Insitu: Oil Sands Mining Goes Underground

Think of oil sands mining, and images of mammoth machinery, digging and hauling bitumensoaked sand from pits to processing plants, immediately spring to mind. The procedure is dirty, requires huge amounts of natural gas and water, and scars the landscape to such a degree that some Canadian politicians have called for a moratorium on oil sands development until the long-term environmental impacts can be assessed.

But oil sands producers are looking beyond traditional surface extraction to less invasive methods, with all techniques pointing in one direction: underground, or in situ, oil sands mining.

The resource potential for in situ oil sands extraction is huge. Surface mining is only feasible for the shallow oil sands deposits found north of Fort McMurray, which means that 80 percent of the resource is too deep for mining and requires in situ (Latin for “in place”) recovery methods.

While it is difficult to say how much oil can be drawn from the porous rock formations found underneath the 140,000 square kilometres that comprise the Alberta oil sands, in situ has been steadily increasing over the years, and now represents close to half of total oil sands production, or nearly 700,000 barrels of oil per day (bopd). Production is expected to double over the next five years, with 50-60,000 bopd added annually. In fact, in situ extraction could surpass surface mining by 2017, according to a report from the Pembina Institute.

Technologies: From “huffand puff” to THAI

In situ’s story began in the 1980s, when oil companies tried injecting steam into vertical wells in order to mobilize the viscous, tar-like bitumen contained in underground reservoirs. Imperial Oil was first to commercialize the technique, known as Cyclic Steam Stimulation (CSS)  or “huff-and-puff”, at Cold Lake, Alberta.  Steam is injected into the well for a period of weeks, then stopped, before the hot oil is pumped out as the bitumen warms up. CSS recovers 20-25 percent of the oil in the reservoir, and is best suited to wells drilled vertically in stratified oil fields.

While CSS is still utilized and viable — Cold Lake retains its status as the largest in situ project at 150,000 bopd — the oil industry was not satisfied with a 25 percent recovery factor and began investigating techniques for drilling horizontal wells. While more expensive to drill, horizontal wells can recover more than twice the oil in a reservoir compared to a vertical well, making the extra cost worthwhile. Researchers at the University of Calgary combined the injected-steam concept with horizontal drilling, and came up with Steam Assisted Gravity Drainage (SAGD). In 1984, the Alberta Oil Sands Technology and Research Authority (AOSTRA) launched the first SAGD underground test facility.

With SAGD, two parallel horizontal wells are drilled a few metres apart, then steam is injected down a vertical well into the upper horizontal well. The heated bitumen flows down to the lower well, where it is pumped to the surface.

With steam-assisted gravity drainage (SAGD), steam is injected down the vertical well into the upper horizontal well.  The heated bitumen flows down to the lower well, where it is pumped to the surface.

In the 1990s, as SAGD evolved, in situ oil sands extraction enjoyed something of a renaissance, with a number of projects coming onstream. These included Suncor’s Firebag and Mackay River, Conoco Phillips’ Surmount, and Cenovus’ Foster Creek and Christina Lake.

The Whitesands Demonstration Project was developed in 2006 by Petrobank Energy and Resources Ltd., which pioneered a new in situ technology known as THAI.

THAI, which stands for toe-to-heel air injection, injects steam into a vertical well at the “toe” of the horizontal well. The steam begins a combustion process to create a controlled fire that moves into the “heel” of the horizontal well, as theoil in the reservoir is melted and pumped to the surface.

THAI is friendlier to the environment than SAGD, because it uses less steam and natural gas to move the oil.

Mining the Carbonates

Calgary-based Laricina Energy Ltd. is at the forefront of in situ oil sands exploration and production. The company owns two of the top 13 in situ projects in Alberta, and is the leading developer of the Grosmont Carbonates, which is the largest source of hydrocarbons in the world and the second largest source of bitumen, according to Laricina CEO Glen Schmidt.

“What’s exciting about the carbonate formation is it has great permeability,” Schmidt said in an interview with MINING. com. “It has very good thickness, lots of oil in place, and the quality of the rock is excellent.”

The Energy Resources Conservation Board estimates that the Grosmont Carbonates contain 400 billion barrels of oil, putting it on par with Middle East sources. To extract the bitumen, Laricina is experimenting with a method that combines SAGD with solvents such as propane, which thin the bitumen and improve recovery rates by up to 30 percent. The process is more energy-efficient than SAGD because less natural gas needs to be burned to heat the steam.

Laricina is also part of a consortium of four companies — the others being Suncor Energy Inc., Nexen Inc., and Florida-based Harris Corporation — that received $16.5 million in July from the Climate Change and Emissions Management Corporation to research an in situ extraction process involving electromagnetic heating.

The technology uses electricity to deliver energy to the reservoir, thus reducing the amount of water and energy needed to heat and move the steam through the well.

Laricina’s pilot project, Saleski, is expected to be operational this fall and, if successful, will be commercialized in 2012, says Schmidt. The project was recently given a boost from the Canada Pension Plan, which invested $250 million in Laricina.

“The purpose of our pilot is to prove out the design, so we’ll be doing SAGD, and also benchmarking steam and solvent, potentially electromagnetic longerterm,” says Schmidt, who is also chair of the In Situ Oil Sands Alliance, a group of Canadian oil sands companies focused solely on in situ extraction.

Lighter Footprint

Perhaps the most exciting aspect of in situ is its potential for improving the public’s perception of oil sands mining.

Compared to surface mining, in situ extraction uses a fraction of the land base, along with less water and energy, resulting in a dramatically lighter environmental footprint.

As Petrobank senior vice president and COO Chris Bloomer told a Calgary business publication in June, “You can fly over a vast area and you can barely pick out the in situ operations.”

According to Schmidt, in situ producers do not interfere with lakes and rivers when accessing water for steam. All of the water is sourced underground, he says, and 90-95 percent is recycled.

And while some environmental groups will dispute claims that the technology is kinder to the environment than surface mining, Schmidt says that the real comparison should be between the oil sands, and oil that the United States imports from abroad.

“The carbon emissions, because of transportation, lead to overall larger carbon emissions worldwide, so the carbon footprint for the U.S. will be reduced by buying local,” says Schmidt, adding that the gap will widen more as in situ technology improves. “Newer projects are much more energy-efficient and therefore their carbon footprint is much reduced.”