By Edward Welsch
ALBERTA, Canada--Ten years ago, new oil field technologies
unlocked vast crude supplies from western Canada's oil-sands
deposits, propelling America's northern neighbor to the top echelon
of the world's petroleum repositories.
Now oil companies here are experimenting with technologies that
could unlock even more reserves from what is some of the world's
heaviest and stickiest petroleum. The new technologies could also
drive down the cost of producing oil in Canada.
One consortium aims to get oil flowing to the surface by sending
radio waves from huge antennae pushed through wells deep
underground-- adopting technology first developed for the U.S.
government to eavesdrop on underground bunkers.
Another company is working on inserting electrical heating coils
into wells to melt the oil, while other firms are tinkering with
petroleum-based solvents they hope to pump into wells to get more
oil out.
All the experimentation is aimed at improving a standard method
of oil-sands extraction: so-called steam-assisted gravity drainage,
or SAGD. (That is pronounced "Sag-Dee" in industry parlance.) That
technology is itself a recent breakthrough-- essentially injecting
superheated steam into wells to heat deposits of sticky bitumen, a
form of petroleum, making it liquid enough to be pumped to the
surface.
The technology was commercialized in Canada's northern Alberta
province early last decade, and helped enable oil companies to tap
deeper oil-sands reserves. For decades, most oil-sands development
had more in common with strip mining than conventional oil
drilling. Companies dig up a mix of bitumen and quartz sand and
wash the sludge down with hot water to extract the bitumen.
SAGD quintupled the amount of bitumen that may be possible to
recover in Canada, and helped lift Canada's overall recoverable oil
reserves to No. 3 in the world, behind Saudi Arabia and
Venezuela.
But those reserves are only a 10th of the 1.7 trillion barrels
of bitumen found in Canada. Alberta's Energy Resources Conservation
Board estimates there are also more than 400 billion barrels of
bitumen trapped in carbonate rock formations in Alberta, mostly in
a large formation called the Grosmont that stretches across the
center of the province.
"If we postulated that 25% of that can be recovered, Canada
could move to No. 1" in world oil reserves, said Glen Schmidt,
chief executive of privately owned Calgary energy-technology
company Laricina Energy Ltd.
Laricina is one of several companies including Royal Dutch Shell
PLC, Athabasca Oil Corp. and Husky Energy Inc. that are adapting
SAGD technology to rock formations like the Grosmont and trying out
new enhancements to cut the use of fresh water and energy, which
will bring down the overall cost and greenhouse gas emissions of
operations there. While SAGD doesn't gobble up as much surface area
as conventional oil-sands mining, it still uses lots of energy and
water. That makes it expensive and carries a big greenhouse-gas
footprint.
Basic SAGD technology uses two horizontal wells drilled parallel
to each other, one above the other. Natural gas is used to boil
water into steam, which is injected underground into the top well.
The steam heats and softens the bitumen, separating it from the
sand, causing it to drip down to the bottom well, which sucks it
back up.
Laricina is part of a consortium including large Canadian energy
companies Suncor Energy Inc. and Nexen Inc. that is testing
replacing the steam with an antenna, developed by Melbourne, Fla.,
telecommunications-equipment manufacturer Harris Corp. After being
fed down a well, the antenna blasts out heat, warming the
bitumen.
Nexen announced Monday that Chinese international energy company
Cnooc Ltd. plans to acquire it for $15.1 billion.
Mr. Schmidt said early tests show the technology could cut
energy use by 40%. It also removes the high upfront costs of water
treatment and steam generation facilities. That could cut the cost
the cost of SAGD production, which is currently around $55 to $65 a
barrel for most projects.
"If we eliminate steam, we eliminate potentially 60% of the cost
of a facility, which is huge," he said. The technology could be
ready as soon as 2019.
The antenna project got started back in 2008, when Harris was
working on technology aimed at improving underground listening
capabilities for the U.S. government.
As part of its research, Harris executives sought out oil field
experts experienced in horizontal drilling techniques.
"We were trying to gain access to underground facilities,
underground locations, so we had to bring in people who had
specialties in horizontal drilling," Wes Covell, a Harris vice
president, said. He declined to be more specific about what he said
was a classified project.
Harris executives had an epiphany when the drilling experts
mentioned the Canadian oil industry's problem of getting
energy-efficient heat to travel down horizontal wells into the
bitumen reservoirs deep underground.
Harris and other antenna designers try to reduce electromagnetic
heat as much as possible to improve the efficiency of a radio
antenna for communication. Harris "realized that we can take our
antennae and instead of using them for communications, we can use
them as a source of electromagnetic energy that generates heat,"
Mr. Covell said.
Athabasca Oil, another big Canadian oil producer, is testing a
similar electric-heating technology to unlock bitumen from
carbonate rock. The company inserts electric coils, made of the
same material as heating elements on a stovetop, into wells. If
tests are successful, Athabasca plans to start a commercial project
for its technology by 2018.
Laricina and several other companies are also testing adding
light hydrocarbon solvents to steam in SAGD wells to boost output.
The solvent dilutes bitumen, making it easier to flow.
Cenovus Energy Inc. is working on a solvent project that could
be rolled out commercially in 2017.
Jason Abbate, head of production engineering at one of Cenovus's
projects, said solvent technology could increase oil production
rates by up to 25% and cut the amount of steam and natural gas use
by up to 30%. It could also improve the percentage of oil that
producers can capture from bitumen deposits.
"If you can get 80% to 90% of that rather than the regular 70%
with SAGD, there's a big economic benefit for us," Mr. Abbate
said.
Write to Edward Welsch at edward.welsch@dowjones.com
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