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Athabasca Oil looking for oil sands TAGD partner

Cost could be half steam-assisted gravity drainage.


July 27, 2012
by CANADIAN PRESS

CALGARY: Athabasca Oil Corp. is on the lookout for a partner in the oil sands and that new technology it’s using in an emerging Alberta oil play has been showing encouraging results.

“The company has undertaken joint-venture initiatives during the first six months of 2012 and we are confident that an oil sands joint venture agreement may be concluded during the third quarter,” CEO Sveinung Svarte said on a conference call to discuss second-quarter results that showed a widening loss.

The Calgary-based company said it did a field test on its Leduc carbonate property 90 kilometres northwest of Fort McMurray, Alta., using thermal-assisted gravity drainage, or TAGD. The test confirmed the process, which uses electrical cables to heat the bitumen, enables the oil to flow to the surface.

“In our minds it demonstrated the reliability and performance of the heating cables,” said Ian Atkinson, vice-president of geoscience and development.

The more common technique to extract heavy oil from deep underground is steam-assisted gravity drainage, or SAGD.

Athabasca anticipates the cost of TAGD operation will be about half of a SAGD one, as it won’t require any steam to be generated or any water treatment facilities to be built. It can also soften up the bitumen at much lower temperatures than in SAGD.

Athabasca expects to get regulatory approval by year-end and to launch a TAGD pilot project in 2013, followed by a two-year drilling, construction and installation phase.
Athabasca happened upon the Leduc quite serendipitously. It initially purchased a property called Dover West for its oil sands potential and discovered after that directly below the sands lay 150 metres of bitumen-saturated rock.

Unlike the oil-soaked sands lying overtop, the Leduc more closely resembles a sponge with bitumen filling holes in the rock, making it very technically challenging to extract the oil.

Athabasca’s Leduc property is estimated to contain 16.3 billion barrels of total petroleum initially in place and 2.8 billion of contingent resource, according to an assessment by GLJ Petroleum Consultants Ltd. at the end of April, which was based on the use of SAGD technology.

Atkinson said there’s no reason to believe TAGD can’t be used in its oil sands operations, too.

In 2009, Athabasca entered into a joint venture with PetroChina in which it sold a 60% interest in its MacKay River and Dover oil sands lands.

Earlier this year, Athabasca exercised its option to sell the rest of MacKay River to PetroChina, making it the first oil sands operation to be fully controlled by a Chinese company.

The Dover project is expected to obtain regulatory approval early next year, and once it does, there will be an identical divestiture option.

“You don’t do JVs because you think they’re fun. You do JVs because you need the financing,” said Svarte.

“These are items that take time, but it’s important to get them right up front because they can be very large value drivers, especially some of these partners we look at are people who can bring markets and help us also to commit to pipelines in the future.”

© 2012 The Canadian Press