This also states a reserve picture of 1.7 trillion barrels which is likely accurate, particularly with the advent of THAI. That it represents two thirds of the global reserve is daunting and we can expect that to stand up even with fresh discoveries in the deep sea and elsewhere.
THAI appears to produce crude at around $35 per barrel. How that will stand up as experience is gained is today anyone’s guess. I note that SAGD comes in at $60 per barrel in costs and that is naturally more expensive by far since it must produce steam with natural gas at some serious expense. At least the initial running costs are based on supplying compressed air to the toe. I expect to see THAI to swiftly replace SAGD particularly if the ultimate recovery hugely surpasses that of SAGD which is much lower than originally anticipated.
I believe that the method lends itself to significant optimization and that cost of $35 is likely to get a lot lower but not in the initial stage while the fire front is been fully established.
Black gold mine
Published: 08 December 2008 12:20 PM
Source: The Engineer
To its champions it represents a plentiful, secure source of fuel that could wean the West off its addiction to Middle East oil. To its detractors it is an environmental catastrophe in the making.
Despite the strong feelings on both sides, most agree that the oil-sand beneath the soil of Alberta, Canada represents the largest petroleum resource on the planet.
Canada's oil-sand reserve covers an area about twice the size of Wales and already hosts most of the world's oil majors plus a smattering of home-grown specialists. Between them they produce about 1.3 million barrels of crude oil a day from this unpleasant mixture of clay, sand, water and bitumen.
But there is much, much more — an estimated 1.7 trillion barrels more, or two thirds of the world's remaining petroleum reserves. Despite a recent slowdown triggered by the falling price of crude, there are plans to scale up production to 3.5 million barrels a day over the next decade.
Now for the bad news. To get the oil-sand out of the ground and turn it into useful fuel, huge amounts of energy are required and the process pumps vast quantities of CO2 into the air, creating giant lakes of toxic sludge. In comparison, conventional oil production looks like an environmental blessing.
While campaigners would like to see the industry shut down overnight many others, including Geoffrey Maitland, professor of energy at Imperial College London, believe the size and location of the resource makes exploitation inevitable. 'There's three or four times more of this stuff than there is conventional oil,' Maitland told The Engineer. 'If you could extract it today economically then it would transform overnight the balance of power in terms of where the hydrocarbon is.'
Against a backdrop of growing political pressure and falling crude prices (oil-sand is considered uneconomical when crude drops below $70 a barrel) the industry has no choice but to clean up its act. The question is, what can technology do to improve the economic and environmental profile of the dirtiest end of the oil business?
About three quarters of oil-sand activity is concentrated on the reserves that lie closest to the surface, which can be extracted using traditional open-pit mining techniques.The biggest producer, Syncrude Canada (a joint venture between firms including Imperial Oil and ConocoPhillips), generates about 350,000 barrels of oil a day.
At Syncrude's colossal facilities, dubbed Mordor by local activists, the biggest trucks and shovels in the world dig out the oil-sand and place it in enormous crushers before it is sent on huge conveyer belts to gargantuan separation vessels.
As the oil-sand at these facilities is so close to the surface, the mining costs are not high. It is at the separation and refining stage that the big inefficiencies begin to emerge.
To separate the bitumen from the ore huge amounts of water — about three barrels for every barrel of oil produced — are used to float the oil from the tar sand within the separation vessels. Unfortunately, this water also dissolves the clay that forms about 20 per cent of the oil-sand.
The resulting noxious sludge, or tailings, ends up in giant reservoirs where the water and clay can take up to 30 years to separate.
The size of these ponds — Syncrude's 540 million m3 Fort McMurray pond is the second largest dam in the world — is regarded by some as the industry's greatest problem.
A number of groups, including French fuel giant Total, are developing and testing expensive filtration systems that speed up the de-watering process.
However Dr Murray Gray, scientific director of Alberta University's Centre for Oil Sands Innovation, is carrying out fundamental scientific research into extraction methods that dispense with the need for water. The group's work is being funded by Imperial Oil.
'We would like to keep the clay with the sand. Current technology beautifully disperses this material in the water and that creates the tailing problem,' he said.
'We have a project looking at clay minerals in the oil sand and how they are distributed within the ore. We have made progress here and started to visualise ways of getting oil out without moving clays about.
'Another project, which should be ready for pilot testing in a year, involves adding special catalyst materials to crack the bitumen in order to avoid having to use water.'
There are even greater reserves to be found underground. About 80 per cent of Alberta's oil-sand is buried too deep for open mining and to get at these a different process is required.
Current approaches tend to mirror conventional oil extraction techniques by displacing the bitumen to the surface. However, bitumen does not flow like conventional oil. It is up to 10 million times more viscous and to reduce the viscosity to the point where it begins to flow requires the application of a lot of heat.
One method that appears to be gaining in popularity is a so-called in-situ technique known as steam assisted gravity drainage (SAGD). This technique, used by Shell, BP and others, pumps steam down a line at high pressure into the reservoir. After a number of weeks of continuous heating, the bitumen begins to separate from the oil-sand and drips down into a drainage line from where it can be extracted.
It is a novel process and, because some upgrading occurs in-situ, it is a more economical way of getting at oil-sand than surface extraction. But Imperial's Maitland says it is still relatively energy-inefficient and only recovers 10 per cent to 15 per cent of the resource.
'You need to generate a lot of steam at the surface and in generating this steam you generate a lot of C02,' he said. Also, the fraction of heat that goes into heating the oil as opposed to heating the rock is a relatively small percentage (20 per cent) so there's a tremendous loss in efficiency. The overall energy and C02 carbon footprint sums are very poor.'
An alternative to steam is the use of hydrocarbon solvents that require far lower injection volumes than steam and are therefore more energy efficient. One such process, vapour assisted petroleum extraction, is being used at Imperial Oil's Cold Lake oil-sand facility in Alberta.
Another alternative is electrical heating. Dr Bruce McGee, chief executive of E-T Energy, is a pioneer in this area and has developed an electro-thermal heating technique that he claims is the only one that can make oil-sand economical at current crude oil prices.
E-T Energy's electro-thermal dynamic stripping process is deployed by drilling a number of well bores next to the oil reservoir.
Electrodes of varying voltages are put down the bores and the voltage difference causes electricity to flow through the oil-sand and melt the bitumen. The firm is using the technology on its own reserves to produce 1,000 barrels a day and plans to increase production to 10,000 barrels a day by 2010.
McGee claims a number of advantages for his technology. It boasts big thermal efficiencies over SAGD, he said, and claimed that while SAGD only becomes economical when crude oil is $60 or above, his process remains competitive at $22 a barrel.
He added that while a steam plant can take months to set up, his technology takes just two weeks to install and will be producing oil within the year.
Another technical advantage, he claimed, is that the electrodes can be configured to provide feedback on the geometry and suitability of the reservoirs in which they are positioned. While SAGD plants can sometimes work for months before operators discover they are poorly positioned, this technique can respond far more rapidly.
In a similar initiative at an earlier stage of development, a group at Siemens is working on an electromagnetic induction-based system that it believes could be used to complement and, ultimately, replace steam.
Dr Bernd Wacker, the engineer behind the concept, said the idea is to embed a copper cable in the ground then pass a current through it, creating an alternating magnetic field that generates eddy currents, heats the surrounding sand and rapidly reduces the viscosity of the bitumen.
Wacker's team has tested the concept in a sand box at its lab in Erlangen, Germany, and is preparing for a second set of trials in a larger experimental facility. He hopes to begin field trials in Alberta by 2010.
Wacker's vision is that initially the system will be used to complement steam extraction methods, with the inductor running parallel to the steam pipe to provide an additional heating effect.
According to early calculations the process could, he claimed, lead to a 20 per cent improvement in the efficiency of extraction. In the longer term, if the coils were used to replace steam, he believes a 50 per cent improvement could be achieved.
While such techniques could go a long way to achieving the desired economic and environmental goals, Imperial's Maitland believes the oil-sand industry may be barking up the wrong tree.
'It strikes me that there's a greater analogy between tar sands and coal than there is with conventional oil,' he said.
The research carried out into the underground gasification or in-situ processing of coal may be more pertinent to the oil-sand industry.
One promising technique is the toe to heel air injection (THAI) process pioneered by Prof Malcolm Greaves at Bath University.
The key idea of the technique that has already undergone commercial trials with both Orion Oil and Petrobank is that rather than having to use additional energy at the surface to create vapour or steam, some of the in-situ heavy oil is used as a sacrificial fuel.
Air is injected into the reservoir, an underground combustion front is created and the high temperatures, of up to 400ºC, reduce the viscosity of the bitumen.
Because the temperatures are so much higher than those achieved using SAGD, the process also leads to some in-situ cracking and pyrolysis of the bitumen, creating other usable products including methane, CO and, if there is some steam, hydrogen.
A process such as THAI, claimed Maitland, begins to address some of the problems of oil-sand production. 'You use some of the in-situ material as your energy source. You're starting to produce some CO2 in-site, so you could capture some of it and use it to enhance recovery and sequester it within this heavy oil reservoir,' he said.
'It's also doing some in-situ processing so that you're starting to produce at the surface more of what you want.
'We're a million miles away from being very selective and optimised in all of this but I do believe that the road ahead with these heavier hydrocarbon materials is not to produce them the way we've produced conventional oil.'
But in-situ combustion raises big problems of its own. Maitland said there is a pressing need for simulation technology able to accurately predict the effect of lighting huge underground fires.
'You need really good models — you're not just modelling fluid flow but heat and mass transfer over a kilometre-length scale in geological environments that aren't well characterised.'
For instance, because the bitumen is effectively the glue that binds the tar sand together, its removal from deep underground could have serious consequences.
'If you combust this material and flow it, what are you doing to the mechanical properties of a formation?' asked Maitland.
'Can you maintain stable wells? Are you going to get subsidence or major changes to the subsurface?'
With crude prices hovering around $50 a barrel, these are questions to which the industry is going to have to find answers fast.
According to the Canadian Association of Petroleum Producers, investment in oil-sand expected for 2009 had fallen by 20 per cent. Recent decisions by both Shell and Petro-Canada to put planned expansion on hold are just recent examples of how investment is dropping off.
But despite the jitters Maitland, in common with many others, believes the oil-sand industry is here to stay.
'The fact that oil's gone down now is only a temporary thing,' he said. 'I think we will continue to see high oil and gas costs in the future and that the long-term investment in these things will be high.'
'There's been a lot of immediate reaction to the current economic situation and we will see some pulling back but I think in terms of long-term strategy the majors like Shell and BP are committed to seeing the heavier hydrocarbons as strategically very important.
'However, they realise that they've got to produce them in a much cleaner way in the future.'
Maitland added that with Barack Obama due to be sworn in as US president in January, there is also now an added political imperative.
'In order to use these reserves — which are absolutely crucial to the future of the provision of the amount of energy the world needs and security of supply — it must inevitably be done in a cleaner way because it's a matter of when, not if, legislation gets put in place.
'There will not be a window of opportunity to operate in a way where you can be profligate with energy consumption.'