SEE OIL TRADE ASSN..Heavy:
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TECHNICAL LUNCH
December 15, 1998
The first business/regulatory technical lunch of the 1998/99 season was held. The speaker was Loyola Keough, a partner with Bennett Jones law firm, who practices regulatory and environmental law. Mr. Keough described how regulatory changes are affecting proponents of heavy oil projects and how to prepare for these changes.
Issues affecting heavy oil projects range from the normal required approvals, such as approvals under the Oil Sands Conservation Act, to new legislation. Environmental issues are high on regulator's agendas. Mr. Keough spoke about the triggers for review under the Canadian Environmental Assessment Act (CEAA) and new legislation such as the Water Act, which comes into effect January 1, 1999. Mr. Keough touched on the need to include comprehensive reclamation plans, road construction plans and consideration for First Nations, Aboriginal and Metis in regulatory applications.
Over 50 people attended the meeting, and there were considerable questions and dialogue following the talk.
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MANAGING THE CYCLES
A Heavy Oil - Oil Sands Conference
December 2 1998
Organized by the Canadian Heavy Oil Association together with Oilweek Special Events was held at the Calgary Convention Centre on December 2, 1998. In spite of the current business environment the annual conference was well attended this year by all those engaged or interested in the heavy oil and oil sands industry. The technical committee (John Elliott, John Howard, Don Towson, Firoz Kurji, Peter Sametz, Bill Brown and John Zahary) had done a great job putting an interesting and versatile program together and Bob Buchanan and Dave Donalds expertly handled everything else.
The day started off with the morning keynote speaker Peter Quinn, Managing Director of IFP North America, who addressed the need for major breakthroughs in upgrading technology and pointed out that those could come from exploiting the synergy between production and upgrading with new processes, and new catalyst development.
The two morning sessions, Upgrading and Field Operations, followed suit with six exceptional presentations. Roger Bailey, Executive Director, ADOE, gave an overview of enabling technologies for oil sands development and concluded that collaboration through research networks and consortia do work in providing those technologies. Clark Johnson, President, Frontier Refining & Marketing Inc. told us that the Cheyenne Refinery will expand and will require 35,000 BPD of Canadian Heavy Crude after the 2003-2004 startup. Be prepared for the Next Cycle! As the final speaker for the upgrading session, Chris Allard, Manager Upgrading, Mobil Oil Canada presented the status of the Kearl Oil Sands Upgrader Evaluation: data gathering for both remote and integrated cases nearing completion, public consultation is underway and the best business case is being developed.
The first presentation in the session on Field Operations was by John Pearce, Manager Heavy Oil, Northstar Energy Corporation, who told us that a new produced water reuse plant is being commissioned for the Dover SAGD Project. John also mentioned that the recently completed 750 meters long Phase E well produces 800 BOPD at a dry steam cumulative steam oil ratio of 2.7. The technical challenges ahead comprise the improvement of Steam-Oil Ratio by using hydrocarbon-steam mixtures, improvement of thermal efficiency by new production pumps, reducing cost of water treatment and tailoring bitumen products to the consumer. Dave Hassan, Resource Manager, Amoco Canada Petroleum Company, talked about the Big Kahuna, creating multi-lateral drainholes to a central horizontal producer by drilling at an angle to the main drainhole. Preliminary experience indicates that this patent-pending technology can potentially reduce F&D costs for drilling, completing and equipping wells by as much as 50%. Roland Massinon of National Oilwell Canada Ltd. ended this session with a detailed description of the Mass Transfer Pump and its initial field testing. The first commercial pump was installed in June 1998.
After an elaborate lunch the delegates were treated to the luncheon keynote speaker Jim Stanford, President and CEO of Petro-Canada, who shared his views on the strategic long-term development of Canada's oil sands resources with the audience. The full text of the speech is available through the office of the Canadian Heavy Oil Association or through the Communications Department at Petro-Canada.
The two afternoon sessions were entitled Long Term Outlook and Market Developments. Rob Macintosh, Policy Director at Pembina Institute, started off the first session by addressing the environmental issues and climate protection that are inherent to the competitive exploitation of heavy oil and oil sands. The number of questions directed to Rob was staggering, ranging from "Are the recent changes in temperature, weather patterns etc. statistically different from historical trends?" to "What is the Green House Gas emission level per barrel of heavy oil produced?". Since time was limited at the conference, we hope to address most, if not all, of the raised questions in the near future. Mike Langley, Senior Vice-President, Heavy Oil Division, Ranger Oil
Limited, presented the past success in reducing Lindbergh operating cost from $9.15 in 1996 to $5.85 in 1998. Mike mentioned that the future success of heavy oil lies in downstream integration and close cooperation and that for Ranger Heavy Oil, the main focus for the future is: grow production, control operating costs and manage F&D costs. Art Meyer, Vice-President, Enbridge Inc., presented an excellent outlook for heavy oil pipelining capacity and concluded that mid-term requirements in pipeline capacity of heavy crude and bitumen producers have been met by planned expansions which in turn means that producers are positioned well to compete on existing markets and to expand market presence.
Bob Feick, Senior Analyst, Merrill Lynch Canada Inc., opened the session on market developments with another of his reliable and credible presentations on supply & demand & pricing for heavy oil, followed by Brad MacKenzie, Market Supply Analyst, Imperial Oil, who started his presentation on diluent supply by showing us what we knew all along: crude price forecasts are more often wrong than right. Brad then went on to analyze the history of the diluent supply, treated in detail a long list of market development indicators, and concluded that over the next few years supply will be long. Steven Kelly, Principal, Purvin & Gertz, Inc., addressed some of the elements of Venezuelan heavy crude strategy and outlined its impact on Canadian producers. Steven expected that trade patterns for Venezuelan, Mexican and Canadian heavy crude will resolve the logistically most advantaged market configuration and that refiners will continue to invest in heavy crude conversion capacity.
The closing remarks were given by Sue MacKenzie, Vice-President of the CHOA, who thanked everybody involved for making the conference such a success, specifically the speakers that have put so much effort in preparing their excellent presentations. If you want to receive a copy of the hand-out, please contact Sarita Parks at the CHOA office. We can only hope that this Annual December Conference will continue to provide an appropriate technical, educational and social one-day occasion that members seem to value so much.
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BEER & CHAT
November 16, 1998
Mr. Doug Ayotte, Vice President Millennium Project Services for Suncor Energy Inc., presented an excellent overview of Suncor's Project Millennium to roughly 100 people at the November 26 Beer and Chat. Project Millennium is a $ 2.2 billion expansion to provide infrastructure that will increase Suncor's annual plant capacity to 76.6 million barrels ( 210,000 bpd) by 2002. Plans are to twin the existing upgrader while incorporating process improvements such as hydrotreating and tail gas recovery. The first stage of the proposed project includes a $90 million analysis which will include definitive engineering and an environmental impact assessment - both expected to be completed by mid-1999. Suncor Board of Director approval and regulatory approval will be required before project construction begins. As part of the Project, Interprovincial Pipelines (IPL) will be building a pipeline from Suncor to Hardisty, at a cost of roughly $325 million, with roughly 500,000 bpd capacity to
transport Suncor's upgraded product ...//..
and
..//..(( Chucka says it is COMPLETED and TURNED ON! Yes..see prior post runs 15-20% of Capacity!))
There were 11 speakers that could be grouped into 4 focus areas:
1.Global View of Heavy Oil
Dr. Farouq Ali gave an opinion on "Canadian Heavy Oil Operations: Are We Making Money?" by providing a contrast between some Canadian and Californian operations. He was followed by Jerry Hoffman of Berry Petroleum Company in California who provided "An Independent's Perspective and Success in California Heavy Oil". To round out our global jaunt, Peter Lubey of Scimitar Hydrocarbons Corporation took us to Egypt and the Issaran Project to describe "Creating Value Through Discovered Reserve Opportunities".
2.Case Studies
Always of great interest are case studies and this conference included five of them. John Donnelly of Blackrock Ventures updated the status of Hilda Lake: A Gravity Drainage Success". Keith Scheidt of Husky Oil Operations described "Husky's Success at the Pikes Peak Thermal Project". Mirko Zatka of Shell Canada presented "Long-Stroke Pumping System at Shell Canada's Peace River Multilateral Thermal Wells". The pumping technology was fascinating but so was this novel application of steam and gravity drainage. Peter Nicholls of Marathon Canada spoke on "Inflow Observations from the Bolney Thermal Project" and some remedial well workovers. Mike McCormack of Fractical Solutions presented the "Ranger Oil Wolf Lake Dual Well SAGD Operating Experiences" and also described some acid workovers.
(( Chucka sya that this is MINERAL SIGNIFICANT for PG Model at Peace River Arch Area of New Blue Ribbon BM Block <and maybe to the west tord BC area side of Alberta> area in center of Alberta rather than talk of the Fort McMurray Area ONLY! As had been the talk!))
3.Geology
Peter Putnam of Petrel Robertson Consulting gave the participants some "Geological Considerations in Thermal Operations". I know that even many of the engineers in the crowd found his descriptions of heavy oil geological features and their potential impact on reservoir performance to be intriguing.
4.New Technology
To challenge many of our preconceptions of heavy oil recovery, Raj Mehta of the University of Calgary challenged us with the question: "In Situ Combustion - It's Hot, But Is It Thermal?". Brian Wagg of C-FER Technologies ask us "Have You Ever Seen a 400 Degree Dogleg?" and then showed us one in a deformed casing.
The day ended with rounds at Alabama Slammers. Feedback on the conference was very positive - other than a few required improvements to the audio and the local construction schedule. If you missed it - we hope to see you there next year. If you did attend, we'll count on seeing you again next year.
Cogeneration Opportunities for Heavy Oil Producers
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PANEL DISCUSSION
February 25, 1999
On Thursday, February 25th, 1999, the Facilities and Upgrading Technical Subcommittee hosted a panel discussion on cogeneration opportunities for heavy oil producers. The discussion was structured as one of CHOA's "Beer and Chat" sessions and was held at the Calgary Petroleum Club.
Cogeneration is defined as the simultaneous production of power and useful thermal energy from a single fuel-consuming process. The premise for the topic was that the heavy oil industry in Alberta represents an unparalleled opportunity for application of cogeneration concepts, because:
Alberta's existing power generation supply barely covers peak demand and the provincial pool currently welcomes new power sources
Thermal heavy oil projects require large quantities of steam which represents a ready host of thermal energy
Alberta has an abundant supply of a cheap, available fuel - natural gas
The panel members were Mr. James Brolen, Director of IPP Development for TransAlta Utilities Ltd., Mr. Jason Thompson, Assistant Project Manager for the Primrose Steam Enhancement Project for Amoco Canada Ltd. and Mr. Don Fitzgerald, Sales Manager, Power Projects, Stone and Webster Canada Ltd.
Each member of the panel presented a brief overview of his experience and perspective on the following aspects of cogeneration opportunities for heavy oil: regulatory, financing, design, sizing, cost, timing, etc. Some important issues which were identified included:
Optimizing the thermal design and understanding the electricity market are essential to assessing the economic viability of a heavy oil cogeneration project.
The advantages to a heavy oil producer of a cogeneration project are the reduction in operating costs, the increase in revenue and the reduction in greenhouse gas emissions.
Today's combustion turbines are much larger, much more efficient and much more reliable than those of 20 years ago. Unfortunately, current demand for these machines is very high and the time to develop a project is now in the order of three years from procurement order to operation.
The floor was then opened to general discussion from the floor. The audience numbered over 100 attendees, most of them belonging to heavy oil producers, independent power producers and engineering contractors. The questions posed by the audience fostered a lively discussion about all issues related to heavy oil cogeneration applications that lasted for well over an hour.
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