In-situ takes the heat

TAGD steps up as a game changer.

October 10, 2012
by Matt Powell, Assistant Editor

There’s a lot of talk these days about how to move oil sands bitumen through super pipelines to US and Asian markets. But there are also some hot developments on the extraction side.

Techniques such as hydraulic fracturing aren’t popular topics of conversation among environmentalists, but Athasbasca Oil Sands Corp. has tested (and proved) a new technology that might actually generate some positive buzz.

The process is called TAGD (thermal assisted gravity drainage), which applies thermal conduction to soften the bitumen rather than super-heated steam. The process cuts water and energy use in half, and that’s a potential game changer in the extraction game.

Athabasca, which has a market capitalization of $5.4 billion, expects to receive regulatory approval by 2014 for the $50 million pilot located at the oil play 90 kilometres northwest of Fort McMurray. A two-year drilling, construction and installation phase will follow.

“We have a field test in full swing now,” says Bruce Roberts, Athabasca’s chief reservoir engineer. “The pilot will give us an understanding of what kind of recovery rates we can achieve. It’s not much different from SAGD [steam assisted gravity drainage] in terms of production, but it’s far more cost effective and much better for the environment.”

Roberts expects TAGD recovery rates to be about 65% – similar to SAGD. The pilot project will also give the company a better understanding of TAGD’s cost and energy requirements, he says.

The bitumen trapped in the company’s Leduc oil play lies below the oil sands in a carbonate formation that can’t be mined using other in-situ extraction processes.

SAGD uses super-heated steam to melt the viscous bitumen to a point where it flows to the bottom of a well bore. It’s sucked out from there by a twin well that’s about six metres deeper.

“Carbonate reservoirs have lots of fractures, so when you inject steam, it goes to the most conductive pathway,” Roberts says. “The steam flows into those fractures, which leads to uneven heating of the reservoir.”

SAGD uses a lot of water and energy, and requires support from significant surface operations. Dundee Capital Markets suggests in a report that about 70% of a SAGD operation’s capital costs go towards water handling, conditioning and treatment.

No water necessary
“Water usage is a big issue in Alberta, so cutting that out of the equation is a huge benefit,” he adds.

Because TAGD uses electric heaters and thermal conduction, it only requires about half a cubic-metre of water per cubic-metre of bitumen, a savings of more than six times that of SAGD. That’s a major competitive advantage.

“You’re not using steam, so you don’t need water, which cuts both energy and water costs right off the bat,” Roberts says. “Surface facilities are much simpler.”

Roberts says only about 3% of the oil sands is actually mineable. The rest needs to be extracted using in-situ processes. The company’s Leduc carbonate asset is one of those in-situ formations that has approximately 17 billion barrels waiting to be coaxed to the surface, enough for Athabasca to produce up to 40,000 barrels a day for about 40 years.

TAGD uses electrical heat tracing installed in horizontal wells to warm up the carbonate formation. During testing, Athabasca says two well pairs were drilled horizontally, and spaced eight metres apart. Electric heaters were installed in both wells, while a pump was installed in the lower well. It heats the carbonate to about 120 degrees C, which is warm enough to soften the bitumen so it floats to the surface.

“Heating by conduction is much more uniform,” Roberts says. “We’re essentially heating the rock instead of just the bitumen. Conductive heating isn’t impacted by fractures, which makes the process more energy efficient because it takes less to do the same job.”

Thermal heating reduces the bitumen’s viscosity to about 10,000 centipoise (cP), similar to cold-flow heavy oil, which is typically warm enough to be extracted using generic cavity pumps.

The company also announced in August it was seeking a partner for the project. Now, the rumour mill is swirling with news that Kuwait Petroleum is readying a $4 billion joint venture with Athabasca.

It’s no stranger to partnerships. In 2009, it sold a 60% stake in its MacKay River and Dover oil sands projects to PetroChina. Earlier this year, however, it sold the remaining 40% stake, making PetroChina the first Chinese company to fully control a play in the oil sands.

With a $50-million commitment to the pilot plant, Athabasca is betting TAGD will prove to be a more sustainable way of liberating some of the 17 billion barrels of sticky, black bitumen stored in Leduc’s subterranean bank vault.

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This article appears in the September/October 2012 issue of PLANT WEST.