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Msg  113770 of 131655  at  7/17/2010 12:01:04 PM  by

crackerjax


Strong Buy

SAGD today is not the same innovations will be a game-changer in terms of well productivity

 
  • SAGD today is not the same  innovations will be a game-changer in terms of well productivity
  • Technology Promising For Unconventional Oil Exploitation
 
 
 
By: Elsie Ross
CALGARY, Alta.

Technological change can be a game-changer when applied to unconventional oil wells, a panel of steam-assisted gravity drainage (SAGD) players told the TD Newcrest unconventional oil forum Thursday.

"SAGD today is not the same as it was in 1987, it is not the same as it was when it started to be applied in the oilsands 10 years ago and five years from now it is going to be a lot different than it is today through a variety of innovations," said Dick Gusella, chairman of Connacher Oil and Gas Limited, which operates the Great Divide and Algar bitumen projects.

"There will be a lot of change; I think it's going to be a game-changer in terms of well productivity," he said.

In 1987, Gusella was part of the first SAGD project in a conventional heavy oil reservoir at Tangleflags, Saskatchewan.

Connacher expects gas co-injection to be a factor. It has an application before the Energy Resources Conservation Board and expects to receive word on it shortly, said Gusella.

"In effect you create a thermal blanket at the base of your cap rock in order to continue to insulate heat," he said. "Preserving heat and distributing it efficiently are two of the key things that make SAGD work very effectively."

High temperature electrical submersible pumps (ESPs) designed for tough conditions such as SAGD wells also are coming in vogue, especially for operators such as Connacher who have bitumen at 450 metres subsurface and higher temperatures to deal with, he said.

Other SAGD advances include slotted liners, the positioning of tubing in the reservoir and better overall instrumentation as far as understanding where the steam is going and how it can be reorganized to result in the most efficient steam chamber.

Connacher believes the next big jump for SAGD will be solvent injection. "We think this will be a game-changer relatively with the same kind of impact that pumps have had, moving away from gas lift," said Gusella.

Because SAGD is still relatively new, development of these new technologies, whether it's infill wedge wells or ESPs, is "hugely material," suggested Chris Slubiski, chief executive officer of OPTI Canada Inc.

"If the recovery rate is 45% or 46%, it goes to 55% to 65% to 75%," he said. "We're not there yet but that's the kind of influence we are talking about."

As the price of oil goes up, operators can afford to spend more money to try different technologies and can afford to go after more of the marginal resource, said John Festival, president of BlackPearl Resources Inc. The result will be more marginal resources being developed at a higher cost, he said.

A veteran player in the heavy oil business, Festival headed Black Rock Ventures until its sale to Shell Canada Limited in 2006.

Gusella recalled that at Tangleflags in 1987, with an oil price of $30 per barrel, "we were drilling vertical wells that produced water preferentially." By the end of the first phase of the steam injection pilot, the company had flowing oil wells at 3,000 bbls a day. "Really, you're going from nada to 3,000 bbls a day, that's what I call a game changer," he said.

However, the latest in cutting edge technology isn't for everyone, Byron Lutes, president of junior Southern Pacific Resources Corp., told the forum. For a smaller company such as his, which has yet to build its first project, using the existing technology available today "is still leading edge," he said. "Our staff and people are very much in tune with what works today," Lutes added. "I don't want to put our company in the position of where we are trying the next jump in technology with SAGD."

Rather, "we want to make sure it works when we put it onstream."

Southern Pacific, though, obtained a lot of technology and experienced people acquired with its acquisition from then Encana Corporation of its Senlac, Saskatchewan SAGD project and has been looking into ways that can be applied to its proposed McKay project.

At McKay, Southern Pacific has a thin (six to eight metre) heavily saturated (80%) Wabiskaw zone about 10 feet above its McMurray sand in which it is planning a 12,000 bbl per day SAGD project. Because the formation is too thin for SAGD, the company is looking at trying to recover the bitumen using the heat from the SAGD chambers down below, said Lutes.

"We think there's a good chance we can recover that Wabiskaw oil."

The company is working on a pilot project for that. "That would be leading edge but it's very low risk because we're going to have a project sitting there and we are going to have steam to try it on a couple of well pairs," he said. "If it works, it's a huge bump in our recoverable oil in that particular project."

Lutes remains confident the McKay project will receive regulatory approval at the end of August, enabling the company to move quickly this fall on road construction and final awarding of bids on facilities. Construction will be fully underway a year from now with completion by the end of 2011 with first steam in January 2012, ramping up through the year with full production by 2013.

Plans call for 12 well pairs on two pads to get the project up and running and over time that will be increased to 75-80 well pairs on 12 well pads.

Heading into the fall, Southern Pacific is still very confident of its final capital cost estimate (plus or minus 10%) in April, said Lutes. The company is starting to get back bids on the larger vessels and pieces and everything the company has seen to date indicates that costs are in line with the estimate or that bids are coming in slightly under the estimates.

At Senlac, Southern Pacific has just finished drilling two infill wells in between three existing well pairs, on time and on budget. The wells will be coming onstream and ramping up at the end of July and into August and are expected to add 500 to 600 bbls per day of production. The company has reviewed the development plan and three-dimensional seismic that came with the project. It has about 17 phases of development, each consisting of two SAGD well pairs per phase.

"Our target is just to keep this plant filled between 4,000 and 5,000 bbls per day for the next 10 to 15 years," said Lutes. "It becomes a great cash engine for us to use for other projects and also for a great learning and training centre for other projects we are working on."

Southern Pacific has identified two additional growth areas at McKay. It is currently working on environmental data and hopes to file regulatory applications by next summer. That would put two 12,000 bbl per day projects about two years behind the first phase of McKay.



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