The Alberta oil sands have been the subject of much publicity and controversy over the past few years, so that anyone who can read or watch TV, should know that the oil sands are a vast and virtually limitless supply that’s going to backstop North American energy security for a century or more.
It's important to remember that a massive development like the oil sands, which costs literally millions of dollars for the companies engaged in the extraction process, not to mention the additional significant expenditures required to meet environmental regulations, to reclaim the land and to protect natural resources like drinking water.
Oil Sands Development Requires a Complete Support Network
Oil and gas producers are essentially procurement houses that go out and purchase the resources - manpower and equipment - that they need to extract oil.
Third parties are contracted for most oil sands activities, everything from drilling wells to building and operating pipelines, and even catering. The first link is the producers. For over half a century the major oil companies have been the only ones who could afford to be in the oil sands exploration business. And while the vision of trucks and shovels, typical of a normal mining operation, is in everyone's mind, more than 80 percent of the oil sands resource is actually too deep to be mined. New technologies have been and are being developed, and specialized steam injection techniques wiil form the basis of most new production over the next decade.
Little-kown Statistics About the Oil Sands
The Alberta oil sands are the third-largest source of proven crude oil reserves in the world, next to Saudi Arabia and Venezuela, and they produce 1.5 million barrels of oil per day, with 3.3 million barrels per day expected by 2019.
In terms of significant oil exports to our nearest neighbor, Alberta provides more oil to the U.S. than Saudi Arabia. On the magnitude of investment, the Canadian Energy Research Institute (CER) estimates a capital investment in the oil sands at $218 billion over the next 25 years.
Anyone who is concerned about Alberta's management of its environmental issues, particularly about the oil sands, will be interested to note that Alberta plans to invest $6.1 billion in green technology over the next five years, more than all the other Canadian provinces combined!
Recoverable Oil Sands Resources
Using currently available technology and under the current economic conditions, there are 170.4 billion barrels of recoverable oil in the oil sands deposits of Northern Alberta. In addition, there is another 315 billion barrels of potentially recoverable oil in the oil sands, which would require more favourable economic conditions or new technology to extract and process.
Approximately 80 percent of oil sands are recoverable through in-situ production, with only 20 percent recoverable by mining. Recovery rate percentages vary depending on the method of extraction, which are as follows:
- 5-10 percent for primary recovery of conventional oil
- Up to 20 percent using conventional enhanced oil recovery methods such as water flood or polymer flood.\
- Up to 35-40 percent bitumen using cyclic steam stimulation
- Up to 50-60 percent of bitumen using steam assisted gravity drainage
- Up to 90 percent of bitumen from mining
Oil Sands Research
There is extensive research on-going at Alberta universities. The Centre for Oil Sands Innovation at the University of Alberta and the Alberta Ingenuity Centre for In Situ Energy at the University of Calgary, focus on less energy-intensive upgrading practices of oil sands resources. New recovery technologies are funded through the Innovative Energy Technology Program, a $200-million Alberta government royalty credit.
Other technologies are also involved in funded research by the province, including nanotechnology, which is being explored at the National Institute for Nanotechnology at the University of Alberta, specifically aimed at using nanotechnology to explore and develop innovations that will accelerate improvements in the environmental performance of the energy sector. New tailings performance criteria, management technologies and practical solutions to reduce and potentially eliminate tailings ponds as we know them today, are also the subjects of funded research.
Research into improved in situ thermal extraction techniques will reduce -- or eliminate -- the industry's reliance on fresh water, reduce energy consumption and lower greenhouse gas emissions, which account for less than 1/10 of one percent of the world's greenhouse emissions.
Companies Active in the Oil Sands
Over the past 18 months there have been some high profile companies coming to invest in the oil sands and to offer investors the opportunity to participate in the new public companies being formed.
Both Canadian and foreign-based firms are investing, an indication of the importance placed on the oil sands and the potential financial returns. Foreign capital from China is backing companies like Athabasca Oil Sands and MEG Energy, and with China’s voracious appetite for overseas investment, there will inevitably be more new investment opportunities supported by Chinese capital.
Laricina Energy and OSUM Oil Sands are two new firms on the energy investment list and Calgary-based Peters and Co. recently did a valuation on both companies, noting they are going to be popular issues.
Horizontal Drilling and Steam Injection
The real key to the renaissance in oil sands reclamation, is horizontal drilling and steam injection. One technology which is considered to have reached a level of maturity is Steam Assisted Gravity Drainage (SAGD), in which pairs of parallel horizontal wells work in tandem to inject steam and bring oil back up to the surface. This is a sophisticated undertaking that requires the skills of a surgeon and some heavy iron.
Sources:
- Schaefer, K., et al (n.d.) How To Position Yourself for the Oil Sands Boom: Steady Investment Profits for Decades
Duane Sharp - I am a retired professional engineer (electronics), with over 40 years of writing experience in technology topics, with a focus on the IT ...
