Mary Clark

examines the technological advances that are

Sheppard, daughter of hot water process inventor

predicted to help balance development with

Karl Clark, and by energy journalist and historian

environmental concerns.

Gordon Jaremko. And then we get to the heart

Most importantly, in this publication the CHOA

of the publication, and the CHOA—technology.

recognizes three oilsands pioneers who have been

Just before the CHOA was founded, cyclic

inducted into our Hall of Fame: Dr. Roger Butler,

steam stimulation (CSS) projects were started

Edward E. “Ned” Gilbert and David J. Theriault,

in Alberta at Primrose and Peace River, and the

whose achievements have been highlighted by

Underground Test Facility was in initial stages

Qi Jiang and Melanie Collison.

of testing the feasibility of using SAGD as an

We hope that you enjoy this publication, and

in situ technology for recovery of bitumen too

that you continue to use the CHOA as a tech-

deep for recovery by surface-mining techniques,

nical and social network to help us all achieve

mainly in the Athabasca deposit. That same year,

a balanced approach to sustainable economic

1986, the Alberta Geological Survey started a

development of our immense heavy oil and oil-

five-year research program on regional char-

sands deposits today and into the future.

acterization of the Athabasca oilsands. At that

12

Canadian heavy oil association

time, well delineation was sparse (compared to

Fran Hein, Ph.D., P. Geol.

present-day drilling) and, where possible, the

Technical and Social Committee, CHOA

regional databases consisted of a control of four

Chief geologist, ERCB


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TIMELINE tiMeline 1719 A Cree named Wa-pa-su brings samples of oil sand to York Factory, a Hudson’s Bay Company trading post on the edge of Hudson’s Bay in Manitoba. He had previously brought samples of salt and brimstone.

1848 The first geological assessment of the oilsands was done by John Richardson, associated with his search for the lost Franklin Expedition party members.

1700s

seventeen hundred

1894 The federal government field party drills the first wells into the oilsands, looking for light oil at Athabasca Landing under the recommendation of George M. Dawson.

1800s

eignteen hundred 1882 The Geological Survey of Canada sends Robert Bell and his team on an expedition to study the Athabasca Basin.

1778 Explorer Peter Pond provides the first recorded description of the Athabasca oilsands.

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Canadian heavy oil association

Photos: page 14, National Archives of Canada; Glenbow Archives; page 15, northpolepenquin.com; istock/100pk; istock/A-Digit

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1906 Count Alfred von Hammerstein conducts four unsuccessful seasons of drilling between 1906 and 1909.

1920 Railway is completed to Waterways, just south of Fort McMurray.

1910 Experiments in using bitumen for street pavement begin in Edmonton.

1900—1919

nineteen hundred 1910 Hammerstein forms the Athabasca Oil and Asphalt Co. There is a flurry of speculative activity in the Athabasca region and in the village of Fort McMurray.

1919 Imperial Oil Limited drills 18 holes in the Lloydminster area. Favourable geological reports are issued.

1923 Heavy oil is discovered near Wainwright, Alta.

1920—1927

nineteen hundred

1920s Traces of high-grade oil are discovered in a water well in the Lloydminster area.

1927 Oxville Oil and Gas Development Co. begins drilling in the Lloydminster area. Over the next five years there would be numerous discoveries, but no commercial wells.

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the first quarter century: 1986-2011

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TIMELINE tiMeline 1927 Alcan Oil Company becomes the International Bitumen Company Limited, under the control of Robert Fitzsimmons. By 1930, Fitzsimmons will be operating a small hot-water separation plant at Bitumount, a site approximately 90 kilometres north of Fort McMurray.

1929 The first horizontal well is drilled in Alberta.

1927—1929

1930 Alberta obtains control of its lands and natural resources from the federal government, and the Alberta Department of Lands and Mines is formed.

nineteen hundred 1929 Edmonton scientist Dr. Karl Clark patents his oilsands hot-water extraction process.

1936 The Abasand experimental oilsands plant starts up.

1938 Oil and Gas Conservation Act is passed and responsible energy development is committed to Alberta law. The Petroleum and Natural Gas Conservation Board, the second iteration of Alberta’s energy regulator, is formed.

1930—1939

nineteen hundred 1930s Monitor Oils, Texecano Oils and Ribstone Oils drill wells in the Lloydminster region. Oil is found, but nothing commercial.

1937 The first heavy oil refinery is built, adjacent to wells south of Lloydminster.

1938 Lloydminster Royalties Ltd. brings in a Lloydminster heavy oil well at 250 barrels on the first day. The next day, it produces only salt water.

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Canadian heavy oil association

photos: page 16, istock/kathykonkle; Provincial Archives of Alberta; page 17, Provincial Archives of Alberta.

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1941 Canadian Pacific Railway announces plans to rebate 50 per cent of its royalty to stimulate heavy oil development.

1943 Sparky #1, four miles from Lloydminster, is brought in. After producing for a few years, it is abandoned due to production problems.

1946 Husky Oil Ltd. locates a used 1,500-barrel-per-day refinery in the Lloydminster area.

1940—1949

1950 A provincial government report calls oilsands production economically feasible.

nineteen nineteenhundred hundrednineteen hundred 1943-48 About 200 wells are drilled in the vicinity of Lloydminster.

1945 The Lloydminster area produces about 50,000 barrels of oil, refined by Excelsior Petroleum into primarily bunker “C” fuel.

1947 Husky issues the first posted price for heavy crude oil from the Lloydminster region.

1958 Federal and provincial committees are formed, including the Oil and Gas Conservation Board, to assess California’s Richfield Oil Corporation of California’s proposal to use nuclear detonation to liquefy the oil sands at Pony creek (near Chard, Alta.).

1950—1959

nineteen hundred 1950s Railroads begin switching from bunker “C” to diesel fuel, devastating Lloydminster oil sales.

1953 Great Canadian Oil Sands (GCOS) is incorporated.

1958 A precurser to Syncrude Canada Ltd. builds the Mildred Lake pilot plant.

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the first quarter century: 1986-2011

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TIMELINE tiMeline 1960 The Oil and Gas Conservation Board approves the first oilsands mining scheme.

1963 The “yo-yo” pipeline is built to connect Husky’s Lloydminster refinery to the main Inter-provincial Pipeline.

1960—1969

1972-75 Around 3,000 wells in the Lloydminster area produce about 3,000 barrels per month.

nineteen hundred 1961 The Saskatchewan government begins drilling test holes on provincial road allowances, enabling oil companies to determine reservoir size at a very low cost.

1967 GCOS starts operations of its the first commercial oilsands mine and upgrader complex.

1978 The concept of steam assisted gravity drainage (SAGD) is developed by Dr. Roger Butler for in situ recovery of bitumen.

1970—1979

nineteen hundred 1974 The Alberta Oil Sands Technology and Research Authority is formed as a Crown corporation with a mandate to develop new oilsands technologies.

1978 Syncrude, the second commercial mining/upgrading installation, begins production.

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Canadian heavy oil association

photos: page 18, Provincial Archives of Alberta; Glenbow Archives; page 19, Oilsands Review; Gerry Stephenson; Joey Podlubny.

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1980s-1990s 2-D geological mapping is superseded by 3-D geological mapping to show thicknesses and properties of multiple-stacked layers in the subsurface, along with 3-D geostatical modelling.

1985 Imperial Oil Cold Lake’s cyclic steam stimulation (CSS) in situ oilsands extraction project starts.

1984 The Underground Test Facility is initiated by AOSTRA as an in situ SAGD bitumen recovery facility.

1986 The Canadian Heavy Oil Association is incorporated.

1980—1989

nineteen hundred

1985 Amoco Canada starts the Primrose CSS project.

1991 1993 The CHOA Reservoir Syncrude and the Handbook is published. Fort MacKay First Nation commence 1990-2000s a pilot project 4-D seismic where 30 wood becomes bison are repatriated commercialized. to live on reclaimed Alberta’s first oilsands mining application is landscapes. in SAGD

1988 NewGrade Energy Inc., a joint venture by Consumers’ Co-operative Refineries Limited and the Government of Saskatchewan, completes construction of a heavy oil upgrader. It starts operating in 1990.

1990—1995

nineteen hundred

1992 The Lloydminster Upgrader begins processing heavy oil.

1995 Canadian Prime Minister Jean Chrétien announces $25 billion worth of tax breaks for the oilsands industry.

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the first quarter century: 1986-2011

19


TIMELINE tiMeline

1996—1999

2000-2005 Syncrude and the Fort MacKay First Nation declare their wood bison pilot project a success and applies to Alberta Environment to make bison pastures a permanent feature of reclaimed landscapes. The herd has grown to over 250 head.

2001 The world’s first commercial SAGD project is up and running for Alberta Energy Company at Foster Creek.

2002 The Oil and Gas Journal includes the EUB’s large bitumen reserves numbers in its year-end publication, a major step in the acknowledgment of Alberta’s vast oilsands opportunity.

2003 The EUB publishes its Regional Geological Study of the Athabasca Wabiskaw-McMurray in its Report 2003A in support of the its Bitumen Conservation initiative of the EUB, and as part of the published hearings concerning co-production of gas over bitumen.

neteen hundred 1997 Gulf Canada starts the Surmont SAGD pilot.

2000 The Alberta Energy and Utilities Board (EUB) publishes its first large bitumen reserve number for the year 1999 in its ST98-2000 report.

2001 Alberta’s conventional heavy oil production peaks at approximately 570,000 barrels per day.

2003 The Athabasca Oil Sands Project (mining/extraction/upgrading) starts up, inaugurating a new production growth era.

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Canadian heavy oil association

ur field

Photos: Page 20, Joey Podlubny; Page 21, Canadian Natural Resources; Suncor Energy.

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2008 A global recession–induced slowdown suspends the development of many new oilsands projects.

2006 The CHOA

Handbook is

published.

2006 Oilsands production for the first time surpasses one million barrels per day.

2008 Canadian Natural Resources Limited commences operations at the Horizon bitumen mining and upgrading project.

2010 Suncor Energy Inc. celebrates the reclamation to a solid surface of Tailings Pond One, the first tailings pond in the oilsands sector.

2000-2009

two thousand

2005 ERCB Decision 2005-122 rules production from certain Wabiskaw-McMurray gas zones will not be allowed in 917 wells where gas is in communication with underlying in situ bitumen resources. The decision conserves about 25.5 billion barrels of recoverable bitumen in contact with the shut-in gas.

H2

2009 Construction begins on Imperial Oil’s Kearl oilsands mine, the first project of its kind not to include an upgrading facility.

2

2010 Renewed strength in energy prices and investor confidence again spark forecasts of substantial new growth in oilsands development.

2011 CAPP predicts that in situ oilsands production will overtake mining oilsands production in 2014. 2011 NEB forecasts oilsands production to reach 5.1 million barrels per day by 2035.

2011 The Canadian Heavy Oil Association marks 25 years of operation.

2010-2011

two thousand

2011 CAPP reports total 2010 conventional heavy oil production in Alberta and Saskatchewan of 375,000 barrels per day, and combined mining and in situ oilsands production of approximately 1.5 million barrels per day.

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the first quarter century: 1986-2011

21


MINING PIONEERS

Mining pioneers How entrepreneurs and scientists made the conventional oil industry stand up and take notice By Mary Clark Sheppard

he average Canadian can be excused for having

road materials lab, Dr. Karl Clark, had just found a way of separating oil from

only a vague idea about the oilsands industry, since it is only

the bituminous sand and was causing great excitement among his colleagues.

now an international one. But its origins are Canadian, and this

Tory made contact, an offer was made, and early in September of 1920, Clark

should be celebrated with pride. Before official records began,

arrived in Edmonton with his wife and infant daughter, several months before

it was known that native peoples had observed oil seeping from

Stansfield could get away.

the cutbanks along the Athabasca River near Fort McMurray,

He was given an office, a lab and a good supply of bituminous sand. His

Alta., some 250 feet high. They used the sticky material to caulk

brief was to find a way of turning the resource into an asset for the province.

their boats, as did the early explorers and fur traders who also traversed the

In January of 1921, the Scientific and Industrial Research Council of

area. These oily sand beds were first officially recognized in 1875 by the

Alberta was inaugurated with Clark as its first full-time working member. It

authorities in Ottawa and were named bituminous sands. The resource was

was renamed the Alberta Research Council in 1930 and is now known as

speculated and prospected upon for the next three decades, without any

Alberta Innovates– Technology Futures.

real progress achieved.

Karl Adolph Clark (named after his father’s friends at Hamburg University)

In 1905, the Province of Alberta was inaugurated and two years later

grew up in Toronto where his father, Malcolm Sinclair Clark, was a professor

saw the establishment of its university. The University of Alberta’s founding

of French and German Languages at McMaster University. His grandpar-

president, Dr. Henry Marshall Tory, was trained as a mathematician, but had

ents had emigrated from the Western Isles of Scotland in 1846. Clark’s

a great interest in science and natural resources. He was very much aware

undergraduate studies were at McMaster University and he obtained a PhD

that Alberta’s wealth at that time depended entirely on the cattle and agrar-

in physical chemistry from the University of Illinois in 1916. Rejected by the

ian industry, plus some small coal mines. With the backing of Alberta’s first

armed services, he joined the Geological Survey of Canada, based in Ottawa,

premier, Alexander Rutherford, Tory determined to establish a research depart-

and began fieldwork studying the various rocky materials used for road sur-

ment for studying the province’s natural resources. He was well aware of the

facing materials found in Ontario and Quebec.

20-odd years that had been spent in the fruitless pursuit of liquid oil from the

Later, when working on the Prairies, he encountered a different problem.

bituminous sands. Perhaps what was needed, he reasoned, was an entirely

Before gravel was found, roads were made entirely from the prairie soil. In

different approach and a new technology to develop this potential resource.

dry weather they presented a very good surface, almost like concrete, but

It was only after the First World War that Tory was able to fulfill this dream.

because of the bentonite contained in the soil, in wet weather the road became

By 1920, he had arranged to recruit Edgar Stansfield of the Mines Branch

a slippery, unstable mess along which almost nothing could navigate. Clark

in Ottawa to work on coal classification studies. In the spring of that year,

wondered if the bentonite could be waterproofed somehow. Oil was a natural

Stansfield mentioned to Tory that a young scientist in charge of the Branch’s

water repellent and maybe the bituminous sands could be employed to this end.

22

Canadian heavy oil association


A bitumen production pilot plant north of Fort McMurray called Bitumount operated between 1929 and 1955. The work performed there was eventually considered a singular success, proving that oil suitable for refinery feed could be produced from the oilsands. Photo: Provincial Archives of Alberta

In 1919, the Road Materials Laboratory was set up in the Mines Branch

Up to this point Clark had worked by himself, but for planning a larger test

of the federal government and Clark was transferred from the Geological

plant he needed an assistant. By good fortune, the right man for the job turned

Survey to head it up. Early the next year, some bituminous sand came into

up looking for work. His name was Sidney Martin Blair.

his hands and provided him the opportunity to pursue an idea he had been

Born in Ontario of Scottish ancestry and a veteran of the Royal Flying

thinking about for some time. Based on colloidal chemistry, he applied

Corps Canada, Blair had already studied petroleum engineering via the Kharki

standard emulsification procedures using a soap reagent to a mixture

University program set up in England by President Tory for servicemen await-

of sand and water, but to his astonishment, instead of getting an emul-

ing passage home to Canada from the First World War. He and Clark worked

sion, he got a separation. This was the event Stansfield had related to Dr.

together for four years and developed a friendship that lasted throughout their

Tory at their meeting in 1920 and which led to Clark’s appointment to the

lives. After receiving a master’s degree in 1926, Blair left to learn more about

University of Alberta.

oil refining and enjoyed a distinguished career in the U.K. oil industry during

Clark had already achieved a separation in his beaker in Ottawa. The

the Second World War, before returning to Canada in 1948.

follow-up task now was finding a way of recovering the oil. It looked to be

The mechanics of the process they developed involved the following stages:

a straightforward matter after siphoning off the water, but it proved not to

1. The bituminous sand and sodium silicate were mixed in solution

be the case. In Edmonton, all his attempts to find a way of retrieving the oil without bringing the sand with it, or the sand without bringing the oil

2. This solution was transferred into a treatment box and heated for several hours, during which time the mixture became a pulp.

with it, failed. But, while working through endless failures, Clark noticed

3. The pulp was discharged into a mixing box and more hot water was added.

the propensity of froth to form when his solutions were stirred with more

4. The mixture was moved into a bath of hot water, where an oil froth formed

hot water. This put him in mind of the new technology called mineral flotation that was at that time catching the interest of engineers. After much time spent manipulating the components of the sand in solution with dif-

and the sand fell to the bottom of the bath. 5. A simple drum rotating above the waterline and within the oil froth drew the oil away, leaving the sand to be lifted out by a bucket line.

ferent reagents, he found an answer. It involved the creation of a water pulp

Between 1923 and 1929, three experimental plants were built: in the base-

of the bituminous sand with sodium silicate as the surface active agent,

ment of the university power plant, at the Dunvegan rail yards north of Edmonton

which, when mixed with more hot water, formed a froth that floated the

and on the banks of the Clearwater River opposite the railhead outside Fort

heavy oil and allowed the sand to sink. This discovery marked the end of

McMurray. Each choice of location was a function of its perceived advantages.

the pure research at the lab because the challenge then was to find a way

At the university, because of its proximity to the research lab and a good sup-

of expressing this procedure mechanically. The next phase was to build a

ply of heat and water; at Dunvegan, there was a supply of fresh bituminous

small lab plant, and this is when Clark began to be an engineer.

sand and no restrictions on height, but still sufficiently near to the lab and the first quarter century: 1986-2011

23


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PhotoS: Provincial Archives of Alberta

MINING PIONEERS

Karl Clark had three experimental separation plants to test his hot water extraction process in the 1930s. Above, at Waterways, in the Athabasca region of northern Alberta, and right at the Dunvegan rail yards north of Edmonton. local machines shops; and on the Clearwater River, in the bituminous sand country of the north. The power plant worked very well and produced good samples of oil, but it

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had a design problem caused by lack of headroom. At the Dunvegan plant there

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was plenty of height. This time, results were sporadic and sometimes nothing worked at all initially, but once equipment was changed, things went well. The third plant on the Clearwater River, built in 1928 and operated in 1929, was a joint project with the Mines Branch in Ottawa. At end of season in 1929, the operation was hailed as highly successful. Besides pushing back the frontiers of separation technology, the building of such an operation some 300 miles into the wilderness of northern Canada was noteworthy and the event was recorded in technical journals throughout the world. But again a problem showed up. Yields had been uneven and were sometimes very disappointing. Clark had suspected for some time that there was an unknown factor, and it came to light purely by chance. The bituminous sand at the Clearwater site contained salts that rendered it unusually acidic. When Clark finished his investigations in 1932, he felt confident that all the major factors affecting successful separation had been found and understood. The timing was unfortunate because as the Depression was taking effect in Alberta,

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the Research Council had to be shut down due to lack of funds. Clark was absorbed into the Faculty of Engineering. The baton was then picked up and carried by two pioneer entrepreneurs, Robert Fitzsimmons and Max Ball, whose enterprises each made a contribution to the first large-scale commercial venture, Great Canadian Oil Sands Limited (GCOS), later to become Suncor Energy Inc. Fitzsimmons, originally from the Maritimes, was the first on scene. In 1923, he purchased an undeveloped lease some 60 miles downriver from Fort McMurray, intending to drill for oil. He set up home and garden, settled there with his family

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and secured a post office, calling it Bitumount. His drilling efforts during the following four years came to naught, so in 1928, he built a separation plant. He knew about the success of the Dunvegan plant and more or less copied what was being built on the banks of the Clearwater. Although he had little technical knowledge, he more than made up for it with his innovative skills and enthusiasm. Much to the interest of the research council, his bituminous sand separated extraordinarily easily and without the use of an additive. He managed to build up a little business selling his rather sandy bitumen for roofing purposes and laying on roads. However, the advent of the Second World War caused his financing to dry up and he had to sell out to a Montreal entrepreneur by the name of Lloyd Champion, who reckoned to produce oil suitable for use on the Alaska Highway then being built.

24

Canadian heavy oil association


OILSANDS SOLUTIONS

The second private enterprise, which became Abasand Oils Ltd., was led by Max Ball, an American. He was both a lawyer and geologist with considerable experience in the field of petroleum, and also understood how expensive dry holes were to the industry. Like those before him, he was drawn to the romance and lure of the bituminous sands that lay seemingly ready for the taking. Ball had a separation process developed by J.A. McClave in connection with the University of Colorado. Instead of hot water, he used dilutants to flush out the bitumen. Ball had great difficulty securing a lease because in 1930, in the middle of his negotiations with the federal government, control of natural resources was transferred from federal to provincial jurisdiction. In the end, a compromise was struck. He would build his plant on land already offered by the federal government, known as the Horse River Reserve, and when he needed to expand, the province would offer a larger lease of his choice downriver. This was to be a valuable asset to him later on. When he was able to get started, Ball was beset by mining problems, as his bituminous sand was particularly difficult to quarry due to the presence of marcasite nodules. But he managed to produce diesel oil, which, though rather crude, was useable. The Consolidated Mining and Smelting Company of Canada (CM&S, now Teck Resources Limited) was one of his backers, as it wanted fuel for mining operations along Lake Athabasca. However, disaster struck in 1941 as the plant burned to the ground. It was

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November, and a month later came Pearl Harbor, and the United States entered

· Single Project Execution interface.

the Second World War. At this point, Canada was seriously short of oil. The Turner

· Incorporation of Fabrication and Construction knowledge from concept to commissioning.

Valley field in Alberta was able to produce only about one-fifth of national need. The rest had to be imported from across the border. Under these new circum-

· Design standardization.

stances, the Americans were uneasy about the adequacy of their own supplies

· Simplified Project Controls & Reporting.

and let it be known that Canada should not feel they could rely entirely on them. A committee was set up to address the problem. It was comprised of representatives of both the federal government and the industry, and its focus was on the bituminous sands. Its particular brief was to decide if the Abasand plant,

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then in the process of being rebuilt, was capable of being expanded to 10,000 barrels per day. Since CM&S also used flotation principles for recovering its minerals, it was put in charge of re-examining the plant. CM&S brought Clark back into the picture and asked him to give an analysis of the operation. In his report, Clark pointed out that more diluent was being lost than oil produced, so the separation operation needed redesigning. In the end, the committee decided Abasand was capable of being expanded. It appeared briefly as though there would be a joining of hands between those who had knowledge as well as interest in the bituminous sands— Abasand, CM&S, Clark and the Federal Mines Branch. However, using the

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MINING PIONEERS War Measures Act, the federal government took over the plant and put the Mines Branch in charge. It soon became clear there was no place for the Photo: Provincial Archives of Alberta

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previous team in the new regime. Ball returned to Washington, D.C., where he was quickly taken into the oil controller’s office, the input CM&S had provided was no longer wanted and the Alberta Research Council became personae non grata. Not many months passed before stories about Karl Clark, inventor of the hot water process.

difficulties being encountered at Abasand began to emerge. These continued as further weeks passed. Production was very poor, and eventu-

ally it became known that the plant had become merely a research facility. The Alberta government became very concerned. The minister of public works, William Fallow, a long-time supporter of the research council, made a series of blistering attacks on Ottawa. Alberta authorities were afraid that the failures at Abasand were going to give the bituminous sands such a bad account that development would be put off for years, at least. Fortunately, in June of 1945, the problem was resolved because the plant burned down just as the war was drawing to an end and the federal government made a graceful withdrawal from the scene. Champion, the Montreal entrepreneur who had taken over International Bitumen Company Limited in 1942, was also having problems making his plant operate. In 1944, he finally sought the advice of friends he had in Sun

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Oil Company. They recommended he start over with a new plant. Sensitive to how upset the Alberta authorities were over the debacle at Abasand, and knowing some of the Alberta’s cabinet ministers, Champion suggested that they might together build a really good separation plant that would prove to the world the potential value of the natural resource. At Bitumount he could provide good docking facilities and a site of proven good sand. They would use the research council’s proven technology. He further suggested that he finance half the cost and the other $250,000 be covered by a government loan, which he would repay over a 10-year period. A deal was struck. Although the federal excursion into the bituminous sands had been a disaster, the new Bitumount pilot plant that operated in the summer of 1949 was a singular success. Many technical difficulties had to be overcome and there was much criticism from the government opposition when Champion couldn’t raise his part of the money, leaving the Alberta government to bear the whole cost. But it all turned out well. The oil produced was pronounced suitable for feeding into the refineries of the day, and most importantly, the plant was able to provide the kind of engineering data required should a large-scale operation be built. Almost 20 years earlier, when the Clearwater plant had operated successfully, the petroleum industry considered it only as an interesting innovation. This time, it sat up and took notice that there was a new viable source of

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26

Canadian heavy oil association

crude oil.

Mary Clark Sheppard is the daughter of Dr. Karl Clark, the Alberta Research Council scientist who invented the hot water extraction process that enabled oilsands producers to separate bitumen from its matrix of sand, silt, water and clay. This invention resulted in the first commercial oilsands operations. Clark Sheppard has published two biographies about her father and his work.


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history

From obscure

to essential ft e r a l o n g h i s t o r y of hard labour as the Cinderella in the bargain basement of the petroleum industry, heavy oil rules today. It eclipses the former darlings of the fossil fuel family, light crude and natural gas, as the engine of growth in the 2011 edition of a 25-year forecast done periodically by the National Energy Board (NEB), Canada’s Energy Future: Energy Supply and Demand Projections to 2035. The “reference case,” or scenario rated as most likely to come true, is a paint-by-numbers portrait of the greatest investor-driven oil production prospect outside the Organization of the Petroleum Exporting Countries. The picture draws on business intentions and immensely detailed annual reserves reports by Alberta’s Energy Resources Conservation Board (ERCB). Canadian output is expected to double, reaching six million barrels per day as of 2035. In all its forms— from wells with pumps that strain to pull up molasses-like flows to bitumen mine and upgrader complexes that manufacture premium synthetic crude— heavy oil is forecast to grow to 5.4 million barrels per day or nine-tenths of the national total from the current two million barrels per day or two-thirds. Alberta’s 140,200 square kilometers of oilsands resources are the growth mainstay. Even after making allowances for project delays or cancellations, production is expected to more than triple to five million barrels per day as of 2035 from the current 1.6 million barrels per day. Within the heavy oil product line, the premium-value top item, upgraded 28

Canadian heavy oil association


Left (top): Construction underway on the Great Canadian Oil Sands plant (now Suncor), the first commercial oilsands operation in the world, in 1966. Photo: suncor energy

Left (bottom): Shell Canada’s Scotford upgrader, which was commissioned in 2003. This project marked a new era in oilsands development where it would begin to dominate. Photo: joey podlubny

Heavy oil and oilsands come of age By Gordon Jaremko

synthetic crude, is forecast to grow,

mineral pitch issues from a crev-

and pound a well into the ground

48 metres on his farm 16 kilometres

but at a slower pace that lags the

ice in a cliff composed of sand and

with the cable-tool machinery, which

south of Lloydminster in 1926, he

overall total expansion due to less-

bitumen. It lies a few hundred yards

worked like a piledriver. The epic

and his neighbours sent the water to

favourable cost and price trends

back from the river in the middle of a

effort was fuelled by a common

chemists at the University of Alberta

than the outlook for raw bitumen.

thick wood. Several small birds were

theory of the pioneer era that black

for analysis. After laboratory tests

Upgraded output is expected to

found suffocated in the pitch.” Like

gold lay in pools beneath the bitumen

showed the well had accidentally

about double to 1.9 million bar-

every other aspect of the oilsands,

ore at a depth of about 190 metres.

run into oil, the farmer and his friends

rels daily in 2035 from the current

from microscopic clay “fines” in geo-

Only a puddle of such “free oil” was

created the Marren-Lloydminster

887,000 barrels per day.

logical water associated with the ore

found. The firm went broke. The

Oil and Gas Company Ltd., raised

Heavy oil is no overnight success.

to sandpaper-like abrasive action

deserted rig collapsed and bush

$100,000 and ignited an explora-

No Alberta resource has a longer

of its knife-edged quartz grains on

grew over it until industry veterans

tion campaign that spread across

pedigree or more checkered record

steel industrial hardware, the environ-

Stan Kondratiuk and Fin Lineham

the Alberta-Saskatchewan border-

of striving to grow up into a product.

mental peril noted by Richardson

retrieved it in the 1970s using a metal

lands, with numerous discoveries

The fur trade was at its height and

spawned generations of technology

detector, trucks, helicopters, and

inspiring homegrown companies

development.

cash and services donated by numer-

to keep the drilling going through the Great Depression of the 1930s.

the Victorian-era British princess that Alberta was eventually named

Only 10 years after Richardson’s

ous companies. The sight teaches a

after had not even been born yet at

observation, the first commercial oil

lesson about oil, OTS Park director

By 1934, Lloydminster had natural

the time of the first recorded sight-

well in North America launched the

Barry Moore said in an interview: “It

gas service. The district sprouted

ing of the oilsands. A Cree rover

Canadian industry near Sarnia, in

doesn’t come easy or cheap.”

two oil refineries: Excelsior in the

called Wa-Pa-Sun carried a bitumen

southwestern Ontario. By the time

Variations on the same theme are

town and Dina, about 40 kilo‑

sample east to the York Factory out-

Alberta became a province at the

taught by exhibits and oral history

metres to the south, near Wainwright.

post of the Hudson’s Bay Company,

dawn of the 20th century, oil had

memoirs preserved by the Heavy Oil

Lloydminster had one of the first main

where agent Henry Kelsey made a

its modern image as black gold and

Science Centre in Lloydminster. The

drags paved with asphalt in western

note of it in his official journal. More

inspired feats of technical and eco-

city, east of Edmonton on the Alberta-

Canada. Black smoke rose over the

mentions occurred in the diaries of

nomic daring.

Saskatchewan border, has been the

town from a refinery waste inciner-

18th century northern explorers Peter

A monument to the exploration

capital of conventional heavy crude

ation pit every day except Monday,

Pond and Alexander Mackenzie. As

era—and especially the magnetic

drilling in both provinces for almost

which the plant voluntarily recognized

a trade item, bitumen has a history

attraction of Alberta’s northern heavy

a century.

as Wash Day by stopping the burn-

dating back to the ancient Egyptian

oil regions—greets visitors at an out-

Among the lessons taught by the

ing long enough to let households

pharaohs, with uses ranging from

door shrine to industry pioneers in a

centre is that primitive technology

dry their laundry clean on outdoor

preserving the dead as mummies

secluded southwestern Edmonton

and rudimentary earth sciences did

clotheslines. Farmers in the district

to folk medicine and waterproofing

ravine. A wooden derrick marks the

not invariably end in failure. Lady luck

built fences with discarded drill pipe.

boats and canoes.

entrance to the Edmonton Oilfield

played a big role in the pioneer era

Stores posted entrance signs at their

Technical Society’s nine-acre pri-

of the energy industry.

entrances saying “Please remove

The first description of the oilsands by a scientist—chemist John

vate OTS Park.

In the absence of seismic sur-

oily footwear.”

Richardson, a member of an 1848

The structure is a reconstructed

veys and computer simulations of

Large-scale development began

overland search party seeking the

cable-tool drilling rig that entrepre-

geological formations, fussy cattle

in 1946 with the arrival of Husky Oil

lost polar expedition of Sir John

neur A.F.A. Coyne and his Northern

sniffed out the path to the discovery

Ltd., then an American-owned pro-

Franklin—included an observation

Production Co. Ltd. imported from

that launched conventional heavy oil

duction and refining empire based

of the resource’s potential to be a

Pennsylvania, then hauled in pieces

development with flowing wells and

in Cody, Wyo. The company led a

hazard. While crossing the future

400 kilometres north to the Fort

rocking-horse pumpjacks. When

mini-boom in supplying the railways

bitumen-mining district north of Fort

McMurray area. The enterprise took

his livestock turned up their noses

with heavy crude, barely refined into

McMurray, Richardson recorded in

from 1915 through 1918 to assemble

and refused to drink from a well that

thick bunker oil akin to steamship fuel.

his diary that “a copious spring of

the rig beside the Athabasca River

Charles Marren dug to a depth of

The stuff only had to heat boilers the first quarter century: 1986-2011

29


history

and not work as an instant explosive

development. The Saskatchewan

At its peak in 2003, conventional

From Laboratory to Production: The

mist when mixed with air to drive

government paid half the price of the

heavy oil production hit 917,700

Letters of Karl A. Clark, 1950-66.

the rapidly moving pistons of inter-

$700-million Regina plant by tak-

barrels per day, NEB records show.

His patent on the production pro-

nal combustion engines. Bunker oil

ing on 50 per cent ownership. The

Despite gradual depletion of wells as

cess was 11 years old. The beginning

was a technical advance at first, as a

federal, Alberta and Saskatchewan

they age, output is projected to con-

of operations by the first commer-

cleaner and more efficient replace-

governments shared majority own-

tinue for the next quarter century and

cial plant was still 17 years off. But

ment for coal in steam locomotives.

ership of the Lloydminster project

still be 530,100 barrels daily in 2035.

Clark saw a wide road ahead into

The gravy train lasted until the rail-

and poured in $1.2 billion or 75 per

On the growth side of the heavy

a colossal future for the northern

ways converted to diesel engines in

cent of its costs. In both cases, the

crude spectrum, the oilsands, the

Alberta bitumen belt, with conven-

the late 1950s, enlarging demand for

governments sold their interests to

vigour foreseen by the NEB and

tional black gold paving the way.

the higher-value light oil discovered

industry after construction was com-

ERCB fulfills a prophecy by the

He predicted: “Great volumes of

south of Calgary at Turner Valley in

pleted and early operations worked

Edmonton scientist who invented

oil will be produced. This will have

1936 and southwest of Edmonton

bugs out of their systems.

the original process for bitumen

to get to more than a local market.

at Leduc in 1947. Husky and other

The ensuing wave of drilling and

extraction using hot water. Karl Clark

Bituminous sands development

heavy oil producers devised blends

production growth spawned tech-

predicted a giant future for the big-

depends on pipelines to outside

and opened up niche markets that

nology that gave the heavy oil region

gest but crudest item in Alberta’s

marketing areas. If there had been

kept their specialty alive while it was

a new landmark: spinning tops of

resource endowment at the time that

no oil discoveries and a bituminous

eclipsed by abundant light crude

a potent extraction device known

it most seemed to be doomed by

sand development had to shoulder

through the 1950s, ’60s and ’70s.

as the progressing cavity pump.

better luck elsewhere. He had his

the construction of pipelines as well

Construction of two plants in the

The hardware replaced pumpjacks

vision when the Leduc discovery of

as its own mining and extracting job,

late 1980s, Husky’s Biprovincial

and sucker rods with steel poles

the most valuable naturally occur-

I think the development would be in

Upgrader at Lloydminster and the

that resemble corkscrews but use

ring fossil fuel, freely flowing light

the distant future. But the oilfields

Co-op Upgrader at Regina, set off

a more sophisticated method than

oil, was less than three years old.

are presenting the bituminous sands

the modern wave of conventional

mechanical lifting on auger-like cir-

“Many people consider that the

with a pipeline system to make use

heavy oil development. As in the

cular ramps. The devices work like

finding of oilfields in the province

of. Any time that the cost of produc-

pioneer discoveries, technology

super vacuum cleaners with suction

eliminates any chance of bituminous

ing oil from the bituminous sands is

was not the only force at play in

that overcomes gravity by rotating

sand development in the foreseeable

such as to show a profit, the stage

creating a new market by building

precision-engineered shapes. The

future,” Clark acknowledged in cor-

is now or soon will be set for the

capacity to manufacture heavy crude

force lifts sand out of the ground

respondence dated Jan. 20, 1950.

development to start.”

into a suitable product for fuel and

with the crude, in turn spawning

“I do not think this is so. In fact, I

Oilsands schemes rolled up to

lubricant refineries. Both upgrading

innovations and growth businesses

figure that it is quite otherwise,” he

the industrial starting gate while

projects were deemed to be matters

in separating and disposing of oily

wrote. The document is preserved by

Alberta still had more conventional

of high public interest in fostering

waste in environmentally accept-

his daughter Mary Clark Sheppard

black gold than the pipelines could

resource and regional economic

able ways.

in her book Athabasca Oil Sands:

take. Projects had to fight for delivery

30

Canadian heavy oil association


Left: Drilling steam assisted gravity drainage well pairs in the Athabasca oilsands, 2005. Top right: Conventional heavy oil operations in the Lloydminster heavy oil belt. Bottom right: Inside the central processing facility at Imperial Oil’s Cold Lake in situ project, the earliest commercial thermal oilsands operation. Photos: Joey Podlubny

capacity that was divvied up by

raised output to spread costs thin-

an ERCB market-sharing regime,

ner. They made technical advances

“pro-rationing.”

on a large scale from increasingly

The first commercial mining and

computerized control systems to

upgrading complex, Great Canadian

replacing imported mine bucket-

Oil Sands Limited, only made it into

wheels, draglines and conveyor

production in 1967 by limiting its size

belts with rugged, simpler trucks

to a ceiling that the premier, Ernest

and shovels more suited to the ore

Manning, set after long regulatory

and northern conditions.

and political duels: five per cent of

It took a quarter century for

total Alberta output, or 45,000 bar-

the Athabasca Oil Sands Project

rels per day. The Syncrude Canada

(AOSP) to start up the third Fort

Ltd. project was older, but had to

McMurray mine in 2003 and another

settle for second place in the de-

five years for Horizon to become

velopment lineup because it sought

the fourth. Innovations ranged from

elbow room for 100,000 barrels per

cost- and emissions-cutting reduc-

day. After waiting for ERCB approval

tions in the operating temperature of

until 1969, Syncrude also had to

the production process to building

delay construction in order to fit into

the AOSP synthetic crude upgrad-

provincial oil supply and demand

ing plant near Edmonton, in a more

forecasts. The ruling included a rare

economical location than the sub-

board split. The majority under chair-

arctic climate and muskeg swamps

man George Govier set a three-year

of northeastern Alberta.

postponement, while future chairman

The lone exception to the long

Vern Millard dissented by interpreting

oilsands project lull pioneered a

the economic projections as requir-

new business strategy as well as

ing a longer wait.

technology. The Cold Lake de-

Skeptical companies in the in-

velopment went into action in the

dustry majority held back from

mid-1980s after a ’70s mega-

replacing a partner that dropped out

project version was divided into less

while Syncrude was under construc-

costly stages. By gradually grow-

tion in 1974. The Alberta, federal

ing in profitable phases through the

and Ontario governments filled the

’80s, ’90s and early 2000s, Cold

gap by taking on part ownership and

Lake established reliability and eco-

providing loans and grants. By the

nomic respectability for “in situ” or

time production started in 1978, ris-

underground bitumen extraction with

ing costs, adverse energy policies

steam pumped into the ore. As of

and unpredictable upheavals on the

2015, the NEB predicts in situ meth-

global oil market discouraged any

ods of tapping the four-fifths of the

further new developments. Activity

oilsands that are too deep to mine

focused on making the first two com-

will emerge as a growing majority

plexes economical. They gradually

of production.

Gordon Jaremko has worked since 1972 for newspapers, wire services, magazines and specialty publications, with occasional forays into books and broadcasting, from home bases in Calgary, Edmonton and Ottawa. He is recognized as a leader in coverage of the Canadian energy industry. the first quarter century: 1986-2011

31


www.pwc.com/ca/energy

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FEATURE technology history 1 The Alberta Oil Sands Technology and Research Authority Underground Test Facility north of Fort McMurray revolutionized in situ bitumen recovery by proving that steam assisted gravity drainage would work. Image: Gerry Stephenson

In situ heavy oil and oilsands technology How we got here By David Theriault and Neil Edmunds

the first quarter century: 1986-2011

33


technology history 1

n situ oilsands development

the early years

Formation were the inability to push

that required melting, and he clearly

is thriving today. According

Thermal steam flooding recovery

bitumen, a lack of understanding

understood the significant role of

to the Alber ta Energy

applications began as early as 1952

the role gravity could play, massive

gravity drainage. This is in contrast

Resources Conservation

at Shell’s pilot in Yorba Linda, Calif.,

sanding of perforated completions,

to the conventional paradigm of a

Board, there is a significant

at Chevron’s commercial project at

and the common presence of mobile

very difficult fluid to push.

resource at 1.8 trillion barrels

Kern River, Calif., in 1968, as well

water and gas zones.

in place and in situ projects

as in Venezuela. Along the way,

It is well known that the late Dr.

SAGD test at Cold Lake, involving

are producing approximately

cyclic steam stimulation (CSS) was

Roger Butler developed and first

one of the world’s first horizontal

755,000 barrels of oil per day

serendipitously discovered.

published the basic concept of

wells as a producer, plus two verti-

SAGD in 1978. What is less well

cal injectors. However, the results

In 1980, Imperial conducted a

at year-end 2010. About 75 per

CSS proved to be the key

cent of this production comes

to unlocking the bitumen in the

from ther mal methods . T his

Clearwater Formation in Alberta.

development exists because

Imperial Oil Limited began piloting

society demands hydrocarbons,

CSS at Cold Lake in 1965, eventu-

and this demand is growing as

ally building what is still the most

population increases, standards

productive in situ bitumen project

of living improve and technology

in Alberta. This activity was occur-

advances. Technology advances

ring before SAGD and horizontal

come from communication and

well technology. However, the tech-

collaboration among industry,

nology did not fare as well in the

academia and government. Our

McMurray Formation, as evidenced

known and perhaps significant is

did not stand out against the well-

discussion will focus on the

by dozens of pilot tests of CSS,

that in 1978, he was working at the

developed CSS technology already

reservoir recovery technology

steam flooding and in situ com-

Imperial Oil Sarnia refinery, not in

in place, and the technology was

advances in thermal and steam

bustion conducted prior to 1990.

the Calgary heavy oil patch. Butler

not pursued.

assisted gravity drainage (SAGD)

The most prominent reasons for the

understood that bitumen at reser-

Moving to current technology

applications.

lack of success in the McMurray

voir temperatures acted as a solid

In the meantime, the Alberta Oil

W W W. H O C S . C A

Technical advances supporting in situ oilsands development are evidence that this industry does not stand still, and that industry, academia and government do collaborate to advance technology development.

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Canadian heavy oil association


Sands Technology and Research

pioneered the use of thermal simu-

McMurray tests. By 1989, the UTF

kicked off from 1997 to 1999

Authority (AOSTRA) had been

lators to model SAGD. Simulation

had demonstrated twin-well start-

at Surmont, Foster Creek and

founded by the Province of Alberta

quickly and convincingly showed

up, effective McMurray sand control,

Hangingstone. Commercial projects

with a specific mandate to com-

that SAGD would be the most suc-

steam trap production control and

initiated since 2001 have resulted

mercialize the McMurray in situ

cessful process of the several under

a likely commercial combination of

in 2010 SAGD production levels

resource. Horizontal wells were

consideration, that horizontal injec-

productivity, SOR and recovery

of 318,000 barrels of oil per day.

identified as a potentially enabling

tors were superior to vertical, and

factor from a decidedly middle-tier

technology, especially after a 1976

that SAGD could be reliably ini-

reservoir.

visit by AOSTRA management to

tiated between twin horizontals

Once SAGD was demonstrated

nical challenges including advancing

an “oil mine” in Yarega, Russia. At

spaced a few metres apart, using

and surface horizontal well drilling

sand control technology utilizing

Yarega, tunnels had been driven in

only heat conduction and gravity.

became commercially available, in

wire-wrapped screens and slotted

a shallow heavy oil formation and oil

At the time, horizontal well drill-

situ oilsands development was in

liners, utilizing gas lift to electric sub-

drained from pipes driven horizontally

ing technology from surface was not

the game big time.

mersible pumps and metal-to-metal

into the sand, which were periodically

yet developed. As a result, three well

steamed. Thus, what was to become

pairs, each about 60 metres long

the Underground Test Facility (UTF)

and 25 metres apart, were drilled

was seen as a means to make a large

upwards from tunnels in the Devonian

number of horizontal wells feasible,

limestone, about 15 metres below

drilled from tunnels with heavily mod-

the base of the McMurray Formation.

ified mine-face drilling techniques.

(Insiders called it the “upside-down

(The remarkable development of

test facility.”) The first pair began

the mine, and custom drilling tech-

steaming in December of 1987 and

nology for the UTF, is an unsung

was converted to continuous pro-

story; even these achievements

duction in April of 1988. Phase A

were critical steps in the success

production rates and steam to oil

SAGD piloting of surface hori-

of the reservoir tests.) AOSTRA

ratios (SORs) quickly set records for

zontal drilling applications were

Moving to today’s commercial application Cold Lake CSS exceeded 100,000 barrels of oil per day by 1998 and has gone through numerous expansions. With the addition of Primrose horizontals, 2010 CSS production levels reached 244,000 barrels of oil per day.

Throughout this time, operators have addressed numerous tech-

progressing cavity pumps to allow lower-pressure operations, using slant drilling rigs to access more shallow reservoirs, improving water recycling and moving towards zero liquid discharge. As a result, cumulative steam to oil ratios (CSORs) have dropped to between 2:1 to 3:1, and industry is applying solvent assisted steam processes that could bring the CSOR to 1.5:1. Canadian thermal technology stands as the most efficient in the world, recovering

Putting rock theory into practice Oil Sands Imaging has the tools and expertise to transform seismic to success. Discover how our advanced Seismic Transformation and Classification (STAC™) workflow can transform your seismic data volumes into highly accurate lithological volumes (including facies and fluids classification).

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In Situ Oil Sands; Oil Carbonates; Unconventional Tight Oil & Gas; Conventional Oil & Gas; and more.

the first quarter century: 1986-2011

35


technology history 1

some of the heaviest oil from colder

collaboration through its formal con-

reservoirs, using less steam.

ferences and informal luncheons

This progress is evidence that

and beer and chat sessions, and

this industry does not stand still,

has facilitated great networking for

and that industry, academia and

all. These advances can be a great

government do collaborate to

springboard to other innovations and

advance technology development.

will continue to improve the environ-

The Canadian Heavy Oil Association

mental and economic performance

has played a prominent role in the

of the heavy oil and oilsands industry

sharing of information and industry

into the future.

David Theriault is senior vice-president, in situ and exploration for Laricina Energy Ltd. He has 31 years of heavy oil and oilsands experience. Prior to joining Laricina, Mr. Theriault was president of Triangle Three Engineering Ltd., providing consulting services directed at oilsands resource assessment, development and exploitation, and provided strategic support on gas-over-bitumen regulatory applications and technical solutions. He was director, oilsands, at Gulf Canada (now ConocoPhillips Canada) from 1997 to 2001, responsible for the Surmont pilot project, the Surmont commercial 100,000-barrel-per-day regulatory applications, Syncrude Canada Ltd., upgrading and the gas-over-bitumen challenge.

Neil Edmunds is currently vice-president of enhanced oil recovery for Laricina Energy Ltd. Mr. Edmunds brings a strong technical background of over 33 years in the oil and oilsands industry, focused primarily on thermal recovery of heavy oil. Prior to his current position with Laricina, Mr. Edmunds was a reservoir engineering specialist with Encana Corp. from 2000 to 2005, where he provided reservoir and operations direction for vapour extraction and SAGD pilots at Foster Creek, researched new recovery technologies and provided expert testimony on gas-over-bitumen issues before regulatory hearings. Formerly, Mr. Edmunds was manager, enhanced oil recovery for CS Resources Limited, responsible for the Senlac thermal project, and later vice-president, recovery technologies, where he focused on research projects. Since 1997, Mr. Edmunds has been principal of Clearwater Engineering providing periodic consulting services in thermal recovery and the development of reservoir simulation software. Prior to that, Mr. Edmunds was process development coordinator at the Underground Test Facility for AOSTRA, and was previously senior reservoir engineer with Vikor Resources Ltd. and AOSTRA. Mr. Edmunds holds a Bachelor of Science in Mechanical Engineering (Gold Medal) from the University of Alberta.  

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Canadian heavy oil association

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Technology History 2

CHOPS and SAGD:

revolutionizing in situ heavy oil By Maurice B. Dusseault

38

Canadian heavy oil association


Left: Cold heavy oil production with sand (CHOPS) operations underway aided by a progressing cavity pump. Below: An operating steam assisted gravity drainage (SAGD) well pad. PhotoS: Joey Podlubny

wo technologies that

became used for surface transfer of sludges and

simply the preferential drainage of the fluid of higher

radically changed the Canadian

viscous liquids, and were used in the heavy oil

density (water) while the fluid of lower density (air)

heavy oil business in the late 20th

industry in California. From there, they made their

remains high in the aquifer. Vertical shafts, perhaps

century are cold heavy oil production

way to Canada in about 1982-83. Sand-resistant

with short radial horizontal drains, and even gently

with sand (CHOPS) and steam assisted

PC pumps capable of lifting viscous oil from

inclined drains from mine tunnels had been used in

gravity drainage (SAGD). Both required

depths of up to 1,000 metres were perfected

California (Kern County), Russia (Yarega), Ontario

a substantial paradigm change in the

in the Lloydminster area between 1983-95 by

(Lambton County) and elsewhere. Oil was delib-

minds of field operators and reservoir engineers.

pioneering companies such as KUDU and BMW

erately produced by gravity drainage into vertical

CHOPS arose directly from field practice; gradually,

Pumps (now Weatherford Canada Partnership).

hand-dug wells less than 40 metres deep in Ontario

aided by incremental advances and new pumping

With the rod-fall velocity problem solved, and with

for a year before the famous Pennsylvania oil strike

technology, it became generally adopted over a

PC pumps that lasted more than a year (up to

by Edwin Drake in 1859.

long period of time. SAGD arose from theoretical

two years now is common), the CHOPS concept

However, the breakthrough SAGD concept of

and laboratory developments, and was met with

started to crystallize. Combined with large-diameter

steam injection combined with gravitational phase

extreme skepticism, but was adopted rapidly after

perforating (“big-hole” charges, up to 30 millimetre

segregation and horizontal well production was

the first full-scale field successes in the early 1990s.

diameter), more aggressive workover methods and

developed by Canadian Dr. Roger Butler in the 1970s.

Heavy oil exploitation in Canada began in the

improved efficiencies in sand handling, by 1990-92

Facing industry skepticism, even within his own com-

1930s in the Lloydminster, Alta., area. Wells 400–500

local operators were aggressively developing suit-

pany, Butler convinced the Alberta government to

metres deep produced one to five cubic metres of oil

able zones and expanding “conventional” heavy oil

fund a full-scale field SAGD demonstration in the

per day using reciprocating rod pumps in perforated

production until CHOPS production peaked at about

late 1980s using shafts and tunnels from which

(10–12 millimetre diameter) casing to produce oil of

10,000 cubic metres per day in about

500–10,000 centipoise viscosity. Small amounts

2002 in Canada. Concepts such as

of sand came in with the oil, probably on the order

deep slurried sand injection with pro-

of 0.1–0.2 per cent, tanks had to be occasionally

duced water, salt cavern waste storage,

cleaned and early local companies seemed aware

various thermal and chemical methods

that sand influx was simply part of non-thermal vis-

to aid in sand separation at the surface,

cous oil production. The low oil rates were in part

and many others developed in response

related to slow rod fall, so that pump speeds of three

to the need to produce oil in a very dif-

to four strokes per minute were common, and still are.

ferent manner than previously.

When prices rose steeply in 1972-81, many large

The important paradigm shift in

oil companies (Texaco Inc., Amoco Corporation,

CHOPS was moving from tolerating a

Exxon Mobil Corporation) attempted to develop

bit of sand and low production rates in

the billions of barrels in the heavy oil belt using sand

heavy oil to encouraging sand influx and learning to

horizontal well pairs were drilled because the tech-

screens, hydraulic fracturing, gravel packs and other

manage the consequences, thereby producing oil

nology to precisely place horizontal wells from the

technologies to exclude sand. A great deal of applied

much more rapidly, and often from fields that would

surface did not yet exist. This seminal project was

research was done on different screens, various slot-

never have been developed otherwise (2.5 to six metre-

viewed in a derisory manner by industry at the time,

ted devices and special methods, but in all cases,

thick sandstones). CHOPS stands as a remarkable

and almost all companies (except Chevron) refused

massive production impairment occurred. The screens

example of practical developments in the field by

the invitation to join the primary experiment, even

and gravel packs plugged quickly, and many rea-

experienced and intelligent operators leading to a

voicing public criticism of the project in technical

sonable wells that had been producing three to five

viable technological construct. Also, more and more

and business conferences.

cubic metres per day with a small amount of sand

oil companies are realizing that sand production is

The Alberta Oil Sands Technology and Research

became non-productive: the sand problem was

almost always beneficial to oil production and are find-

Authority organized the project, and full technical

solved at the expense of the oil. Many large com-

ing ways to manage the sand rather than exclude it,

viability was demonstrated. With the advent of

panies such as BP p.l.c. and Chevron Corporation

reaping the benefits of the improved oil rates.

controlled-trajectory horizontal wells drilled from

lost their enthusiasm over heavy oil and gradually

Leaving aside surface mining, commercial bitumen

surface in the mid-1990s, commercialization fol-

(viscosity greater than 10,000 centipoise) exploita-

lowed in 2001 (10,000 barrels per day at Foster

Progressing cavity (PC) pumps were conceived

tion in Canada began in the 1980s when the Imperial

Creek), exceeding 350,000 barrels per day in 2011

by René Moineau in France in about 1930, while

Oil Limited Cold Lake cyclic steam stimulation pro-

and targeted to reach the one-million-barrel-per-

he was working on air compression for jet engines.

ject passed the 10,000-barrel-per-day threshold.

day mark just before the year 2020.

Moineau received a doctorate degree for his dis-

Gravity drainage was a known concept in water

SAGD seems to be a revolutionary technology with

sertation on this novel approach, later becoming

wells and low-viscosity oil production. The lower-

even geopolitical implications, because the heavy

a professor of mechanics. Gradually, PC pumps

ing of the phreatic table in water well pumping is

oil in the world is by no means evenly distributed.

left the Lloydminster area.

the first quarter century: 1986-2011

39


Technology History 2

There were approximately 14 trillion barrels of liquid crude oil originally in the earth’s rocks, about 4.5 trillion barrels of conventional oil, of which about

Figure 1: Oil Price and Major Events in the Canadian Viscous Oil Industry

1.2 trillion barrels has been produced to date. Of the

70

approximately 9.5 trillion barrels of viscous oil (greater than 100 centipoise), over seven trillion barrels is in

60

sandstones, mostly unconsolidated high-porosity sandstones at relatively shallow depth (less than

14–16 per cent, and the rest of the world has the remaining approximately 40 per cent. SAGD gives the highest recovery factors of any technology and is being adopted rapidly worldwide, but nowhere

USD Oil Price (1982$)

Venezuela has 22 per cent, Russia has perhaps

40

faster than in Canada because of the vast resources

Lloydminster heavy oil began 1930s

Leduc discovery

PC pumps

Peak oil USA

Horizontal wells

Oil Price

30 20

Commercial SAGD Commercial CHOPS

Peak oil Canada

50

1,000 metres). Of this seven trillion barrels of viscous oil resource, Canada has about 25 per cent,

Commercial cyclic steam

WTI BRENT OPEC

Suncor (GCOS)

Syncrude mine

Albian mine

10

and the stable political and economic conditions. Continued improvements are being implemented

0 1946

as the body of practical and scientific knowledge expands unceasingly.

1952

1958

1964

1970

1976

1982

1988

1994

2000

Horizon mine 2006

2012

To finish this discussion of the history of these two technologies, brief descriptions of the screen-

requires continuous sand influx so the formation sand

reservoir should have a richness factor (fraction of

ing criteria are given. These parameters have been

must be cohesionless; furthermore, all attempts to

total zone porosity filled with oil) exceeding 0.7 with

determined over many years through study and field

block the sand or consolidate the reservoir lead to

a reasonable vertical permeability. An overlying gas

observations, and their evolution also forms part of the

massive production rate drop, perhaps by a factor of

zone or a basal water zone can be tolerated because

technical history of CHOPS and SAGD development.

10. Formation sand must continually move slowly to

SAGD operates at a constant pressure, which can

the wellbore, and workover practices are generally

be set to avoid severe influx and steam chamber

aggressive methods designed to start or re-initiate

quenching risks, but of course an ideal reservoir would

Successful CHOPS projects are in unconsolidated

sand influx. Mobile water or gas in the reservoir,

have not these zones and could be operated at the

heavy oil sandstones from 2.5 to 15 metres thick with

even within 500 metres, is generally disastrous, as

optimum pressure (higher or lower than hydrostatic).

oil viscosity up to about 20,000 centipoise. High

the extreme drawdown used and the propagation

Solution gas is not necessary, but its presence will

clay content (greater than six to seven per cent) is

of high permeability zones because of the sand pro-

aid production, and SAGD can be combined with

a strongly negative factor that not only affects oil

duction will lead to early gas or water breakthrough.

solvent injection to reduce steam needs.

amounts of difficult emulsions. Because CHOPS

SAGD

2,500–4,000 barrels per day at peak production.

is a solution-gas drive process, sufficient gas in

Successful SAGD projects are located in uncon-

A key factor in the success of SAGD is the shear

solution is necessary. Most heavy oil deposits are

solidated sandstones at least 20 metres thick with

dilation resulting from the high thermally induced

close to saturated with methane, with a solution-gas

oil viscosities of 1,000 centipoise, up to two million

stresses; this causes massive increases in perme-

constant near two cubic metres per cubic metre

centipoise, although there are no real limits to the

ability, breaks through thin clay beds that impede

megapascals (e.g. 10 cubic metres of methane per

viscosity range—even 100-centipoise oils can be

vertical drainage and generally accelerates oil

cubic metre of oil at 500 metres of depth). CHOPS

exploited by SAGD if conditions are appropriate. The

production.

CHOPS

flux rate, but also leads to the generation of large

Maurice Dusseault started teaching at the University of Alberta in 1977 after completing his degree in civil engineering. For five years, he held an Alberta government–funded chair intended to foster oilsands development and energy research. Since 1982, he has been professor of geological engineering, Earth and Environmental Sciences Department, University of Waterloo, teaching rock mechanics, deep waste disposal and production methods. He has co-authored two textbooks and 480 full-text articles. He works widely with industry as an advisor and professional instructor in petroleum geomechanics, and was a Society of Petroleum Engineers (SPE)–distinguished lecturer in 2002-03, visiting 19 countries and 28 separate SPE sections, speaking on new oil production technologies. Maurice has developed a number of professional short courses in subjects, such as production approaches, petroleum geomechanics, waste disposal and sand control, presented in 20 different countries in the last 10 years. He has also helped found three companies, all still growing. 40

Canadian heavy oil association

In good reservoirs, SAGD wells can achieve

References Dusseault, MB. 2007. CHOPS. SPE Petroleum Engineers Handbook, Chapter 5, Volume VI— Emerging and Peripheral Technologies (EMPT), Ed. Warner HR, 40 pages.

Komery, DP, Luhning RW, Pearce JV, Good WK, 1998. Pilot Testing of Post-Steam Bitumen Recovery from Mature SAGD Wells in Canada. 7th UNITAR Conference on Heavy Crudes and Tar Sands, Beijing, China, Paper 1998.214, 18 pages. (Alberta Energy Resources Conservation Board website)

Joshi, S.D. 1991. Horizontal Well Technology. PennWell Publishing, Tulsa, OK, 537 pages.


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For 25 years, you’ve worked hard to help lighten the industry’s heavy oil challenges. Happy birthday, CHOA. And thanks for giving Halliburton the opportunity to be part of something unique: a respected forum where Canadian operators, service companies and others can freely exchange heavy oil ideas and concerns. Gaining greater insight into operator challenges has helped Halliburton develop everything from industry-leading water management technologies that both conserve water and clean it, to advanced SAGD and multilateral services that safely and efficiently help operators access greater amounts of oil while barely disturbing the surface. Keep up the good work, CHOA. Thanks to you, heavy oil’s future is brighter than ever.

Solving challenges.

© 2012 Halliburton. All rights reserved.

HALLIBURTON


regulatory Gas over bitumen: a key conservation decision. Photo: photos.com

THE REGULATOR’S ROLE IN THE DEVELOPMENT OF ALBERTA’S HEAVY OIl aND OILSANDS By Neil McCrank, Q.C.

Impact of Depleted Gas Zone Oil production Steam injection

n 2012, there is a universal recognition that the oil that will be produced from Alberta’s heavy oil and oilsands is significant. The Depleted gas pool

actual bitumen-in-place in northeastern Alberta is estimated to be over 1.7 trillion barrels, of which more than 300 billion barrels are considered potentially recoverable from the oilsands (excluding the vast carbonate deposits). “Proven reserves” are currently 173 billion

Steam injection

barrels remaining to be recovered, of which 80 per cent is expected Bitumen reservoir

to be recovered using in situ technology. While the “regulator y regime” around conventional oil is well documented, very little has been written about the regulation of the unconventional oilsands and conventional heavy oil.

Bitumen production

The early days (pre-1955) One of theof earliest discoveries of petroleum in Canada was directly attributed Impact Depleted Gas Zone

Normal SAGD Process

to the knowledge of local Aboriginal people who travelled the Athabasca Oil production

Oil production

River in northeastern Alberta. They mixed the bitumen that flowed out of injection with spruce gum to caulk the seams of their the banks of theSteam Athabasca

Steam injection

birchbark canoes. This use was documented in the early 1700s by traders of the Hudson’s Bay Company. Normal pressure gas pool

However, while the governments of Canada and Alberta were interested Depleted in developing this possible resource, and piloted “oilsands paving projects” gas pool

among others, it was not until about 1925 that Dr. Karl Clark of the Alberta Research Council successfully demonstrated a separation method using

Steam injection

Steam injectionsoda. These are the same fundamentals used in the hot water and caustic

processing of oilsands at commercial mining operations today.

Illustration: ERCB

Bitumen reservoir

At about the same time, discoveries of conventional heavy oil Bitumen were made reservoir

on both sides of the Alberta-Saskatchewan border.

During the next almost three decades, governments continued their Bitumen production

Bitumen production

research and pilots and encouraged small commercial projects, but the resource was largely ignored while the development of much easier con-

The Energy Resources Conservation Board decision in 2005 to shut in all natural gas wells in the Athabasca area in communication with bitumen deposits ended nearly a decade of debate.

ventional oil grew rapidly in Alberta. The regulatory regime quite naturally followed the resource development activities, focusing on conventional oil discoveries. the first quarter century: 1986-2011

43


regulatory

The growth of the oilsands resource (1955-95)

It was necessary for the regulator to develop regulations in the areas

The development of the regulatory regime relating to the oilsands started

where it was the principal regulator (eg., conservation, safety practices) and

to take shape in late 1954 with the formation of Great Canadian Oil Sands

to enter into joint initiatives with government departments that shared juris-

Limited (GCOS), the forerunner of today’s Suncor Energy Inc. near Fort

diction on air quality, water usage, tailings ponds, etc., (Alberta Environment

McMurray. This led to the passage of the Bituminous Sands Act by the Alberta

and others).

legislature in April 1955, the most important feature of which was the stipu-

The regulator was also obliged to remain informed and current on new

lation that any operation for the recovery of hydrocarbons from the sands

technology that was being developed. The most important development

would not be subject to the provisions of the Oil and Gas Conservation Act.

related to the new technology that would allow for the extraction of the

For the first time, there was recognition that the oilsands resource was

bitumen resource that was too deep to mine. An example was the field test of the steam assisted gravity drainage (SAGD) process that was being tested

a different product for the government to regulate. Over the next four decades, the regulators—most importantly the Petroleum and Natural Gas Conservation Board (1938-87), the Oil and Gas Conservation

by AOSTRA at the Underground Test Facility in the Fort McMurray area.

Board (1957-71) and the Energy Resources Conservation Board (ERCB,

The modern era (1995-today)

1971-95)—responded to the developments and major legislature initiatives

Since about the mid-1990s, oilsands and heavy oil resources have become

such as the 1983 Oil Sands Conservation Act.

more very important to Alberta, Canada, and indeed North America.

In the mid-1970s, the Alberta government created the Alberta Oil Sands

The large-scale mining operations in northeastern Alberta continue to

Technology and Research Authority (AOSTRA) to encourage development

expand and multiply, and the regulator maintains a constant vigilance in

of new technology for the recovery of bitumen from the oilsands.

ensuring these developments continue to be in the “public interest.”

It was essential for the regulator to develop processes to ensure that

However, the more dramatic change has been in the technological

applications, approvals and inspections related to oilsands mining opera-

advancements that have allowed the production of in situ bitumen to become

tions (ie., GCOS, Syncrude Canada Ltd.), in situ technology pilots (Shell

commercially viable. The technology centres around thermal processes

Canada Limited at Peace River, BP p.l.c. at Wolf Lake) and others were

such as SAGD, electric stimulation and combustion, all of which cause

“in the public interest.”

the reservoir to be heated to the point where the bitumen begins to flow

During the same time frame, these same activities relating to the heavy

naturally and is then collected and pumped to the surface. This new focus

oil development (ie., Imperial Oil Limited conducting small-scale pilots at

on in situ development created a need for the regulators to find new ways

Cold Lake) were being carried out by the regulator.

of assessing and monitoring these projects.

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Canadian heavy oil association


One of the major contributions made by the regulator (the Alberta

battles between the bitumen leaseholders and the separate holders of

Energy and Utilities Board—AEUB, 1995-2008—the successor to the

natural gas leases, and a number of inquiries that were held by the ERCB/

earlier ERCB and renamed the ERCB again in 2008) was to recognize

EUB. The government, the lessor of these gas leases, was obliged to pro-

the need to re-categorize the in situ bitumen “resource” to a “reserve”

vide compensation for any loss of value to the lessees, but the bitumen

where it was proven on the “core and cuttings” analysis to be commer-

resources were protected from possible sterilization by the depletion of

cially viable with current technology.

the gas cap and the associated pressure.

In the early 2000s, the AEUB announced that the “proven reserves” in the oilsands were upwards of 173 billion barrels. This change was

The way forward

initially criticized, but after a “stout” defense of its scientific approach

The hydrocarbon energy deposits in Alberta are massive and their extraction

by the AEUB, the international oil and gas community accepted these

will remain challenging. It will continue to require dedicated profession-

“proven reserves” calculations.

als in the industry, the government and the regulator to ensure that the

A further contribution made by the regulator was the protection of

resources are developed “responsibly and in the public interest.”

this massive “proven reserve” so that it could continue to be extracted in an efficient and effective manner. This became known as the “bitumen conservation initiative.” When the Oil and Gas Conservation Act was enacted in 1983, the requirements for approval of gas production within or adjacent to oilsands deposits were not carried over from the previous Oil and Gas Conservation Act. This was probably due to the fact that at that time, there were no expectations that the bitumen would ever be produced and, in any event, the need for a preservation of the pressure due to a gas cap was not contemplated. In 2005, the AEUB took a decisive step to order a shut in of all gas wells in the Athabasca area that were known to be in communication with known deposits of in situ bitumen that were deemed commercially producible. This action brought to a close a decade of hotly contested

Neil McCrank, Q.C., is former chair of the Alberta Energy and Utilities Board, a position he held from 1998 to 2007. Mr. McCrank received his bachelor of science degree in electrical engineering in 1966 from Queen’s University in Kingston, Ont. In 1969, he graduated with an LL.B. from Queen’s University and was admitted to the Law Society of Upper Canada in 1971 and the Law Society of Alberta in 1980. He is also a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta. He is currently counsel in the Calgary office of Borden Ladner Gervais LLP.

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the first quarter century: 1986-2011

45


first nations

Working together to reach consensus and achieve shared aims By Jim Boucher

he journey the

also on a provincial and national scale—

First Nation is composed of Cree

aboriginal community

in large part due to the advent of the

and Dene people who have prac-

a n d i n d u s tr y h ave

oilsands industry as a substantial

ticed hunting, trapping, fishing and

taken together has—at

economic driver.

gathering along the Athabasca River

times—been fraught with

difficult, that journey needed to be taken for us to reach where we are

The FMFN comprises over 600 band

As a First Nation, we consider

today—a place of better understanding,

members with approximately 400

ourselves a leader in working col-

greater mutual respect and increased

residing in the hamlet of Fort McKay,

laboratively with industry, and hold

capacity to work together. As chief of

a community located approximately

a successful and long-established

the Fort McKay First Nation (FMFN)

65 kilometres north of Fort McMurray,

record of strong relationship-building

for a good portion of the last 25 years, I

Alta., nestled along the shores of

with the various mining companies

have witnessed momentous economic

the Athabasca River in the Regional

operating near our land. Given the vast

changes not only within my region but

Municipality of Wood Buffalo. Our

amount of activity concentrated within

Although sometimes

46

Canadian heavy oil association

for generations. We are a signatory to

The Fort McKay First Nation: Our community and our people

complexity and contention.

Treaty 8, and belong to the Athabasca Tribal Council (ATC), of which I am also on the board of directors.


Left: The five First Nations groups in the Athabasca oilands region, including the Fort McKay First Nation, are represented by the Athabasca Tribal Council. Photo: Joey Podlubny

Below: The community of Fort McKay has been interacting with industrial developers for close to 100 years. This is Fort McKay in the 1920s. Photo: Provincial Archives of Alberta

the Athabasca oilsands, it could be

available to our community members,

The aboriginal community has long

of this work over two decades, the ATC

argued that there is nowhere else in

we have reaped a number of benefits

recognized the need to establish a

has been able to establish very healthy

North America where there is as signif-

from resource development within the

constructive working relationship with

working relationships with industry

icant an impact on a community from

region. At the same time, this has not

industry and, likewise, industry also

and government that have significantly

a resource development standpoint as

been without consequence in terms

has appreciated the need for foster-

benefited the aboriginal communities

in Fort McKay. Since 1986, oilsands

of impacts on our environment and

ing a productive relationship with the

of the Wood Buffalo region.

production in our region has doubled

traditional way of life. We are also

aboriginal community. In 1988, the ATC

and is expected to double again by

deeply concerned about the effects

was formed to represent the interests of

2020. In the past, our First Nation

of such development on our water, air

five First Nations in close vicinity to oil-

The oilsands and Fort McKay First Nation today

has estimated there to be approxi-

and land, and how this may adversely

sands development in northern Alberta:

As a First Nation co-existing with

mately 800 million barrels of oil within

affect our culture and traditions, par-

Athabasca Chipewyan, Chipewyan

oilsands development, we are com-

our territory, and with that heralds the

ticularly for future generations.

Prairie, Fort McKay, Fort McMurray

mitted to maintaining our tradition of

No. 468 and Mikisew Cree.

longstanding relationship-building

potential of great opportunity for our

From 1998 to 2002, the ATC

with industry for the betterment of our

Industry Agreement Group oper-

community. Our focus for the future

ing near our lands are run by Suncor

Aboriginal and industry relations: A historical journey

ated with a primary focus to build

has been to maximize our community’s

Energy Inc., Syncrude Canada Ltd.,

In the past, Aboriginal People were

capacity between the regional First

economic prosperity through creat-

Royal Dutch Shell plc, and Canadian

not necessarily considered obvious,

Nations and the industry groups work-

ing sustainable, long-term growth

Natural Resources Limited. Through

integral parties to be included in deci-

ing in the Athabasca oilsands. Their

and development while upholding

this, we are profoundly familiar with the

sions on development or consulted on

aims were to foster long-term mutu-

respect for our environment. Given

issues related to the oilsands industry,

the impact of such development on

ally beneficial relationships between

this, our First Nation brought our for-

community relations, environmental

our communities. We had to become

all parties (First Nations, industry and

mer Industry Relations Corporation

monitoring and ecological preser-

proactive in asserting ourselves as im-

government), and support growth and

under band administration as the new

vation. Given our circumstances, our

portant members of the community

sustainability of ATC-member First

Sustainability Department in early

First Nation and community members

whose voices and input needed to

Nations while maximizing the benefits

2011. This restructuring was done to

have realized many positive gains—

be heard and respected. We wanted

and managing the impacts of indus-

provide community members greater

largely financial—as a direct result

to become active participants in a

trial development. In 2002, this group

access to information, services and

of oilsands development. Through

viable economic opportunity, which

transitioned from capacity building to

knowledge about industry development

agreements we have forged with oil-

the oilsands offered, while also pre-

more of an issues-management pro-

while helping to ensure Fort McKay’s

sands companies, our joint venture

serving our culture and traditions and

cess within the framework of a new

economic prosperity, social stability,

partnerships with industry through

respecting our environment. And

structure that included ATC-member

long-term sustainability and a healthy,

our Fort McKay Group of Companies

we have worked hard over the last

First Nations, industry groups and all

productive environment for our future

as well as employment opportunities

number of decades to do just that.

three levels of government. As a result

generations.

First Nation’s community members. The mining projects currently operat-

the first quarter century: 1986-2011

47


first nations

From our perspective, long-term

working together with industry to reach

in the economy through building the

and support community members in

sustainability involves establishing

a shared understanding for protect-

capacity of our community members.

launching their own businesses.

agreements with each of the min-

ing the environment and First Nations’

Our aim is to build community-

ing companies operating in the Fort

interests. Environmental issues out-

member capabilities so they may

Moving forward

McKay area that address environ-

lined in the agreement include noise,

continue to thrive economically, cul-

The oilsands industry provides the

mental and economic stability and

odours and air quality, air-quality stan-

turally and spiritually for generations

aboriginal community an important

security in the community for future

dards, safety, the management of water

to come—reaping the benefits of

opportunity that we must be pre-

generations. The first new agree-

use and potential impacts regarding

progress that come with resource

pared to maximize and manage for

ment reached was in 2011 with Total

the Athabasca and Ells rivers, wild-

development while still honouring

the long-term sustainability of our

E&P Canada for its proposed Joslyn

life impacts, soil and vegetation, mine

our history, customs and traditions.

communities and our people into the

North mine. This represented a water-

planning, tailings and land reclamation.

We also appreciate that educa-

future. I believe that Aboriginal People

shed moment, providing an historic

We also recognize the need to

tion and training are the keys for our

will have an even more integral role as

example of a First Nations community

further strengthen our participation

community members—particularly

participants in Alberta’s thriving econ-

our youth—to become active partici-

omy for decades to come; however,

pants in the resource economy and in

we need to ensure that we are suffi-

shaping their own destinies. In support

ciently equipped with the education

of this, our First Nation has created

and training necessary to make that

systems for educational advance-

a reality. Through the important rela-

ment, career building and business

tionships that we have forged with our

development. We have an E-Learning

industrial neighbours, we also look for-

Centre in Fort McKay, which operates

ward to continuing to work with the

as a Keyano College satellite campus

oilsands industry as both economic

providing academic upgrading and

partners and workforce participants

foundational programs to our commu-

for the long-term prosperity of all of

nity members. In addition, we have a

us living and working within Alberta’s

Business Incubator Park to encourage

northeastern region.

Jim Boucher is the elected chief of the Fort McKay First Nation, a position he has held since 1986. He is also chairman of the board of the Fort McKay Group of Companies (FMGC), 100 per cent owned and controlled by the Fort McKay First Nation of Alberta, and involved in a number of joint ventures. Under Chief Boucher’s vision and leadership, the FMGC has grown into one of the most successful First Nation–owned commercial enterprises in Canada, with annual revenues of more than $50 million. Chief Boucher is considered one of the most influential people in Alberta, and one of the most successful aboriginal leaders in Canada.

Dave Theriault, Laricina’s Senior VP In Situ & Exploration, is a leader in advancing Laricina’s growth and development through his work with industry associations, government and regulatory bodies. Mr. Theriault has been instrumental in supporting the progress of the Canadian Heavy Oil Association since its inception, both as a member and past president. His commitment to the growth and success of the association has been crucial in its evolution over the past 25 years. Congratulations to Mr. Theriault on his Canadian Heavy Oil Association Life Membership for Achievement Award.

Congratulations to CHOA on 25 years of industry leadership support.

www.laricinaenergy.com

48

Canadian heavy oil association

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presidents

CHOA Past Presidents 1987 Ken MacRae 1988  Paul Carr, Alberta Energy Company (retired) 1989 Paul Carr, Alberta Energy Company 1990 Terry Kimmel 1991 Dennis Miller, Westmin 1992 Bruce Lounds, Amoco Corporation 1993 Howie Dingle, Imperial Oil Ltd. 1994 Robert Wilson, Husky Energy Inc. 1995  Jane Stevens, CS Resources (Southern Alberta Institute of Technology) 1996  David Theriault, Alberta Energy Company (Laricina Energy Ltd.) 1997 Don Towson, Petro-Canada (retired) 1998  Keith Sadler, Alberta Energy Resources Conservation Board (MEG Energy Corp.) 1999  Sue MacKenzie, Petro-Canada (independent consultant) 2000  Claes Palmgren, Petro-Canada (Statoil Canada Ltd.) 2001 Albert “Ab” Fink, Petro-Canada (retired) 2002  Daryl Wightman, Encana Corporation (Rock Doc Consulting Ltd.) 2003  Gord Rouse, Petro-Canada (Laricina Energy Ltd.) 2004 Mark Doig, WorleyParsons (Husky Energy Inc.) 2005  K.C. Yeung, Suncor Energy Inc. (Husky Energy Inc.) 2006  Gerry Belyk, APA Engineering (EIT Canada Ltd.) 2007 Bill MacFarlane, Nexen Inc. 2008 Trent Kaiser, Noetic Engineering Inc. 2009 Tracy Grills, T. Grills & Associates 2010 Barry Lappin, FMC Technologies 2011-12 Gerald Bruce, MEG Energy Corp. 50

Canadian heavy oil association

CHOA past, present and future A collection of past presidents reflects on what was and what is to come By Deborah Jaremko Photos by Joey Podlubny

n December 2011, a group of past presidents of the Canadian Heavy Oil Association (CHOA) gathered to share their stories about involvement in the CHOA, events during their tenure, challenges they faced and their views on where the association should go in the future. This conversation is largely drawn from that meeting.

HOW WOULD YOU CHARACTERIZE THE STATUS OF THE HEAVY OIL AND OILSANDS INDUSTRY AT THE TIME OF YOUR PRESIDENCY? Jane Stevens: [In] 1996, the oil price was really low and a lot of heavy oil production was shut in. There were revised tax and royalty rules that were favourable, and a favourable differential. I think things were just beginning to improve again [after some of the] curveballs that the industry had received, such as the National Energy Program. As far as CHOA was going, we had at that time 352 members. Don Towson: The industry started out being more conventional heavy oil– focused. The big activity in the oilsands industry [in 1997] was mining. We

Jane Stevens 1995 CS Resources (Southern Alberta Institute of Technology)


were attempting to get the miners involved in the

SAGD [steam assisted gravity drainage] was brand

Daryl Wightman: The industry was characterized

heavy oil association, but not with very much suc-

new, unproven commercially. Heavy oil exploita-

by a period of growth [in 2002], which led to

cess in those days. The in situ other than Imperial

tion was predominantly non-thermal and [cyclic

rapid growth in the CHOA membership num-

[Oil Limited]’s Cold Lake operation, which was

steam stimulation].

bers, too. We grew very quickly from 300 or so

underway then, was very much pilot-focused—

We really weren’t considered mainstream back

all sorts of pilot operations going on, not much

then, so elevating our profile, gaining additional

to about 1,000. Mark Doig: In 2004, we really started to see the

in the way of commercial activity.

exposure and “trumpeting” the bright future of our

industry heat up. That’s when we started to see

Keith Sadler: I would say that the heavy oil and

industry were all key elements of our work. It was

some of the forecasts of $80 billion of capital

oilsands industry [in 1998] was really starting to

sometimes challenging to get people’s attention.

being spent over the next 10 years, and we’d be

evolve as a major player in the oil and gas industry.

We had a great CHOA board and membership—

producing five million barrels per day of heavy

There were numerous new in situ projects being

lots of energized right-minded people—and we

oil by 2025 and all these other wild predictions,

proposed, including the initial developments in

had a lot of fun moving the organization forward.

and that’s when we started to run into the real

the Athabasca oilsands area. Today, this area has

We were trying to break the 400-member mark,

resource shortages. Gas prices started to rise

many successful operations.

and we did!

and we were looking at alternatives to gas to feed

There was also a lot of interest and information

Ab Fink: It was a mature thing in the conventional

these projects, and I think we went from about

exchange amongst the CHOA membership, so

heavy oil side of the business. At that time [in

500 to about 800 members. So as well as the

technical meetings were very popular, as they are

2001], SAGD was starting to ramp up and I think

industry booming, the CHOA really started to

today. As well, international interest was increas-

that reflected in what happened to the member-

boom during that period, too.

ing in the form of oilsands conferences in the

ship. When I first joined [in the mid-1990s] it was

K.C. Yeung: It was about [2004-07] that you saw

U.S. and China.

about 150, and when I left in early 2000s it was

these commercial projects. During the appli-

It was very exciting to be part of an industry

800. The onslaught of people came on, I think,

cation and construction phase, people really

that was clearly beginning to take on a predomi-

in conjunction with the way the oilsands started

started to come in and look at all the CHOA

nant role in Alberta’s energy industry. Similarly,

up and really started becoming a bigger force in

activities. It was about that time that we had the

it was exciting to be part of the CHOA and to be

the industry. In fact, it was interesting because

Fort McMurray conference with dmg [:: events],

associated with the key players in the industry

one of the things that evolved over the period

and the first time I offered the SAGD 101. It

at the time.

was a bit of a push back from the conventional

was also the time that people from overseas

Sue MacKenzie: We were definitely a nascent in-

side, saying, “Geez, you know, there’s so many

started to come to Canada, and so we were

dustry in the non-mining domain [in 1999]—still

guys from the oilsands side here; are we losing

being invited to attend a few events with Alberta

considered to be the ugly duckling, high cost, low

touch with conventional heavy oil?” and that was

Economic Development. In 2005, we went to

recovery, R&D [research and development]-esque.

a bit of an issue.

China to attend a heavy oil seminar there, and

David Theriault 1996 Alberta Energy Company Ltd. (Laricina Energy Ltd.)

Don Towson 1997 Petro-Canada Limited (retired)

Keith Sadler 1998 Energy Resources Conservation Board (MEG Energy Corp.)

the first quarter century: 1986-2011

51


presidents

then the year after was about the time that we

that were being developed. [Membership was]

We consciously looked at the [membership] mix

went to Kuwait.

over 1,000—it was 1,200 or something like that.

and said that we’ve got to keep the mix, because

Gerry Belyk: Really, you know, in 2006-07, is when

Barry Lappin: In my term [2010-11], it was the

otherwise it’ll turn into, you know, a Petro-Canada

it was just going gangbusters. It was just amaz-

media exposure and the explosion of the oppo-

organization or an Imperial organization, or what-

ing what was going on. The folks were starting

sition, and a lot of it not making a whole lot of

ever, and the intent was, no, you have to keep it

to come in from overseas, and then they were

sense factually or having Hollywood getting

across the width and the breadth of the industry

inviting us out and we were going to a number of

involved in it now. It’s incredible that you see

and who our membership represented.

different places. There was a huge demand, more

the oilsands on the front page now. When the

than there even is today. There have been [many

association started, nobody wanted anything

WHAT MAKES CHOA SO SPECIAL

trips], certainly to China, Singapore, Malaysia,

to do with it.

David Theriault: It is a great opportunity to share

Peru, Kuwait, India and Russia.

And we actually saw that [international] invest-

experiences and network.

K.C. Yeung: I think it was all these multi-billion

ment happening, and a lot of it from Asia. We’re

Ab Fink: It’s inexpensive and you get a bunch of

dollar projects; one factor is the oil price was going

[also] starting to see a lot more collaboration,

insights from people, standing around just chat-

up in 2006-07, and 2008, that’s when everybody

and again, this is a real shift from the earlier

ting about stuff, and/or the actual presentations.

comes in, with the proven technology.

years in our industry where we saw people that

In the presentations, we always said we couldn’t

Trent Kaiser: [In 2008-09] there was a huge explo-

were very protective of technology, very close

just have somebody come in and just tell us a story.

sion in recognition of the potential of Alberta’s

to the vest, and now we’re seeing a lot of joint

It’s got to be more than just somebody’s thought

heavy oil resources. There was a lot of excitement

ventures, we’re seeing a lot of collaborations.

on a piece of paper. Somebody’s actually doing

in those days with people seeking us out, want-

One other thing I think is interesting: I saw

ing to find out more, trying to figure out how their

a statistic that said as an industry we are now

Barry Lappin: How we are different becomes very

snake oil might fit into the oilsands industry. And

spending more money on maintenance and

apparent when you look at our membership base.

then over the next couple of years, you started to

operations than we are on capital, which tells

We’re not representing mining companies; we’re

hear a bit about the opponents to the industry.

us that we’ve kind of arrived.

not representing in situ individually. We’re represent-

It was quite a roller coaster ride to feel all of

something with it.

ing everybody including the government, regulatory,

this excitement and then all of this anxiety from

THE GENESIS OF CHOA

Europeans and others that were staring to hurl

Ab Fink: When you think of it, it started out with

keeps us unique, I think. It’s kind of our brand, that

the rocks at the industry with some half-truths

a couple of guys saying to each other, “Let’s go

is, the CHOA brand, and what sets us apart.

and facts taken out of context. The interest that I

down and have a beer and talk about what we’re

K.C. Yeung: It’s relatively informal compared to the

acquired while I was president was in addressing

doing.” And it sort of progressed from that kind

other organizations...[and] you don’t need to be

all of these public perceptions or misperceptions

of informal discussion.

an engineer or technologist or geologist.

Sue MacKenzie 1999 Petro-Canada Limited (independent consultant)

Albert “Ab” Fink 2001 Petro-Canada Limited (retired)

Daryl Wightman 2002 Encana Corporation (Rock Doc Consulting)

photo: supplied

environmental, all the different services. That truly

52

Canadian heavy oil association


Don Towson: It’s an organization of people and

want to share all the profits, and we made a lot

it broadens everyone’s horizons. What I always

not of companies.

of money from that conference.

do to people who ask me, “How do I get to know

Ab Fink: [At CHOA events] I kinda felt like I was

Gerry Belyk: I know when I started looking into

the heavy oil industry?”—the first thing I say is,

just having a discussion with somebody about

[CHOA], I thought it would be a good opportunity

“Join the CHOA.”

something. And it was easy, it happened; it was

to meet people, seeing the different technologies

much easier to get into than feeling like you had

that are going on and also giving overviews of

THE EVOLVING ROLE OF THE CHOA

to get up in front of somebody about something

what is happening in the marketplace. The bot-

Trent Kaiser: The interest that I acquired while I was

very formal.

tom line to it all is relationships and it’s contacts,

president was in addressing all of these public

Jane Stevens: For me, it was a home for a geolo-

and absolutely in all my years of working, which

perceptions or misperceptions that were being

gist because there really wasn’t much offered by

has been 19 or so years, is that this is the most

developed in the industry. I think that’s part of,

[other groups that are] all sort of about explor-

amazing organization I’ve ever been involved with

just that growth of recognition, led to the work

ation. We don’t have to go out and find it [heavy

as far as meeting people and just gaining expo-

that we did on changes in governance for the

oil and oilsands]; we know where it is, we just

sure with people. Phenomenal.

board, which I think is a hallmark that several

need to know how to get it out of the ground.

Gord Rouse: I think there is something for every-

of us can be proud of, transitioning the asso-

It was more of a reservoir description task for

body, you know, whether you like the technical

ciation towards having a bigger contribution on

a geologist and not an exploration task, so I felt

conference in the spring or the business one in

this global stage.

that CHOA was speaking more my language at

the fall, or if you like golf or curling, you can go

Barry Lappin: Trent kind of left a legacy of our asso-

the time, and they didn’t seem picky that I was a

there at some point in the year. And, of course,

ciation trying to leap into the public perception

geologist and not an engineer.

there are the five different groups that make up

area, but we also made it to an elementary school

Mark Doig: A great illustration of [the uniqueness of

the lunches—and it’s not always at lunch, it can

once. There’s a first for the CHOA. We actually

CHOA] was the ICE 2004 conference. We did

be at 3 o’clock for a beer.

went to a class, and went into a school and actu-

that in collaboration with the CSPG [Canadian

Mark Doig: I think the reason CHOA has been

ally talked to the kids.

Society of Petroleum Geologists] and the CWLS

successful is that we focus on being a technical

Trent Kaiser: My favourite quote from that elemen-

[Canadian Well Logging Society]. The difference

group, exchanging information and an opportunity

tary school visit: “We’re using SAGD to get the

in approach between the CSPG, the CWLS and

for networking. Those are the twin pillars of how

oil out of the ground. You know what SAGD

the CHOA was like night and day. They were

the CHOA has grown and will continue to thrive.

stands for? S is for steam, because we need

appalled that these ragtag gypsies would come

The way I look at the CHOA is that it is the

the steam to make it hot, and A is for assisted,”

along to these meetings and no, we didn’t want

window on the industry. I’ve been in the heavy

and you know, we went through the letters...”Can

to give out speakers fees, and no, we didn’t need

oil industry 30 years. When I joined the CHOA

anyone guess what the D stands for?” “Oooh,

to have specially edited papers, etc. But we did

in its infancy, it really broadened my horizons, as

oooh, ooh! Dirty!”

Mark Doig 2004 WorleyParsons (Husky Energy Inc.)

K.C. Yeung 2005 Suncor Energy Inc. (Husky Energy Inc.)

Gord Rouse 2003 Petro-Canada Limited (Laricina Energy Ltd.)

the first quarter century: 1986-2011

53


presidents

It spoke volumes about the challenge that we had ahead of us because already in Grade 3, they were already indoctrinated. On that piece about, what do people expect

[the balanced advocacy approach] is happen-

we’re going to be aiming in the wrong direction.

ing, but I think it is very difficult.

We all have an opinion of what we think the group

LOOKING TO THE FUTURE

wants and it might be perfectly accurate, but we have to be careful in that if that does change,

from the CHOA, it’s part of a riddle that we still

Mark Doig: Five years ago, at our 2006 long-range

we don’t miss the boat.

haven’t solved yet in terms of what the collective

planning retreat, I was the past-president going

Barry Lappin: [The year] I was president was the

knowledge is in our membership and how it can

out and was asked by the board to give a five-

first year that the governance board actually was

be leveraged to provide more reliable and more

year vision of the CHOA. It is interesting seeing

in existence, and we had a full-time executive

honest information about the industry, and there

the CHOA now compared with our vision of it

director and that made a huge, huge differ-

is an expectation that we are advocating for

five years ago. We looked a lot back then at

ence. [We have] established new policies and

the industry. I think some of this has to be, you

how our membership was portioned—in situ

procedures; we re-aligned the board and the

know, how do you define advocacy? Are you

versus mining versus conventional, how much

operating committees; we got student member-

trying to provide balanced information about

of it was owner company people, service com-

ships, special rates for students; we introduced

the industry—that’s how I think of advocacy—as

pany people, etc.—and we stated at that time

the Conversation Dinner Series, the Innovation

opposed to promoting the industry directly and

we wanted to keep that sort of diverse mix, and

Series, we have a new journal, a new website,

specifically to grow it, and I think for the good of

I think we have.

a member survey, and we also had to come up

the industry, there is a huge opportunity here.

We wanted to maintain the technical events;

with a new financial model to actually have a

Barry Lappin: Part of the big problem was, going

we said at the time that we wanted to look at

full-time staff. These are the things that hap-

back a few years, we didn’t have the resources.

creating an executive within the CHOA office

pened in one year.

We didn’t have staff and that was really the con-

and governance, and [decentralizing] the CHOA,

K.C. Yeung: I think right now, we can say that heavy

straining factor, I think. I think the new Heavy Oil

giving it more than just a Calgary focus, espe-

oil is here. Before, it was all about the future;

101 content is more geared toward that. I think

cially in Edmonton. A lot of what we hoped would

not if, but when. When is now. And it contin-

happen five years ago has actually come to frui-

ues to grow in different places depending on

tion, so I would think five years from now we’ll

how the world turns. But we have to give out

probably be carrying on those same trends.

the message that this heavy oil/oilsands will be

Ab Fink: You’ve got to be nimble to be good—I

the energy resources for Canada and for the

think that applies to us in the sense that we’ve

world for a long time, and it will be sustainable.

got to be cognizant of what our membership

We have to continue to give this message out

wants, make sure that we’re keeping aware of

so people are proud to be part of the industry

that and meeting that need, because otherwise

and proud to be in the CHOA.

Deborah Jaremko is the founding editor of Oilsands Review. She also serves the CHOA as chair of the editorial committee and as a member of the education sub-committee.

Gerry Belyk 2006 APA Engineering (EIT Canada Ltd.)

54

Canadian heavy oil association

Trent Kaiser 2008 Noetic Engineering Inc.

Barry Lappin 2010 FMC Technologies


Connacher congratulates the Canadian Heavy Oil Association on its 25th Anniversary! Connacher is committed to developing strong and sustainable relationships, focusing on excellence, innovation and commitment.

Suite 900, 332 - 6 Avenue SW Calgary, AB Canada T2P 0B2 E: inquiries@connacheroil.com

TSX: CLL WWW.CONNACHEROIL.COM


future in situ technology

photo: photos.com

The evolution and future of in situ oilsands recovery technology

By Ian D. Gates and Jacky Wang Department of Chemical and Petroleum Engineering Schulich School of Engineering University of Calgary

e av y oi l and oilsands reservoirs

40–60 per cent for steam assisted

displayed in Figure 1. Typical original

making bitumen mobile within the res-

gravity drainage (SAGD).

reservoir temperatures range between

ervoir. After the bitumen is mobilized,

in Alberta, host

For cold producible reservoirs, in

7ºC and 13ºC for the majority of oil-

a drive mechanism must be available

approximately

general, the in situ viscosity of the live

sands reservoirs where the viscosity of

to move the mobilized oil to the pro-

1.7 trillion barrels

oil must be lower than approximately

the bitumen is over one million cP. By

duction wellbore. Thus, there are two

of heav y oil and

35,000 cP. With sufficient solution-

raising the temperature to greater than

requirements of technically success-

bitumen. This is a

gas drive, oil can be recovered, with

200ºC, the oil viscosity drops to about

ful oilsands recovery processes: first,

significant fraction of the global

or without sand, from these reservoirs

six cP. Thus, heating bitumen to lower

mobilize the oil, and second, deliver

estimated six trillion barrels of heavy

at economic rates. The majority of

its viscosity provides one means of

the mobilized oil to a production well.

oil and oilsands reserves. The key

unconventional oil in Alberta is con-

challenge faced by operators in

tained in oilsands reservoirs. The

producing heavy oil and oilsands

bitumen contained in these reser-

reservoirs is the viscosity of the

voirs often has very low solution-gas

oil. Permeabilities are relatively

content and, given its viscosity, it is

10,000,000

high, often being between one and

essentially immobile within the res-

eight darcys (D), but oil viscosities

ervoir with virtually no natural drive

1,000,000

range in the tens of thousands of

energy. Thus, to move bitumen to a

centipoise (cP) for heavy oil to the

production well in an oilsands res-

hundreds of thousands to millions

ervoir implies that first the oil must

of cP for bitumen. Consequently,

be mobilized. One key property of

oil recovery factors average at

bitumen is that its viscosity drops by

about 10 per cent for cold heavy oil

five to six orders of magnitude when

10

production, about 25–35 per cent

it is heated to over 200ºC. An exam-

1

for cyclic steam stimulation (CSS,

ple of the dependence of Athabasca

also referred to as huff’n’puff), and

bitumen viscosity on temperature is

56

Canadian heavy oil association

Figure 1: Dependence of Athabasca bitumen viscosity on temperature (Mehrotra and Svrcek, 1986).

VISCOSITY, cP

100,000 10,000 1,000 100

0

50

100

150

200

TEMPERATURE, deg. C

250

300


Another key challenge faced by oil-

within an oil column can be of sim-

steam injection–bitumen production

condensate and mobilized bitumen)

sands operators is the heterogeneity

ilar order of magnitude as that of

cycles are repeated until the overall

are produced from the reservoir

of the reservoirs. Heterogeneity

permeability variations.

process is no longer economic. One

through the bottom well. Typically,

key benefit of CSS is that it uses a

steam is injected at sub-fracture

single well—in field practice, verti-

pressure in SAGD operation. In

within oilsands reservoirs ranges from sub-pore scale to kilometres.

THERMAL RECOVERY METHODS

A list of reservoir features with

Thermal recovery methods, largely

cal, deviated and horizontal wells

SAGD, the major drive mechanism

differing length scales is as follows:

steam-based recovery processes,

are being used. The major drive

is gravity drainage. Thus, SAGD

• Water Films: < microns

have been used to recover bitumen

mechanisms in CSS are forma-

can be done in reservoirs with thin-

• Fines: < microns

from oilsands reservoirs. Currently,

tion recompaction (steam fracturing

ner caprock (required for CSS to

• Pores: microns to tens of microns

two processes have emerged as

dilates the reservoir lifting the over-

withstand steam fracturing) and res-

• Sand Size: 10 to approximately

commercial technologies: CSS and

burden, leading to surface heaves

ervoirs with low solution-gas drive.

SAGD, as shown in Figure 2.

of order of tens of centimetres) and

In practice, steam is usually injected

100 microns • Breccia: millimetres to centimetres • Shale Layer Thickness: millimetres to centimetres to metres

Figure 2: (a) Cyclic steam stimulation and (b) steam assisted gravity drainage.

• Brecciated Intervals: centimetres to metres • Calcite Nodules: centimetres to metres

(a)

(a)

SURFACE

• Intraformational Water Zones: metres to tens of metres • Top/Bottom Thief Zones: metres to tens of metres

OILSAND RESERVOIR

• Oil Column Thickness: metres to tens of metres • Shale Layer and Point Bar Mud • Layer Extents: metres to tens to hundreds of metres

(b)

(b) PRODUCE BITUMEN + WATER

1. INJECT STEAM

2. SOAK

CROSS-SECTION

INJECT STEAM

• Mud Plugs (point bar): tens to hun-

3. PRODUCE BITUMEN + WATER SURFACE

STEAM CHAMBER

OILSAND RESERVOIR

dreds of metres

PAY, H

• Viscosity Variations: metres

INJECTION WELL NATIVE BITUMEN

(vertical variations) to kilometres BITUMEN FLOW

(horizontal variation) • Faults: metres to tens of metres

PRODUCTION WELL

• Depth: tens to hundreds of metres • Reservoir Extent: kilometres to In CSS, wet steam is injected into

solution-gas drive in early cycles,

at a constant or variable pressure

Beyond pore, geologic and

the oilsands formation at pressures

and as the steam depletion chamber

(starting high and reducing as the

structural heterogeneities, there

greater than the fracture pressure

grows within the formation, gravity

process evolves, as described in

are fluid compositional heterogene-

of the reservoir. Steam fracturing

drainage plays a major role in later

Gates and Chakrabarty, 2006).

ities that result in viscosity variations

occurs, which distributes the steam

cycles. In practice, steam is injected

in bitumen reservoirs (Larter et al.,

within the formation without displac-

at a couple megapascals (MPa)

ery processes for bitumen from

2008). Typical viscosity variations

ing a significant fraction of bitumen

above the fracture pressure (e.g.

Canadian oilsands reservoirs has

vertically through oil columns are

from near the well area. After the

11–13 MPa at Cold Lake, Alta.,) and

occurred since the 1960s. Most

between 10 and 20 times; the top

target steam has been injected,

production is done until the bottom-

technologies have focused on steam-

oil is usually lower viscosity than the

the well is put on production until

hole pressure is a few hundred

based recovery processes, although

bottom oil. In the horizontal direc-

the oil rate is no longer economic.

kilopascals (kPa). In SAGD, two

there are many that inject air or oxy-

tion, the viscosity varies roughly two

Thereafter, steam injection restarts

parallel horizontal wells, one located

gen to achieve in situ combustion.

to five times over length scales of

until the target volume is injected

above the other, are used. Steam is

Some have focused on vertical wells,

about 500–1,000 metres. At steam

and then production re-commences

injected into the reservoir through

others on horizontal wells, and some

temperatures, the viscosity variation

until the oil rate is uneconomic. The

the top well and fluids (steam

on combinations of both.

tens of kilometres.

The evolution of in situ recov-

the first quarter century: 1986-2011

57


future in situ technology

Agents for bitumen mobilization

viscosity so that it is easier to produce

The first requirement for a techni-

production (Freeman et al., 2008).

or is potentially producible by cold

cally successful bitumen recovery

Heat sourced from resistance heat-

process is mobilization of the in

ing has been evaluated in oilsands

situ bitumen. Figure 3 presents the

reservoirs (Shell Canada Limited’s

process octagon, which illustrates

in situ upgrading project, E-T Energy

various agents used to mobilize heavy

Limited’s electrothermal dynamic

oil and bitumen, and the recovery pro-

stripping in situ heating process and

cesses associated with the agents.

Athabasca Oil Sands Corp.’s thermal

For bitumen reservoirs, the most-used

assisted gravity drainage (TAGD) pro-

agents are steam (CSS, SAGD) and

cess). Shell’s process uses resistance

steam and solvent, such as solvent-

heaters to upgrade the oil within the

aided process (SAP), expanding

reservoir, whereas E-T Energy’s pro-

solvent SAGD (ES-SAGD) and liq-

cess injects current and water into the

uid addition to steam for enhanced

formation to mobilize and move oil to

recovery (LASER).

production wells. TAGD uses an array

In recent years, there has been

of horizontal resistance heater wells

more interest in air injection (in situ

to heat the well and is being piloted in

combustion) in the form of the toe-

a bitumen-laden carbonate reservoir,

to-heel air injection (THAI) process

where it relies on heat conduction as

(Greaves and Turta, 1997). Petrobank

the mechanism to distribute heat within

Energy and Resources Ltd. con-

the reservoir. The target is not to crack

ducted a pilot project in the McMurray

or upgrade the oil, but simply to heat

Formation. THAI uses a vertical well

it. Other new pilots on the horizon

to inject air or oxygen into the oil-

include the enhanced solvent extrac-

sands reservoir to drive a fire front

tion incorporating electromagnetic

along the trajectory of a horizontal

heating (ESEIEH) process (Laricina

well, into which mobilized bitumen

Energy, 2010). This combines sol-

and other fluids drain. Encana’s air

vent extraction with electromagnetic

injection and displacement process

radio frequency (RF) heating, which,

combusts a top gas zone to drive gas

in theory, effectively replaces steam.

to a production well, and also to re-

RF-based heating processes have

pressurize the formation and heat the

longer transmission length scales than

underlying bitumen zone to reduce its

that of conductive heating.

Figure 4: Example of vertical well process for production of oilsands reservoirs.

STEAM

58

PRODUCED HYDROCARBONS AND WATER WATER

Canadian heavy oil association

Figure 3: The process octagon: agents for bitumen mobilization and processes found in the patent and literature.

AIR

CAPRI CATALYST

CASPER

SAGD/CSS/SF

BREA SAGD + CAT

ES-SAGD STEAM TSS-SAGD SAP LASER SAVEX SAVES SOLVENT

BIOLOGICAL

EM CURRENT ULTRASONIC MICROWAVES

VAPEX PHASR CSP SAGP

BRUTES NON-COND. GAS

SURFACTANTS/ADDITIVES

AI = air injection, BREA = biological recovery of energy assets, BRUTUS = bulk reservoir upgrading technology for unconventional systems, CASPER = catalytic air steam process for enhanced recovery, CAPRI = THAI with catalyst bed surrounding the production well, CSP = cyclic solvent process, CSS = cyclic steam stimulation, EM = electromagnetic, ES-SAGD = expanding solvent steam-assisted gravity drainage, LASER = liquid addition to steam for enhanced recovery (solventassisted cyclic steam stimulation), PHASR = phased steam solvent recovery, SAGD = steam assisted gravity drainage, SAGP = steam and gas push, SAP = solventaided process (essentially the same as ES-SAGD), SAVEX = steam assisted solvent extraction, SAVES = solvent assisted vapour extraction, SCUM = steam and catalyst for upgrading with microwaves, THAI = toe-to-heel air injection, TSS-SAGD = taperered steam and solvent steam assisted gravity drainage, VAPEX = vapour extraction.

Recovery processes with vertical wells

water injection rather than steam

Figure 4 displays examples of vertical

injection. The sensible heat value of

processes for production from oilsands

water is roughly one-quarter that of

formations. The processes range from

the enthalpy of live steam, thus the

single-well schemes—equivalents of

heat-carrying capability of hot water

SAGD, but applied to a single vertical

is small and, with heat losses in the

well—to injection/production well pairs.

injection well, the amount of energy

Most of the processes appear to meet

delivered to the reservoir could be

the two requirements of a technically

insufficient to mobilize enough oil to

successful oilsands recovery process:

make the process economic. There

the oil is mobilized and is delivered to a

are many air injection processes

production well. However, given thermal

that use in situ combustion to heat

conduction length scales are of order

the reservoir to produce upgraded

of tens of metres, if the interwell spac-

bitumen. At present, there is only one

ing is too great, much of the oil column

commercial vertical well process for

between the wells may remain cold

oilsands reservoirs: vertical and devi-

and be practically immobile bitumen.

ated well CSS.

Some processes focus on hot


Recovery processes with horizontal wells

along its entire length and produce

(ES-SAGD), solvent and steam is

have been proposed—the basic unit

along the length of the well—both

injected into the formation (Nasr

in Fast-SAGD-like processes (Cyr et

Figure 5 shows examples of oilsand

processes involve complex in-well

and Isaacs, 2001). Combination

al., 2006; Coskuner, 2009; Arthur et

recovery processes that use hori-

tubing string/packer arrangements.

processes of HWCSS and SAGD

al., 2009) is a SAGD well pair and an

zontal wells. The key benefit that

Shell has used single J-wells for

horizontal wells provide is extended

CSS in the Peace River deposit

reach into the reservoir, enabling

(Brissenden, 2005).

offset CSS well (also

Figure 5: Examples of horizontal well processes for production of oilsands reservoirs.

a sub-fracture injection/production well sometimes referred

greater steam injectivity and fluid pro-

In multiple-well processes, steam

ductivity. Some processes use single

is usually injected into the top well

to as a wedge well).

horizontal wells for both injection

and fluids are produced into the bot-

According to reser-

and production (e.g. horizontal-

tom well. An example is SAGD and

voir models, the CSS

well CSS, or HWCSS, Smith and

J-well and gravity-assisted steam

well helps to grow

Perepelecta, 2004), whereas others

stimulation (JAGD, Gates et al.,

the steam depletion

use multiple horizontal wells posi-

2009). In JAGD, the bottom well

chamber within the

tioned either one above the other

is a J-well and the steam chamber

reservoir beyond what

or laterally offset from each other

starts at the toes of the well pair

would be achieved

within the oil column. In single-well

and grows towards the heels of the

by the SAGD well

processes, two modes of operation

wells: it is a toe-to-heel steam-based

are presented: the first configura-

gravity drainage process. There are

tion is HWCSS, and the second

solvent-only and thermal-solvent

configuration is one where injection

equivalents of SAGD: VAPEX uses

and production occur simultaneously

the SAGD well configuration, but

within the same well. The latter pro-

instead, a vapour solvent is injected

cesses typically either inject at one

that can condense at the edge of

end of the well and produce at the

the depletion chamber (Butler,

other, or inject at the top of the well

1997). In expanding solvent SAGD

alone. Of all of the

SOLVENT INJECTION

horizontal well processes proposed for oilsands reser-

OVERBURDEN

voirs, the only clearly

FORMATION PUMP

VAPOUR OIL DRAINAGE

established commercial ones in the field are HWCSS, J-well CSS and SAGD.

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the first quarter century: 1986-2011

59


future in situ technology

Figure 6: Examples of vertical and horizontal well processes for production of oilsands reservoirs.

Recovery processes with vertical and horizontal wells

CSS wells, there are no currently

Figure 6 displays examples of

processes for oilsands reservoirs.

proposed processes that use com-

12

10

20

22

24

26

RESERVOIR TOP STEAM CHAMBER DRIVE / DRAINAGE 20M

Figure 7 shows examples of pro-

conformance of the injectant

posed processes with complex

along the length of the horizontal

well trajectories. These processes

well. In some processes, the hori-

include the soak radial (Parsons,

zontal well is added to a vertical

2000) and soak radialâ&#x20AC;&#x201C;Haybob-type

well process as an infill well (e.g.

well configurations tested by Shell

horizontal wells between rows of

in the Peace River oilsands deposit

CSS wells). The HASDrive process

(Roche, 2005). These processes

consisted of a vertical steam injec-

were not commercial due to exces-

tion placed at the toe of a horizontal

sive steam to oil ratios. At this point,

production well (Porter, 1984). It

no commercial processes use com-

was tested in the field, but its per-

plex wells with curved trajectories or

formance was not favourable. The

radial arrangements of wells.

to guide the fire front and produce

Recovery processes with multiple injection agents

mobilized bitumen. Other than the

The most commonly used alternative

horizontal well infill wells between

to steam injection is solvent, and for

to inject air and a horizontal well 220-440M

Canadian heavy oil association

zontal wells to enable improved

THAI process uses vertical wells

RESERVOIR BASE

60

use vertical wells along the hori-

wells. Many of these processes

16

vertical-horizontal well combination

Recovery processes with multilateral, radial and curved wells

binations of vertical and horizontal

14

well-established commercial


Figure 7: Examples of complex curvilinear or radial well processes for production of oilsands reservoirs.

Mokrys, 1989) have been tested in oilsands reservoirs with little commercial success (DOVAP Pilot,

SOAK RADIAL - HAYBOB

SOAK RADIAL - TUNING FORK

2004; Encana, 2003). Key issues faced by the VAPEX pilots were the length scales for solvent mass transport and hydrate formation. For post-cold produced heavy oil reservoirs, multi-component solvent-only processes have been tested some with success (the JIVE process). Another heated solvent-only process is the N-Solv process (N-Solv Corp., 2011), which has yet to be tested in the field. Other multiple injec-

SOAK - TUNINGinvolve FORK steam and tantRADIAL processes oilsands recovery processes, the

by Nexen Inc.). In general, the results

have been done on steam and gas

air injection that can be interpreted

most tested solvents in the field are

of thermal-solvent processes in the

push (SAGP) where methane has

as wet in situ combustion processes.

butane (SAP at Senlac and Christina

field have demonstrated uplift in pro-

been added to the injected steam:

For example, CSS followed by air

Lake operated by Cenovus Energy

duction rates and reduction of the

the methane replaces some frac-

injection was done at the Margarite

Inc., and solvent-assisted CSS oper-

steam to oil ratio (although these

tion of the steam and accumulates

Lake (Hajdo et al., 1985) and Morgan

ated by Canadian Natural Resouces

results were not the case for the

at the top of the chamber, lower-

Field (Marjerrison and Fassihi, 1995)

Limited), diluent (gas condensates,

Canadian Natural and Nexen pilots).

ing heat losses with consequent

pilots. These processes appear to

LASER at Cold Lake operated by

Typically, less than five per cent sol-

reduction of the steam to oil ratio

have been technically successful;

Imperial Oil Limited) and Jet-B (jet

vent is added to the steam (on a

(Butler, 1997). Solvent-only pro-

however, they were not pursued

fuel–grade fuel, ES-SAGD operated

volumetric basis). Other field trials

cesses such as VAPEX (Butler and

for larger-scale commercial

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the first quarter century: 1986-2011

61


future in situ technology

implementation. Another multiple-

commercial technologies for recov-

the viscosity variation of the oil is

solvent additives to steam, cold and

injectant system that is being evalu-

ery. These processes use relatively

mapped throughout the reservoir

warm solvent flooding, RF stimula-

ated is the solvent-current process

simple well configurations, with

so the sweet spots can be tar-

tion and electrothermal resistance

ESEIEH (Laricina Energy, 2010).

relatively simple operating strate-

geted first, advanced geological

heating are all restatements of rel-

Although the idea of using RF

gies and relatively simple injectants

modelling and reservoir modelling

atively old existing technologies.

emitters to mobilize bitumen is not

(steam injection at constant pres-

and risk analysis capabilities, and

The next 50 years of process

new, its combined use with solvent

sure or declining pressure as the

4-D seismic imaging methods to

design will be exciting, with not only

appears to be novel. Currently, the

operation evolves or variants with

increase understanding of the res-

requirements on productivity, but

only commercial oilsands recovery

solvent additives). The analysis of

ervoir architecture and locations

also controls on greenhouse and

process that uses multiple-injection

various well configurations pro-

of rich oil and evolution of deple-

acid gas emissions and water con-

agents are the steam-solvent SAP

posed in the patent and literature

tion chambers within the reservoir.

sumption. This means that there will

and LASER recovery processes,

reveals that simplicity is the rule.

The past 50 years of oilsands

be continued focus on water-free

which are steam-solvent variants

There are no clearly established

recovery process design demon-

processes since steam generation

of SAGD and CSS.

commercial in situ technologies that

strates that relatively simple well

is the largest contributor to green-

feature both simultaneous recovery

configurations and injectants have

house emissions in steam-based

and upgrading as of yet.

persisted through time. Complex

recovery processes. Although it is

Other technology advances have

wells, complex injection patterns

not completely certain, given recent

As illustrated on the previous pages,

been made to support oilsands

and specialized well internal infra-

developments in technology, the

there have been many proposed

recovery processes. These include

structure have not been adopted by

future of oilsands recovery pro-

well configurations for recovery

directional drilling, high-temperature

industry. The results suggest that

cesses will most likely involve:

processes of oilsands reservoirs.

pumps that enable low-pressure

the majority of new recovery pro-

• Improved monitoring of steam

Horizontal wells have been a major

SAGD processes, limited-entry per-

cesses that have evolved through

chambers, including the use of

enabling technology for oilsand

forations and other complex well

time are incremental adds on exist-

nanosensors and nanoreporters

recovery processes. Currently,

completions, smart well technol-

ing technologies. For example, wet

• Tailored steam-solvent or solvent-

CSS (vertical, deviated and hori-

ogies with interval control valves,

in situ combustion, infill (wedge)

only process design with op-

zontal well) and SAGD are the major

mobility mapping methods where

wells, non-condensable gas or

timized injection conditions to

Evolution and future of recovery process design

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62

Canadian heavy oil association


ensure solvent recovery and reuse

• In situ gasification of oilsands

• Electrical recovery processes,

reservoirs to produce energy in

including RF ones (in combination

the form of hydrogen and syn-

with steam/water/solvent)

thesis gas

• Steam-air or air-only injection processes

• Biological processes (e.g. methanogenesis: oil to gas), and

capabilities with improved forecasting capabilities (integrated

• Improved geological and fluid

feedback between geological and

compositional mapping through

reservoir simulation models and

• Nanotailored emulsion injectants

geological modelling, and more

operations so models evolve as

or conformance control agents

detailed reservoir simulation

operation evolves).

Ian D. Gates is an associate professor in the Department of Chemical and Petroleum Engineering at the University of Calgary. He worked for seven years in the industry prior to joining the university. His primary research interests are in 1. thermal and thermal-solvent methods (SAGD, CSS, ES-SAGD and SA-CSS) and optimization of these technologies for in situ heavy oil and bitumen recovery, energetics and efficiency, emissions and water use, 2. well wormhole models for cold production with sand, 3. imaging reservoirs by using white noise reflection processes, 4. application of smartwell technologies for adaptive production of heavy oil fields, 5. support vector machine learning for reservoir characterization, 6. in situ gasification (in-reservoir reaction engineering), and 7. biofilm development in porous media. Dr. Gates holds a B.Sc. from the University of Calgary, a M.A.Sc. from the University of British Columbia and a PhD from the University of Minnesota, all in chemical engineering. He is a registered professional engineer in Alberta.

Jingyi (Jacky) Wang is a research engineer in the Department of Chemical and Petroleum Engineering at the University of Calgary, specializing in unconventional resource recovery process design and numerical simulation. He has more than 10 years of combined chemical engineering and reservoir engineering experience working with industry and research, with expertise in the areas of thermal reservoir simulation, cold production, VAPEX, CO2 sequestration, hydrate recovery reactive numerical modelling, enhanced oil recovery and production optimization. He holds a B.Sc. in chemical engineering from East China University of Science and Technology and an M.Eng degree in reservoir engineering from the University of Calgary. He is a professional member with the Association of Professional Engineers, Geologists and Geophysicists of Alberta and the Society of Petroleum Engineers.

the first quarter century: 1986-2011

63


future in situ technology

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References

2008. The origin, prediction and

Arthur, J.E., Gittins, S.D., and

impact of oil viscosity heterogeneity

Chinna, H. 2009. US Patent 7556099.

on the production characteristics of tar

Athabasca Oil Sands Corporation.

sand and heavy oil reservoirs. Journal

2011. http://www.aosc.com/upload/

of Canadian Petroleum Technology,

media_element/75/03/first-energy-

47(1):52-61.

capital-2011-east-coast-energy-

Marjerrison, D.M. and Fassihi,

conference—mar-10-2011.pdf.

M.R. 1995. Morgan pressure cycling

Brissenden, S.J. 2005. Steaming

in-situ combustion project: performance

Uphill: Using J-Wells for CSS at Peace

and modelling, in De Haan, H.J. (ed.),

River. Paper 2005-107 presented at

New Developments in Improved Oil

Canadian International Petroleum

Recovery, Geological Society Special

Conference, Jun 7-9, 2005, Calgary,

Publication. 84:275-286.

Alberta.

Mehrotra, A.K., and Svrcek, W.Y.

Butler, R.M. and Mokrys, I.J. 1989.

1986. Viscosity of compressed Athabasca

Solvent Analog Model of Steam Assisted

Bitumen. Cdn. J. Chem. Eng. 64:

Gravity Drainage. AOSTRA Journal of

844-847.

Research, 5:1.

N-Solv Corporation. 2011. http://

Butler, R.M. 1997. GravDrain’s

www.n-solv.com/process.htm.

Blackbook: Thermal Recovery of Oil and

Nasr, T. and Isaacs, E. 2001. US Patent

Bitumen; GravDrain Inc., Calgary, AB.

6230814.

Butler, R.M. 1997. The Steam and Gas

Parsons, L.J. 2000. US Patent

Push (SAGP). The Petroleum Society,

6050335.

Paper No. 97-137, pp 1-15, Jun. 8-11.

Coskuner, G. 2009. US Patent

Porter, L.T. 1984. US Patent 4460044. Roche, P. 2005. Poised For Growth.

Application US 2009/0288827.

Shell’s Peace River Project Is One Of

Cyr, T., Coates, R., and Polikar, M.

Alberta’s Oldest Thermal Bitumen

2006. US Patent 6257334.

Developments.After Decades Of

ET-Energy Inc. 2011. http://www.

Innovation, The Company Is Gearing

e-tenergy.com/et-dsptechnology.php.

Up For Expansion. New Technology

Freeman, L.W., Nzekwu, B.I., and

Magazine, January 2005.

Belgrave, J.D.M. A Breath of Fresh

Shell. 2008. http://www.shell.

Air—Encana’s Gas Displacement

com/static/investor/downloads/

Solution to the Gas Over Bitumen

presentations/2008/bichsel_csfb_

Issue. Paper 2008-497 presented at the

london_18032008.pdf.

World Heavy Oil Congress March 2008,

Smith, R.J. and Perepelecta, K.R.

Edmonton, Alberta.

2004. Steam Conformance Along

Gates, I.D. and Chakrabarty, N. 2006.

Horizontal Wells at Cold Lake. Journal

Optimization of Steam-Assisted Gravity

of Canadian Petroleum Technology,

Drainage (SAGD) in Ideal McMurray

43:11.

Reservoir. Journal of Canadian Petroleum Technology, 45(9):54-62.

Gates, I.D., Larter, S.R., and Adams, J.J. 2010. US Patent Application US2010/0065268.

Greaves, M. and Turta, A. 1997. US Patent 5626191.

Hajdo, L.E., Hallam, R.J., and Vorndran, L.D.L. 1985. Hydrogen generation during in situ combustion. SPE Paper 13661.

altusgroup.com energy@altusgroup.com

Laricina Energy Ltd. 2010. http:// www.laricinaenergy.com/uploads/news/ news_06_30_10.pdf.

Larter, S.R., Adams, J.J., Gates, I.D., Bennett, B., and Huang, H. 64

Canadian heavy oil association


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CHOA HALL OF FAME

Contributions of a lifetime CHOA inaugurates the first three members of its Hall of Fame

ver a span of 25 years, the

the top priority, CHOA has reached professional

Canadian Heavy Oil Association

maturity in stages.

(CHOA) has helped nurture and

As part of the celebration of its first quarter

shape an industry that was largely

century, CHOA has established a Hall of Fame.

unformed. In the mid-1980s, there

The board of directors chose the three inaugural

wasn’t a critical mass of people

honorary lifetime members to get the ball rolling,

fuelling momentum. Those involved

but going forward, members will be asked each

in heavy oil, isolated in their companies, saw a need

spring to submit nominations by early fall so the

to come together to create a body of knowledge

selections can be announced annually at CHOA’s

and a community.

Fall Business Conference.

These people built the CHOA as a uniquely

Whether nominees are low-key or prominent,

collaborative model, a grassroots membership of

board secretary Bill Whitelaw says, “We are looking

individuals devoted to sharing discoveries and in-

for contributions that rise above the great career

formation. The CHOA has grown up alongside the

dynamic, people who contribute by research,

sector, hurting when the industry hurt and thriving

policy innovation and technological innovation

in the good times. With value to members always

in ways that further the industry.” the first quarter century: 1986-2011

67


CHOA HALL OF FAME

Edward E. “Ned” Gilbert By Melanie Collison

Photo: Canadian Petroleum Hall of Fame

As a far-seeing 29-year-old back in the fall of 1951, Ned

where I can, if I am the first to apply for a tar sands permit, obtain proven

Gilbert, formally known as Edward E. Gilbert, went over his boss’

oil reserves for less than $1.40 per acre....”

head—in writing—to campaign for the opportunities the Athabasca tar sands held for Sun Oil Company of Philadelphia. Gilbert had been posted to Calgary in 1945, Sun Oil’s sole employee in

Known for his concern about the eventual decline of conventional oil production in the United States, Pew listened to Gilbert and himself became a champion of the oilsands. The rest, as they say, is history.

western Canada. He was to develop geological prospects, file reports and

Gilbert has a track record of converting his broad exposure to the explor-

make recommendations to head office. In his quest to understand the big

ation business into opportunities that people with more specific knowledge

picture in this energy frontier, he was witness to the Leduc No. 1 gusher in

often missed, and he has contributed to the growth of the industry through

1947 and soaked up knowledge from earth scientists on the leading edge,

academia and professional organizations.

such as Cam Sproule in the Arctic islands and Northwest Territories and Karl Clark in the Athabasca bitumen belt.

In 1986, Gilbert became the first industry director and instructor of the newly created petroleum land management program at the University of Calgary.

After his first foray out west, Gilbert headed home to finish his geology

Active in the Canadian Society of Petroleum Geologists, he was made

degree at the University of Wisconsin. He returned to act as a landman while

an honorary member in 1995. In 1999, he was named winner of the J.C.

George Dunlap came on board to run the business side of the branch office.

Sproule Memorial Plaque from the Canadian Institute of Mining, Metallurgy

The success at Leduc and the ease of producing light oil were hogging the

and Petroleum for his contributions.

spotlight to the degree that even Clark feared the oilsands might be valued

Two years later, Gilbert became an honorary member of the American

only as a backup when the easy fluids bled dry, but Gilbert wasn’t fazed. He

Association of Petroleum Geologists, a position bestowed upon individuals

started picking up permits in the Bitumount region north of Fort McMurray and,

distinguished by their service and devotion to the science and profession

in 1949, began scouting locations for a Sun Oil oilsands processing plant.

of petroleum geology.

The following year, he directed a three-year corehole drilling program

The sole remaining initial member of the Alberta Landman’s Association,

before acquiring Lease 86—the site of Suncor Energy Inc.’s base oilsands

Gilbert is in the Canadian Association of Petroleum Landmen Hall of Fame

operation today.

and in the fall of 2011 was inducted into the prestigious Canadian Petroleum

Gilbert ran into pushback, though. His local boss, Dunlap, and the Sun Oil board of directors in Philadelphia were of the opinion that developing the resource was too expensive. Undaunted, Gilbert wrote straight to Sun Oil chairman J. Howard Pew, sending copies to everyone else, saying, “I will not attempt to speak for the engineers and geologists, but I know of no other place in the world 68

Canadian heavy oil association

Hall of Fame. Ned Gilbert was selected as one of the inaugural honorary lifetime members of the CHOA in recognition of the instrumental role he played in the early development of Canada’s oilsands. Not one to rest on his laurels, Gilbert is currently focusing on Saskatchewan’s oil shale industry through his company, Burning Rock Oil Shale Ltd.


Dr. Roger Butler By Qi Jiang

Photo: Canadian Petroleum Hall of Fame

As Dr. Roger Butlerâ&#x20AC;&#x2122;s last student and one of his last

of commercial SAGD projects by drilling two horizontal wells in close prox-

colleagues, I am honoured to have had the privilege of working with

imity to one another, injecting steam into the upper well and collecting oil

him on both academic research and industry projects.

in the lower one.

Dr. Butler was a tremendous mentor, researcher and engineer with

Dr. Butler had the ability to apply general principles of physics in solv-

profound knowledge, not only in the petroleum industry, but also in

ing different engineering problems and his original theory describing the

fundamental science and engineering subjects. Indeed, it was his sweeping

SAGD process was an excellent example, involving a practical predictive

intellectual curiosity and his ability to combine perspectives from a variety

model developed after many years of observation from extensive experi-

of scientific disciplines that made it possible for him to bring about so many

mental tests and a deep understanding of the complicated physics. His

revolutionary improvements to the petroleum industry. Dr. Butler is well

ability to approach problems from fresh angles and to think about things in

known for his invention of steam assisted gravity drainage (SAGD) and

ways others simply could not was a source of inspiration to me and contin-

research on vapour assisted petroleum extraction (VAPEX) and steam and

ues to inspire so many students and engineers, particularly those working

gas push (SAGP) processes, each representing a significant breakthrough.

in the petroleum industry.

But what is not as well known is that early in his career, while working

During his long professional career, Dr. Butler authored over 130 publica-

in Sarnia, Ont., he became one of the first people ever to implement a

tions and two books, as well as more than 10 patents. In the late 1980s and

computer control system at a refinery.

early 1990s, he made several tours and spoke worldwide on the subjects

Dr. Butler was innately more than just a thinker; he was a doer and a

of horizontal well and SAGD technologies. He received several prestigious

builder who consistently executed his ideas into reality, and in the end he

awards from the Society of Petroleum Engineers (SPE) and the Canadian

lived a life of extraordinary contribution both to industry and to the world of

Society for Chemical Engineers for his pioneering work and innovative

academic research. Perhaps most importantly, Roger exhibited the charac-

research in oilsands development, using SAGD and related solvent pro-

ter of a true gentleman with humble manner, high integrity and professional

cesses such as VAPEX.

standards. He earned the full respect of the people he worked with, both in the academic world and in his ordinary life circle.

Looking back on Dr. Butlerâ&#x20AC;&#x2122;s life, it is hard to imagine what our petroleum industry would be like today without his many contributions. As we

When he first proposed the SAGD method in the late 1970s for the

witness the commercial success of oilsands development using SAGD

recovery of heavy oil and bitumen, he often faced doubt and disbelief about

and its related technologies, and the resulting transformative effect on

its practicability from colleagues who viewed the idea with amusement.

the petroleum industry and the economy of our nation, Dr. Butler will

Roger persisted until his theoretical prediction of the commercial SAGD

always be remembered for his influence on the hearts, the minds and

rates was verified at the Underground Test Facility in the late 1980s. And

the imaginations of me and so many of my colleagues. He passed away

to date, billions of barrels of bitumen have been produced from a number

in May of 2005. the first quarter century: 1986-2011

69


CHOA HALL OF FAME

David J. Theriault By Melanie Collison

Photo: Joey Podlubny

A 1980 graduate of the University of Alberta’s bachelor of

Theriault is active in the Association of Professional Engineers, Geologists

science program in mineral (petroleum) engineering, David Theriault

and Geophysicists of Alberta (APEGGA), the Canadian Institute of Mining,

was only six years into his career when CHOA was founded as a networking

Metallurgy and Petroleum, and the SPE. He has also served on the board

organization devoted to bringing technical information to a diverse membership

of the Alberta Chamber of Resources.

in a fledgling industry.

That’s in his free time.

Within the decade, he had already stepped up to the challenges of lead-

Theriault has carried corporate leadership roles for many years, working

ership and, as CHOA president for two consecutive years, he introduced

in oilsands, heavy oil, conventional oil and natural gas exploration, exploita-

new ideas to ensure the all-volunteer association survived the tough in-

tion, development and operations.

dustry downturn of the mid-1990s. In accordance with his belief that “sharing learnings floats all boats,” Theriault bolstered the collegial atmosphere of CHOA and set up opportunities for members to contribute their knowledge through less formal presentations than had been the practice in other organizations. In addition to being known for serving on CHOA technical com-

Currently senior vice-president, in situ and exploration, for the innovative Laricina Energy Ltd., Theriault signed on there as chief operating officer and vice-president in 2006. He put together his team, added 1.2 billion standard barrels of recoverable in situ oilsands resources and completed a 71-well resource delineation core hole program—in his first year.

mittees and its board of directors, Theriault has contributed to the

Theriault built his knowledge and experience and established his repu-

evolution of the heavy oil industry through long-term multi-stakeholder

tation for efficient capital and operating expenditures, as well as growth in

committees.

reserves and production in parallel with his involvement in CHOA.

He has been a prominent interpreter of industry-regulated practices such

Fresh out of school, Theriault joined Canada Cities Service Ltd. (now

as gas-over-bitumen production protocols, an issue that arose in 1996. He

Nexen Inc.) as an enhanced recovery engineer, doing reservoir and produc-

gave evidence at the 1999 Surmont regulatory hearing and, since 2000,

tion engineering for heavy oil thermal and enhanced oil recovery projects.

has been facilitating the industry-government gas-over-bitumen technical

He moved on to Husky Oil Operations Ltd. to become a project engineer

solutions committee.

at Lloydminster, doing project management and production engineering;

He also sat on the regional advisory committee that shaped the Lower Athabasca Regional Plan and the Alberta Land-use Framework, and was recognized by the Canadian Association of Petroleum Producers for his dedication and commitment. 70

Canadian heavy oil association

drilling and completions, facility design, construction and start-up for thermal oilsands projects. The next move was to Alberta Energy Company Ltd. (now Cenovus Energy Inc.) as a staff engineer leading a multidisciplinary team and directing


Energy Services Box 67 Site 20 RR2 Strathmore, AB T1P 1K5 600 - 105 21st Street East Saskatoon, SK S7K 0B3 steve@rockinghorseinc.com

Steve Marshman

“Safe to the Core”

President

(403) 934-1222 (Alberta) (306) 261-4609 (Sask)

exploration, exploitation, development and operations for thermal oilsands projects. By 1995, he was ready to launch his own consulting company, Triangle Three Engineering Ltd., which focused on primary, thermal, and mining and extraction projects. Theriault stepped out of Triangle to take the position of director of oilsands at Gulf Canada Resources Limited (now ConocoPhillips Canada), guiding its Surmont SAGD pilot, 100,000-barrel-per-day commercial projects, Syncrude Canada Ltd. interests, upgrading initiatives and meeting the gas-over-bitumen challenge. In 2001, Theriault focused again on Triangle and became involved with the management team that built Deer Creek Energy Limited. Deer Creek was sold to Total E&P Canada Ltd. in 2005 for about $1.7 million. When the Deer Creek management group moved on to found Laricina, he joined them. Laricina operates on the cutting edge of oilsands technology, including pioneering SAGD in the potentially vastly prolific bitumen carbonates.

Qi Jiang is a manager of enhanced oil recovery and reservoir engineering at Osum Oil Sands Corp. Dr. Jiang has over 25 years of research and industry experience, including reservoir studies, operation and management of the piloting and commercial activities for the recovery of heavy oil and bitumen from clastic and carbonate reservoirs. He has published more than 20 technical papers on the subject of thermal and non-thermal recovery processes, including SAGD, VAPEX, CSS and SAGP. Dr. Jiang holds PhD and M.Sc. degrees from the University of Calgary in chemical engineering. He is a member of SPE and APEGGA.

Melanie Collison is a senior freelance contributor to Oilsands Review magazine. She has made a specialty of reporting on technological advances in the oilpatch and the resulting improvements in environmental impacts, with a particular focus on profiling the personalities driving change.

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the first quarter century: 1986-2011

71


The Port of Thunder Bay Canada’s Gateway to the West

On behalf of the owners and staff of Three Streams Engineering, we congratulate

25 years

on of providing technical knowledge to the heavy oil and oilsands marketplace.

Three Streams Engineering is a multi-disciplinary, full-service EPCM organization serving the heavy oil and conventional oil sectors. Our upstream and downstream projects include a variety of SAGD components – facility design, well pads, and pipeline (both above-ground steam and underground) — within Western Canada. Three Streams Engineering is a privately owned midsized EPCM focused on building long-term partnerships by working with clients on the execution of their projects towards achieving their overall objectives.

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“providing engineering solutions to any challenge” W W W. Th r E E S Tr E A M S.C O M

We Congratulate CHOA for 25 Years of Service to Industry! In the last 25 years Coen Company has provided the industry with leading edge, low NOx combustion solutions to SAGD and OTSG applications. Coen equipment has delivered innovative combustion solutions, exceeding compliance expectations in the wake of continuous reduction in allowable emission limits.

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COEN is a registered trademark of Coen Company, Inc. in the US and other countries. ©2012 Coen Company, Inc.


The Canadian Heavy Oil Association at a glance Technical Program Technical Luncheons: •Reservoir and Production •Facilities and Upgrading •Drilling and Completions •Environment •Business, Transportation and Marketing

Conferences: •Slugging it Out •Fall Business Conference Heavy Oil 101 Beer and Chats

rking Opportuni o tie tw s Ne Technical Program

Social Program

Social Program

Golf Tournament Lobster Night Curling Funspiel Conversation Dinner Series

Publications

Publications CHOA Handbook Quarterly Journal of the Canadian Heavy Oil Association Heavy Oil and Oilsands Guidebook Innovation Series

Website directory and advertisers’ index Air Products and Chemicals Inc

www.airproducts.com..................................................... 21

Aker Solutions

www.akersolutions.com. ...............................................

61

Altus Group Ltd

www.altusgroup.com...................................................... 64

Arnett & Burgess Pipeliners Ltd

www.abpipeliners.com. .................................................. 13

AVEVA Canada

www.aveva.com.........................................................18-19

HOCS Projects

Schlumberger Canada Limited

Hunting Energy Services (Canada) Ltd

Serpa Petroleum Consulting Ltd

www.hocs.ca................................................................... 34 www.hunting-intl.com..................................................... 62

Indeck Power Equipment Company

www.indeck.com............................................................. 24

Kenwood Electronics Canada Inc

www.kenwood.ca.............................................................. 5

Cenovus Energy Inc

www.adifferentoilsands.com.......................................... 49

Sulzer Turbo Services Canada Ltd

www.suncor.com. ...............................inside back cover

www.laricinaenergy.com................................................. 48

www.cedagroup.com...................................................... 55

www.snc-lavalin.com...................................................... 27

Laricina Energy Ltd

Bantrel Co

CEDA International

SNC-Lavalin Inc

www.sulzerts.com. ......................................................... 13

www.kochmixer.com.................................................44-45

www.bantrel.com............................................................ 60

www.serpaconsulting.com............................................. 66

Koch-Glitsch Canada Company

Baker Hughes Canada Company

www.bakerhughes.com..................... inside front cover

www.slb.com....................................outside back cover

Loring Tarcore Labs

www.tarcore.com.......................................................16-17

Maxxam Analytics

www.maxxamanalytics.com........................................... 63

Suncor Energy Inc

Technip Canada Ltd

www.technip.com. .......................................................... 41

Thermal Energy Services Inc

www.thermalenergy.ca..............................................14-15

Three Streams Engineering Ltd

Coen Company, Inc

Nexen Inc

Connacher Oil & Gas Ltd

NGC Product Solutions

Thunder Bay Port Authority

Devon Canada Corporation

Oil Sands Imaging Inc

Upside Engineering Ltd

Dover Operating Corp

Oilflow Solutions Inc

Viking Pump of Canada Inc

PennWell Publishing Company

Voice Construction Ltd

www.coen.com. .............................................................. 72 www.connacheroil.com. ................................................. 55 www.devonenergy.com.................................................. 74 www.doveropco.com...................................................... 13

Environmental Refuelling Systems Inc

www.envirofuel.ca............................................................. 8

G & L Slotco Oil Field Services

www.gl-slotco.com. .......................................................... 3

Gemini Corporation

www.geminicorp.ca. ....................................................... 25

Golder Associates Ltd

www.golder.com. ............................................................ 65

Halliburton

www.halliburton.com...................................................... 42

www.nexeninc.com........................................................... 6 www.ngc-ps.com.............................................................11 www.oilsandsimaging.com............................................. 35 www.oilflowsolutions.com. ............................................ 20 www.pennwell.com. ....................................................... 37

PwC Management Services LP

www.pwc.com. ............................................................... 32

RAE Engineering & Inspection Ltd

www.raeengineering.ca.................................................. 66

Rocking Horse Energy Services Inc www.rockinghorseinc.com. ............................................ 71

www.threestreams.ca..................................................... 72 www.portofthunderbay.ca. ............................................. 72 www.upsideeng.com. ..................................................... 31 www.vikingpumpcanada.com......................................... 65 www.voiceconstruction.com. ......................................... 36

Volant Products Inc

www.volantproducts.ca. ................................................. 59

WorleyParsons Canada Ltd

www.worleyparsons.com. ................................................ 4

Zirco (1989) Ltd

www.zirco.com................................................................ 26

the first quarter century: 1986-2011

73


Isn’t it time your career picked up a little steam? Thermal Heavy Oil is an exciting growth area for Devon. It is part of our future and we’re working hard to significantly grow production over the next decade. With a significant acreage position in the southern Athabasca oil sands, demonstrated technical expertise and positive stakeholder relationships, Devon has earned the reputation of an industry leader. In addition to the award winning Jackfish facility and its two look alike projects, Devon is in the early stages of multiple development phases of a new program called Pike. In order to help us reach our goal, we need more great employees. If you’re interested in joining our growing team, please see the Careers section at jobs.dvn.com.

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Commitment Runs Deep


We see the possibilities. For Suncor Energy, growth brings opportunity and a set of new challenges. The biggest one of all: balancing increased development with the need to live up to our social and environmental responsibilities, both as an individual company and collectively as part of Canada’s oil sands industry. We believe the key is collaboration. A great example is the Oil Sands Leadership Initiative where Suncor works closely with four companies to improve environmental, social and economic performance in the oil sands industry. With a shared commitment to excellence and innovation, we can work together to build a more sustainable energy future.

36

%

decline

in amount

of fresh water Suncor has withdrawn from the Athabasca River since 2004*

Vincent Saubestre, executive director, Oil Sands Leadership Initiative

50

%

decrease

in GHG

emission intensity at Suncor’s oil sands operation from 1990 levels*

1.2

$

billion

actual and

planned investments in Suncor’s new tailings technology

performance partnerships possibilities

Find out more about Suncor’s track record and how we are planning to responsibly develop North America’s energy supply. www.suncor.com/sustainability

*As at December 31, 2010. ™ Trademark of Suncor Energy Inc.


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Heavy Heavy Oil Oil


Canadian Heavy Oil Association 25th Edition