Why Reducing Water Consumption Is Critical To Oil Sands Competitiveness
Despite considerable progress, thermal oil sands producers desperately need to reduce their water consumption. Are solvents the answer?
For the people who operate and manage steam-assisted gravity drainage (SAGD) projects, oil is almost treated as a by-product to what is actually their primary concern: water. Indeed, SAGD operations are basically just “water facilities with an oil problem,” according to Darren Massey, a programs leader at GE’s Customer Innovation Centre, a Calgary-based facility where energy companies try to tackle the fundamental challenges inherent in developing heavy oil. “Water is really the main resource that you have to manage here,” he says. “The energy that you put in to generate that high-temperature steam accounts for a substantial portion of your total costs.”
– Harbir Chhina, vice-president of oil sands development at Cenovus Energy
Water management and consumption is one of the central questions in addressing how to make thermal oil sands development cost-competitive with horizontal fracking or conventional production methods. Turning water into steam accounts for the largest cost in thermal oil production, both in terms of economics and its environmental impact. And, since oil prices began their rapid descent in late 2014, oil sands producers have faced a heightened pressure to reduce costs. Over the past 18 months, those companies have wrung substantial costs from across their operations by cutting staff and paying less for services and materials. But perhaps one of the most substantial and long-term cost savings could come through the use of solvents – typically propane or butane – that are used in the SAGD process to reduce water consumption and carbon emissions while boosting production yields.
Thermal developments are expected to make up the majority of future oil sands production, most of which will come from SAGD. A report published in December 2015 by IHS CERA (Cambridge Energy Research Associates) projected that SAGD production will increase from 34 percent of oil sands production in 2015 to more than 43 percent in 2025. Cyclic steam stimulation (CSS), for its part, is expected to fall to 8 percent of total production within the same time frame. It seems the longevity of the oil sands business is inextricably linked to water consumption.
The oil-water relationship is one that Harbir Chhina, the executive vice-president of oil sands development at Cenovus Energy, spends a lot of time thinking about. “Both the economics and the environmental footprint of oil sands are linked to SOR,” he says. Cenovus has managed some of the lowest steam-to-oil ratios (SOR) in the industry, and reached a record-low SOR in 2015 of 1.7 at its Christina Lake development, located about 150 kilometers southeast of Fort McMurray. (According to its 2016 guidance documents, the company expects an SOR of between 1.8 and 2.2 at Christina Lake over the year, and an SOR of between 2.6 and 3.0 at Foster Creek).
Chhina says there are countless aspects that make up a successful SAGD project, but he says water management and water reduction technologies are among the most substantial in cutting future costs. In the near term, he believes much of the cost reductions in SAGD will come through solvent-assisted production. The company was planning to commercialize its solvent aided process (SAP) at its Narrows Lake project before it was postponed in 2014. The process involves injecting butane down the wellbores along with steam, which raises yields while keeping energy requirements down. “Without solvents, SOR [at Narrows Lake] would have been 2.2,” Chhina says. “With solvents, we believe we can get to 1.7.”
He expects solvents to play an increasingly critical role in SAGD developments. “The future is in solvents,” he says. “If you have a 3 SOR reservoir, you can probably get to 2.5 or so. We think the improvement [from using solvents] is somewhere between 30 percent and 40 percent.”
Imperial Oil has plans to test a solvent-assisted SAGD (SA-SAGD) process at its Grand Rapids resource, which falls inside the company’s Cold Lake development. For years the company has been testing solvent technologies at its CSS projects, and uses about half a barrel of freshwater to produce a single barrel of oil – a drop of 88 percent since the mid-1970s when development began.
Part of the challenge is also a matter of public perception. The industry uses an average of 0.4 barrels of freshwater for every barrel of bitumen it produces, which amounted to a total of 12 million cubic meters of freshwater consumption in 2014. Much of that water is recycled, but a significant portion of the total water used could ultimately be used for drinking water. Exactly how much of that is “drinkable” is a topic of debate. Freshwater is measured as anything below 4,000 milligrams per liter (mg/l) of total dissolved solids (TDS). But that is a fairly high threshold, considering that the City of Calgary counts anything below 500 mg/l of TDS as freshwater. And the volume of water used has been falling: Total freshwater usage across the industry dropped by over 4 million cubic meters per year between 2008 and 2014.
There are also ongoing efforts to cut water out of the SAGD process entirely. Nsolv Corporation, a Calgary-based company, has a patented technology that uses a medium-temperature solvent to bring bitumen to the surface without the assistance of steam. The company is running a pilot program on a single well pair at Suncor’s Dover lease, and has produced 60,000 barrels of bitumen using the method.
“If we’re going to make the oil sands sustainable we’ve got to address the environmental concerns and we have to address the economic concerns,” says Joseph Kuhach, the CEO of Nsolv. “The only way to do that is come up with technology that allows us to develop the resources in the type of price environment we’re in today. We can’t bank anymore on the high prices we had just a couple years ago.” The company is still a long way from commercializing the technology, and Kuhach will require between $250 million and $350 million to do so. Still, many observers see solvents as a growing focus for oil sands producers as steam generation becomes more costly. “With natural gas prices being very low, you’re going to use steam because that’s what’s known,” says Eddy Isaacs the CEO of Alberta Innovates – Energy and Environment. “As time goes on, and as natural gas prices increase, then switching to using solvents will certainly be something you’ll want to do.”
There are other pilot projects that will test the viability of solvents alongside unconventional heating methods. Suncor Energy, Devon Canada, Nexen and U.S.-based Harris Corporation are in a joint venture to test an electromagnetically-assisted (termed “EASY”) technology, which uses radio frequency waves to melt the bitumen in a reservoir. A solvent is later injected to bring the bitumen to surface. The company began initial tests on the technology in mid-2015.
Over the past few decades, oil sands producers have made major strides in reducing water consumption. By investing in blowdown boilers and other technologies, the industry vastly cut down on the volumes of water it requires; today, by way of example, SAGD operations recycle an average of 90 percent of the water they use.
And yet, those improvements don’t come close to the advancements that are necessary to make the oil sands cost-competitive amid multi-year low oil prices. For his part, Chhina sees plenty of room to reduce water consumption and lower the energy required to get bitumen out of the ground. He says solvent development will gradually progress from today’s high-temperature (250C) solvent-assisted methods to a lower-temperature (80C to 100C) system, and eventually reach a low-temperature (10C to 15C) and low-pressure model, which would substantially cut back on energy requirements. “Ulitmately, we want to go to zero heat,” he says. “I believe, in comparison to a normal SAGD process, that it’s possible to reduce the emissions by somewhere between 80 and 90 percent.”
But these innovations don’t just need to be increasingly substantive – they also need to occur within an increasingly short time frame. “It takes seven years to come up with an idea and pilot test it [in the oil sands],” he says. “We need to do that in two to three years. We’re competing with light-tight oil. But I think our industry is ready for the challenge. There’s no other option here. This is a must.”
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