Conoco’s bitumen recovery at risk in northern Alberta

Aug 02, 2003 02:00 AM

by James Stevenson

Massive oilsands deposits in northern Alberta would be rendered inaccessible with current technology if nearby natural gas reserves are removed, energy giant ConocoPhillips said. Releasing hundreds of pages of previously confidential documents, ConocoPhillips said years of study at its Surmont oilsands pilot project northeast of Edmonton prove steam pressure is not contained by rock layers underground. And if the gas is removed, the pressure levels would be too low to extract the oilsands feedstock, or bitumen, with existing technology, the company said.
The ConocoPhillips data echoes the belief of Alberta's energy regulator, which decided to shut in 938 gas wells by September to protect the underlying bitumen. "We can't rely on shale layers as a seal to keep steam pressure up in the chamber," said Tom Trowell, manager of ConocoPhillips Surmont project. "And we now know that steam does get around or through these layers to the gas above."

The Alberta Energy and Utilities Board "believes there is an immediate and continued risk to bitumen recovery from the production of natural gas from an area of concern within the Athabasca oilsands area," it said late July. The previously confidential ConocoPhillips report has long been sought after by natural gas producers in the area, led by Paramount Resources, which claims that up to half of its production could be affected by the shut-in.
Paramount said that it was waiting to fully review the ConocoPhillips data before commenting. President Sue Riddell Rose has previously said scientific evidence to date is inconclusive in showing there is interaction between gas reservoirs and nearby oilsands deposits when they are injected with steam. ConocoPhillips says that isn't the case.
"Anyone who claims that the steam hasn't reached the gas is being premature," said company spokesman Peter Hunt. By releasing its data, the Texas-based oil and gas company runs the risk of getting dragged back into the heated debate between oilsands producers, gas producers and the province of Alberta, which claims it wants to protect the resource for maximum benefits.

ConocoPhillips joins the ranks of other large oilsands producers, like Petro-Canada, in supporting the shut-in of gas production in the area. Those fighting the order are a variety of gas producers ranging from Paramount and other smaller companies all the way to global giant BP. The dispute is so heated that anyone not directly involved is loathe to take sides.
"This is kind of a dogfight that we're not involved in," Rick George, president of oilsands giant Suncor Energy, told analysts. "And if you're not involved in a dogfight there's no reason to go in one."

The shut-in affects about 90 bn cf of gas, or about 2 % of Alberta's remaining reserves. Conversely, the Alberta Energy and Utilities Board says the amount of bitumen in the area is about 600 times larger. ConocoPhillips says its Surmont lease alone is roughly the size of the city of Calgary, with an estimated average bitumen thickness of a 10-storey building. The company also says that if Alberta hadn't ordered the shut-in of wells on the Surmont release back in 2000, its pilot plant would not have been as successful as it has been.
As a result, ConocoPhillips, along with partners TotalFinaElf and Devon Energy, are poised to make a go-ahead decision on a Surmont mega project before the end of this year that would cost about $ 1 bn and produce around 100,000 bpd by 2014.

Following a meeting with all affected companies, Alberta's energy regulator ordered a regional geological study -- to be completed by December -- in order to closely assess which gas pools in the area are in close contact with bitumen deposits. Alberta's energy department has also begun meetings on the issue, looking at possible compensation for affected gas producers. Paramount has warned that this could end up costing the province hundreds of millions of dollars.
Greg Stringham, vice-president of the Canadian Association of Petroleum Producers, says the geological study is crucial in determining the full impacts of the shut-in. And Stringham said there are a number of other tests continuing from companies like giant EnCana looking at repressuring reservoirs with waste gas or even putting pumps at the bottom of the well to pump up the bitumen.
"I think that's where the real answer to this dilemma lies, it's not in the back and forth between the companies, it's how do we apply technology so that both of the concerns can be resolved."

Source: The Canadian Press
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