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Oil Sands Production Projects At A Glance

A
ccording to Alberta’s Department of Energy, the Province complete the current Athabasca expansion before deciding on project is targeted to grow to approximately 190,000 barrels
contains the second largest proven concentration of oil the second. Originally, a decision was going to be made in 2009. per day on a gross basis over the next decade.
in the world, the vast majority of which is found in oil Future proposals include expanding the Pierre River Mine One hundred per cent of EnCana's oilsands operations are
sands deposits. There are 173 billion barrels of oil in the oil production base by 200,000 bbl/d.The expansion includes min- in-situ.
sands proven to be recoverable with today’s technology and ing and bitumen processing extended to the west side of the EnCana has a 50/50 partnership with ConocoPhillips for
under current economic conditions. In addition, there is an Athabasca River, the Foster Creek and Christina Lake projects. EnCana is the op-
estimated total of 315 billion barrels of potentially recoverable Shell has also applied to the Alberta Energy and Utilities erator of the upstream portion and ConocoPhillips looks after
Board and Alberta Environment for approval to construct and the downstream (refining) portion.
operate Scotford Upgrader 2 adjacent to Shell’s The assets hold independently estimated recoverable bitu-
existing Scotford facilities near Fort men of more than 6.5 billion barrels, and the partnership’s goal
Flexpipe MAKES solution Saskatchewan. is to increase production from the current 50,000 barrels per
s. Flexpipe Sys The proposed Scotford day (bbls/d) to 400,000 bbls/d of bitumen by 2015.
tems s Upgrader 2 would In September 2008 EnCana received the final approval for
aves be constructed in its Wood River refinery Coker and Refinery Expansion (CORE)

oil in the oil sands. The oil on four phases


and process
project in Illinois. Construction is now underway on the inte-
grated oil venture with ConocoPhillips. The project is esti-
sands are a key driver of the economy in Alberta, other
provinces and at a national level. Here is a glimpse of recent Shell’s
cre mated to cost roughly $1.8 billion (U.S.) net to EnCana ($3.6
billion gross) and is expected to be completed over the next
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developments and future plans for some of the major projects. share of future three years.
And since the bitumen found in those oil sands needs to be Athabasca mineable The company is also continuing with development of one of
log

upgraded and then piped to market, the latest in what’s hap- bitumen production as its newest initiatives to improve production and lower steam-to-
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pening on those fronts is also included. The following infor- well as bitumen from the oil ratio: wedge wells.A portion of the reservoir (wedge) is heat-
mation was gathered from various web sites, public disclosure company’s in situ oil sands ed by proximity to the steam chamber and the wedge contains
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documents, news releases and news clippings and is believed developments. a “considerable amount of bitumen” that can be produced.
and

current as of Oct. 30,2008. Scotford Upgrader 2 could ulti- EnCana plans to try the procedure at Christina Lake in
mately process up to 400,000 barrels- 2009.
equ

Athabasca Oil Sands a-day of oil sands bitumen into a range of The regulatory process for EnCana’s Borealis oil
Shell Canada’s 100,000 barrel-a-day expansion of bitumen synthetic crude oil products. sands project also continues to move along. Phase
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mining and upgrading facilities is underway. One of Borealis is in the northern portion of the
The Athabasca Oil Sands Expansion is a project that has cre- oilsands area, about 90 kilometres northeast of
ent

ated about 6,000 jobs during peak periods. EnCana Corp./ConocoPhillips Fort McMurray. EnCana holds a 100 per cent
Shell Canada Limited, the operator of the Athabasca Oil Oilsands have become such a large part of EnCana interest in the proposed project area
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Sands, owns a 60 percent share, while Chevron and Marathon Corporation that the company had planned to split into of approximately 36 sections.
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Oil Sands each own 20 percent. two independent energy companies, with one to focus on
This phase of expansion includes construction of mining unconventional resources.
30
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and extraction facilities at the Jackpine Mine, expansion of froth But given what the company is calling uncertainty in the
-50 ct
treatment facilities at the existing Muskeg River Mine and global financial markets, EnCana has decided to delay the tim-
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n your pipeline pr
expansion of the Scotford Upgrader. ing of a shareholder vote, originally planned for December, until
The Corridor Pipeline links the facilities. clear signs of stabilization return to the markets.
Muskeg River is about 75 kilometres north of Fort McMurray The integrated oil company was to have taken on expan- Phase
and the expansion of the Jackpine mine is just east of that sions at the Christina Lake and Foster Creek oilsands projects One will be
operation.The Jackpine Mine Expansion will bring production in Alberta. capable of producing
at that mine up to 300,000 barrels a day. Located in northeast Alberta about 120 kilometers south of 35,000 bbls per day over 25 years.
While these expansions take place with a proposed com- Fort McMurray, Christina Lake has the potential to be EnCana’s
pletion date of 2010, partners in the Athabasca Oil Sands Project largest oilsands project. It is estimated by EnCana to have an Fort Hills
are looking ahead to more growth in the future. unbooked resource potential of about 1.8 million barrels of oil. While the Fort Hills Energy Limited Partnership announced
Shell has announced that it wants to eventually bring pro- A current expansion is expected to take production to in September 2008 that estimated costs for its Fort Hills Project
duction up to 770,000 barrels per day, but also said it will about 18,000 barrels per day in 2008 on a gross basis and the have risen considerably, it also says the partners remain fully

20 Oil & Gas Network, December 2008


oilsands

committed to the project.


The Fort Hills Project consists of an integrated oil sands
mine and bitumen extraction plant 90 kilometres north of Fort
McMurray and an upgrader in Sturgeon County northeast of
Edmonton.
The Fort Hills partners - Petro-Canada with a 60 per cent
working interest, UTS Energy Corp. with a 20 per cent interest
and Teck Cominco Ltd. with a 20 per cent interest - are assess-
ing a range of options to reduce or defer capital costs.
Fort Hills is now expected to cost about $23.8-billion to
build, up from a June 2007 estimate of $14.1-billion.
The major increases are costs associated with construction
materials, labour, project management and engineering.
Fort Hills is developing a definitive cost estimate, to be the
basis for a final investment decision planned by the partners
for the fourth quarter of 2008.
Proceeding with the Fort Hills Project is also subject to cer-
tain regulatory approvals being received. Fort Hills is working
with the regulators and various stakeholders to obtain the nec-
essary approvals.
Fort Hills is one of the largest remaining undeveloped oil
sands leases in the Athabasca region. The project has approval
for the production of up to 190,000 barrels per day of bitumen.
The bitumen resource has an estimated 4.7 billion barrels
(estimated by Sproule Associates Limited, Oil and Gas
Consultants in 2006).
Original plans were for the first phase to produce 140,000
bpd of synthetic crude oil. The project would also produce
bitumen (expected to be about 160,000 bpd) and previous
plans have included a start up in the fourth quarter of 2011
with the first synthetic crude oil coming from the Sturgeon
upgrader in the second quarter of 2012.

Horizon Project
First steam on Canadian Natural Resources Limited (CNRL)
Horizon Project took place in September 2008.
The Horizon Project is the largest capital project in
Horizon plant-looking west
Canadian Natural’s history at $9.47 billion, about eight per cent
above the previous estimate and 36 per cent higher than orig-
inally estimated back in 2004. and all components for the two hydrotreating reactors that will Jackfish
Phase I will deliver 110,000 barrels per day. The company be installed as part of the Phase 2/3 expansion. Devon Energy Corporation is now working on its second oil
says there will be virtually no decline in production for 40 sands project near Conklin, Alberta.
years since there are an estimated six to eight billion bar- Devon Energy has received regulatory approval for the com-
rels of oil on the lease. pany’s second oil sands project in Canada. Construction of the
The Horizon Project involves moving raw oil- 100 per cent Devon-owned Jackfish 2 project started in
sands materials through a complex process September.
to yield raw bitumen crude oil and then
r int. Flexpipe Syste and
MA K
Once fully operational in 2012, Jackfish 2 will
upgrading it to 34º API, light sweet
otp ms produce about 35,000 barrels of oil per

a l fo E yo
synthetic crude oil. day through Steam Assisted Gravity
The oil will be
nt is ur p Drainage (SAGD). Devon ex-
shipped through
m e ip e l
pects to recover about
n
now

the Keystone 300 million barrels


iro ine
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Pipeline, of oil from
ity. Contact us…

with
pr o Jackfish
a divis

the je c t
u ces mo
re p
red 2.The com-
ro f i
ion of Sh

and
pany is currently
ramping up produc-
t ab
osts l e.
tion at its original Jackfish
TOLL FREE:
c 888-FLX-PIPE (888-359-7473)
project.
Jackfish, which started operations in
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Canadian 2007, is expected to reach full production of


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Natural maintaining 35,000 barrels of oil per day in the first half of 2009.
www.flexpipesystems.com
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full ownership of the re- Jackfish is about four miles east of the Jackfish 2 site in
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source through the pipeline. northeastern Alberta.


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The Horizon Project is locat- Devon is the only U.S. independent with active operations in the
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ed about 70 kilometres north of oil sands.


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Fort McMurray. The project has a th erf


fly-in and fly-out camp. The airstrip
ect ng Kearl
comb re
on the Horizon site allows workers to
commute from the Atlantic provinces. ination of st The federal government gave Imperial Oil Ltd. the go-ahead in June
2008 to start work on its $8 billion Kearl oilsands project. The project is
CNRL is planning for future expansions jointly owned by Imperial Oil, with a 70 per cent stake, and ExxonMobil, with
and has already received the two coke drums a 30 per cent share.

Oil & Gas Network, December 2008 21


oilsands

But now Imperial Oil Ltd. is delaying a decision to proceed


with its $8-billion Kearl oilsands proposal, which could push
the start date for the plant back by one year, the company said.
An environmental challenge and design revisions to the
project (located north of Fort McMurray) have increased costs,
said Imperial Oil.
Now, Imperial is suggesting the first quarter of 2009 to make
a final decision on whether to go ahead, company officials
noted.
If all things are go, plans are to use large scale shovels,
trucks, crushers and an oil sands hydrotransport system. The
base mine will be developed in stages.The initial mine train will
have capacity of about 100,000 barrels per day.
Expected eventual production, based on a phased devel-
opment scenario, could average about 300,000 barrels of bitu-
men a day.
A permanent workforce of around 1,100 to 1,300 is antici-
pated, when all three mine trains are in operation. Imperial
will adopt a camp-based operation with a workforce on a ro-
tating schedule.

Long Lake Project


A 50/50 joint venture of Nexen and OPTI Canada, the Long
Lake Project is the first to combine SAGD, (steam assisted grav-
ity drainage) with hydrocracking and gasification.
Phase 1 of the Long Lake Project is located 42 km south-
east of Fort McMurray. Nexen operates the SAGD portion of the
project, while OPTI operates the upgrader.
The Project has an estimated reserve life of 40 years and
started producing premium sweet crude in the fall of 2008.
The oil is rated 39 degrees API with low sulfur content and
characteristics for making transportation fuels.
The Upgrader was targeted to begin producing Premium
Sweet Crude in November and is expected to ramp up to
58,500 barrels per day by early 2010.
Long Lake is using the patented OrCrude process in order
to use 100 per of the bitumen.
It takes about 72,000 barrels per day of bitumen to create
58,500 barrels per day of premium sweet crude oil. It will like-
ly take until the fall of 2009 to get Long Lake's production vol-
umes up to the anticipated 72,000 bpd for Phase I.
Regulatory approval is already in place for a second phase
of upgrading capacity. A Phase II upgrader would be con-
structed adjacent to Phase I of the Long Lake upgrader.
Preliminary work on Phase II of the project is taking place,
although a corporate decision on when to move forward will
not happen until sometime in 2009. There could be up to six
phases in total, each the same size of 72,000 barrels per day.

MacKay River
Located 60 kilometres northwest of Fort McMurray, MacKay
River is one of the largest commercial SAGD projects in the
Athabasca oil sands area.
Owned by Petro-Canada, the bitumen resource at MacKay
River totals 2.4 billion barrels, giving a lifespan of 25 to 30
years for the current plant and the planned MacKay River
expansion. At mid-year 2008, the plant was producing up to
30,000 barrels per day from four central well pads containing
48 well pairs.
In early 2005, Petro-Canada acquired the Dover oil sands
lease adjacent to MacKay River and then in 2006 purchased ad-
ditional acreage from the province of Alberta. The bitumen
resources on the combined lands is more than sufficient to
Photo courtesy of Canadian Natural Resources Ltd.

support a second plant — to be called MRX. This proposed


expansion would add up to 40,000 barrels per day of bitumen,
with first production tentatively scheduled for late 2011.A final
investment decision on MRX is expected in the first quarter
of 2009.

Northern Lights Project


The Northern Lights Project was put on hold after estimated
costs to develop the project swelled to $10.7 billion, but it's
back on now that Total E&P Canada has become involved.
The heavy pressure vessels are the heart of the Scotford Upgrader. Their construction Synenco Energy announced it was looking for a buyer and
Total E&P Canada Ltd. took up that offer, buying approxi-
involved the largest heavy lift in Canada. Photo courtesy of Shell
mately 94 per cent of the common shares of Synenco,

22 Oil & Gas Network, December 2008


oilsands

Synenco held a 60 per cent share of Northern Lights alongside Syncrude


SinoCanada Petroleum Corp., a owned subsidiary of China- Thirty years ago Syncrude began producing in the oil sands.
based Sinopec. Syncrude began producing high quality sweet crude oil in
The proposed Northern Lights mining and extraction proj- the summer of 1978, with the official grand opening on Sept.
ect will be located about 100 kilometres from Fort McMurray. 15th of that year in its location north of Fort McMurray.
“This asset will strengthen Total’s portfolio in the Athabasca Over the last three decades, Syncrude has shipped more
region comprising principally the Joslyn project that will also than 1.8 billion barrels of high-quality crude oil. It has secured
be developed by mining techniques and is situated approxi- more than 128 patents through leading-edge research and de-
mately 50 kilometres from the Northern Lights Project,” Total velopment that aims to reduce cost, increase reliability and im-
said in a release. prove environmental performance.
Northern Lights consists of an oilsands mining and bitumen Syncrude also earned the oil sands industry’s first land recla-
extraction project northeast of Fort McMurray and a proposed mation certificate from the provincial government in 2008.
heavy-oil upgrader in Sturgeon County near Edmonton. In 2008, production from Syncrude has been about 265,000
The project is designed to produce 114,500 barrels per day barrels per day. Through staged growth, Syncrude plans to in-
of bitumen initially and last an estimated 30 years. Regulatory crease production to about 500,000 barrels of crude oil per day
applications were filed in 2006 and 2007. post 2015.
The Syncrude Project is a joint venture operated by
Petrobank - Whitesands and May River Syncrude Canada Ltd. and owned by Canadian Oil Sands
Petrobank Energy and Resources started forging ahead in Limited, ConocoPhillips Oilsands Partnership II, Imperial Oil
2008 with its most ambitious capital plan ever. Resources, Mocal Energy Limited, Murphy Oil Company Ltd.,
The 2008 capital program for the heavy oil business unit is Nexen Oil Sands Partnership, and Petro-Canada Oil and Gas.
focused on expanding the Whitesands oilsands project near
Conklin, Alberta. Three new toe-to-heel injection (THAI) wells
were drilled in the early part of the year. The wells will incor-
porate the trademarked CAPRI process, where a catalyst is Additional Upgraders
added around the outside of the well bore to enhance the up-
grading of the oil insitu. Petrobank is also using a modified liner
completion designed to reduce sand production with a more North West Upgrading
efficient surface facility design. North West Upgrading plans to build a merchant upgrader
In January, Petrobank filed a public disclosure document for about 45 km north-east of Edmonton, in the Industrial
its 100,000 May River Project, which kicks off the regulatory Heartland Area of Sturgeon County, converting bitumen to ultra-
process. The conceptual design for the project, to be located low-sulphur diesel, diluent, low sulphur vacuum gas oil and
near Whitesands in northeast Alberta, has been completed. The butane. The planned location -- about five kilometres north of
first phase of the project is expected to be a 15,000 bopd mod- Scotford – is close to major crude oil and diluent pipelines,
ule, expandable from a central location to the ultimate design established infrastructure, and a stable and skilled workforce.
capacity of 100,000 bopd. In addition, there are several opportunities for by-product syn-
ergies with other nearby industrial plants.

Courtesy of Canadian Natural Resources Limited


Suncor Completion and startup of the first 77,000-b/d capacity
Suncor Energy just wrapped up a big expansion project phase will occur in 2010. Two further phases – the first of
in the summer of 2008 that cost in the neighborhood of $3.6 which is presently targeted between 2012 and 2014 -- will hike
billion dollars. It has increased production to 350,000 barrels capacity to some 150,000 b/d.
per day.
Now Suncor is already planning for the next expansion — Total E & P Canada
to be producing 550,000 barrels per day at the end of 2012. Total E & P Canada anticipates starting construction of an
That expansion has a price tag of $20.6 billion and work is upgrader in the Fort Saskatchewan area in the last quarter of
already well underway to bring production up to 500,000 bar- 2009.
rels per day. If all goes as plans, operation of Phase 1 would commence
Suncor said a major focus of the expansion plan will be to before 2015 at a capacity of 150,000 barrels per day. Phase 2 is
reduce the environmental impacts of its oilsands operations. scheduled to begin about three to four years later at a design
The company named water management as an area that would
benefit from the project, saying it would be completed with-
out an increase to its water licence. Suncor has said it has
already made strides in reducing water withdrawals from the
Athabasca River.
Included in the next expansion, called Voyageur, is an up-
grader that comes with estimated $11.6 billion price tag.
It will be the oilsands company's third upgrader in the re-
gion north of Fort McMurray — the first being built in 1967
and the second coming on line in 2001/02 with the Millennium
expansion.
Plans call for the new upgrader to be constructed approx-
imately half a kilometre south-west of existing Suncor upgrad-
er facilities near the Steepbank, North Steepbank extension
and Millennium mines.
Suncor CEO Rick George announced at the end of October
that Suncor expects to scale down spending and the pace of
construction on the planned Voyageur upgrader, delaying tar-
geted completion by about a year to the end of 2012. Stages 5
Photo courtesy of Syncrude

and 6 of Firebag in-situ operations are expected to proceed


but, as they are at relatively early phases of development, spend-
ing and scheduling plans remain flexible to respond to market
conditions.
Of the total Voyageur capital budget of $20.6 billion, Suncor
had spent about $5.3 billion at the end of the third quarter of
2008.

24 Oil & Gas Network, December 2008


oilsands

capacity of 245,000 barrels per day of bitumen and with sub-


sequent optimization the capacity may reach 295,000 barrels
per day.
It is expected that up to 4,000 workers would be needed
to construct the upgrader and the company estimates anoth-
er 300 to 400 employees would be needed to operate the proj-
ect once it is up and running.
Total E&P Canada Ltd. is the operator on the Joslyn lease,
with an 84 per cent participating interest. Joslyn is located 65
km northwest of Fort McMurray in the Athabasca oil sands.

Pipelines

Alberta Clipper
The Alberta Clipper project is a new 1,607 kilometre (km)
oil pipeline from Hardisty, Alberta to Superior, Wisconsin.
The Canadian portion of the project involves construction
of about 1,078 km of new 914 millimetre outside diameter (36-
inch) oil pipeline between Enbridge's Hardisty Terminal and
the Canada - US border near Gretna, Manitoba. The pipeline
will have an initial capacity of 450,000 barrels per day and
allow for expansions up to 800,000 bpd. The estimated cost is
$2 billion and is expected to be open in mid-2010.
The National Energy Board has required Enbridge to con-
duct an emergency response exercise at its South Saskatchewan
River crossing to allay concerns about safety. Horizon mine shovel

Enbridge announced in August 2008 that There are future plans for a second
construction had started on the Canadian pipeline to be added to the Keystone system
portion of the Alberta Clipper expansion that will carry a further 500,000 bpd of oil
project. sands.
Initial mainline construction started near Keystone received National Energy Board
Hardisty and Provost, Alberta and also near approval last year for two major regulatory
Bethune, Saskatchewan. applications to construct and operate the
Canadian portion of the project.
Gateway Pipeline
The Enbridge Gateway Pipeline Project is Southern Lights Pipeline
being proposed to ensure there’s enough Calgary-based Enbridge Inc. is proposing
capacity to transport anticipated increased a $2.2-billion US project to import the light
production from Alberta’s oil sands. oils needed to transport heavy oil and bitu-
The export pipeline would transport pe- men produced in Alberta’s oilsands.
troleum from Strathcona County, northeast of The Southern Lights Pipeline would bring
Edmonton, to a new marine terminal in 180,000 barrels a day of diluent from the
Kitimat on the north central coast of British Chicago area to Edmonton.
Columbia, where it would be exported to The proposed line involves new con-
market. struction and changes to Enbridge’s existing
The Enbridge Northern Gateway Project crude oil pipelines, the company said.
involves a new twin pipeline system. It is es- It believes demand for imported diluent
timated to cost $4 billion and could create could reach 300,000 barrels per day by early
more than 4,000 construction jobs. in the next decade.
The west line would transport petroleum Southern Lights involves building 1,085
from near Edmonton to Kitimat and would be kilometres of 16-inch pipe from the Chicago
1,170 kilometres long and 36 inches in area to Clearbrook, Minn. It would reverse
diameter. It would carr y an average of the flow of Enbridge’s line from Clearbrook
525,000 barrels of petroleum each day. to Edmonton.The project would also involve
The east line would transport condensate building a new line to carry 185,000 barrels
from Kitimat to near Edmonton and would be per day of light sour crude oil from Cromer,
the same length, but 20 inches in diameter. Man., to Clearbrook.
Enbridge had scheduled open houses in If all the changes are made, the capacity
British Columbia and Alberta for November to ship light crude from Edmonton to the
2008 as part of an extensive public review U.S. Midwest will increase by 45,000 barrels
process led by Canada’s National Energy per day.
Board and the Canadian Environmental Enbridge has received National Energy
Assessment Agency. Board approval for its Southern Lights
pipeline project. It’s scheduled for comple-
Keystone Pipeline tion in 2010.
TransCanada Corp.’s 3,456-km Keystone The project was originally expected to
pipeline will carry up to 590,000 barrels per cost less than $1 billion US, but drastically in-
day of oil from Alberta’s oilsands to refiner- creased due in part to rising steel pipe prices.
ies in the Midwest. Construction of the It will run through parts of Illinois,
Keystone terminal and initiating station Wisconsin, Minnesota, North Dakota,
began at Hardisty, Alberta on May 9, 2008. Manitoba, Saskatchewan and Alberta.

26 Oil & Gas Network, December 2008