Steam assisted oilsands plants struggle Steam assisted oilsands plants struggle with new technology 'hiccups'
CALGARY, Sep 14, 2004 (The Canadian Press via COMTEX) --
Large oil producers Suncor Energy and Petro-Canada continue to wrestle with reliability problems in their new oilsands projects that use steam to melt the thick bitumen deposits deep underground.
And while many of the bugs have yet to be worked out, a raft of new oilsands projects worth billions of dollars are being built in northern Alberta using the same technology.
Suncor's brand-new $630-million Firebag operation has now been out of production for more than four weeks since troubles with its water-treatment plant required maintenance just seven months after the plant started up.
"We were getting mineral scaling in our steamers because we had problems with our water treatment, basically like the scaling in a kettle," said Suncor spokesman Brad Bellows.
While repair costs are not expected to be material, the shutdown has forced Suncor to lower its annual production targets from Firebag. Still, Suncor (TSX:SU) is writing off the problems to "start-up issues" and is carrying on with development of its $510-million expansion of the Firebag project.
"Bringing a new facility on line takes time and we expected that we'd need to work through some hiccups - this is one of them," said Bellows.
Steam technology, known in the oilpatch as steam assisted gravity drainage, has become necessary to access most oilsands deposits that are buried too deep for traditional open-pit mines such as Suncor's main operation, Syncrude Canada and Shell's Athabasca oilsands project.
In simple terms, the technology involves boiling steam to pump down a well shaft and heat-up the gluey bitumen deep below. Once melted, the oilsands are drawn up to the surface through a second well and then sent away to be upgraded and refined into synthetic crude.
But in reality, the process is far from simple.
Big problems have occurred when the geology allows steam to escape, instead of it being contained in the oilsands resevoir. And countless headaches have been caused in water recycling efforts as greasy, dirty water can damage the steaming equipment.
Perhaps the biggest concern is the reliance on natural gas to fuel the boilers that turn the water into steam. With the rising cost of gas, the race is on to find new technologies that are cheaper and lessens demand on gas.
Petro-Canada (TSX:PCA) has had even more difficulties with its $300-million MacKay River steam assisted plant since it started up in 2002. The Calgary energy giant is currently undertaking a five-day shutdown for regular maintenance and to install $25-million worth of new equipment to improve reliability.
"There's no question that water handling has been the biggest challenge, but thankfully we've navigated most of those bumps in the road," said Sue MacKenzie, bitumen general manager in Petro-Canada's oilsands group.
"Through process improvements and equipment modifications, we've pretty much stabilized the operation and are producing very consistent, quality water."
Petro-Canada also recently decided that the reservoir geology was not good enough to proceed with a second steam-assisted plant called Meadow Creek even though the company already had regulatory approval for the project.
According to energy analyst Will Lacey, steam-technology in the oilsands is "not a pure science - there is a bit of luck associated with it and there's a lot of learning after the fact."
Lacey, with Calgary-based FirstEnergy Capital, said current technological troubles facing the industry will have to be figured out because the size of the oilsands reserves is just too huge to ignore.
"But at the end of the day when you're sticking a pipe underground and putting a bunch of heat under there, you're never a hundred per cent sure until it's producing."
EnCana Corp. (TSX:ECA), which started Canada's first commercial-scale steam-assisted plant three years ago with its Foster Creek operation, also had difficulty ramping up problem-free production.
But the company is now getting about 36,000 barrels a day from its steam-assisted projects with plans to incrementally ramp up production by a further 30,000 barrels in the next few years.
"We're further along on the operating and learning continuum than other plants are because we just started earlier," said EnCana spokesman Al Boras. "So I think we've got a lot of the bugs worked out."
There are a host of big steam-assisted projects in the works for northern Alberta, with more in the planning stages.
Houston-based ConocoPhillips has partnered with French energy giant Total for its $1.1-billion-US Surmont oilsands plant; Husky Energy (TSX:HSE) is gearing up to build its $500-million Tucker plant; Oklahoma-based Devon Energy is proceeding with its $550-million Jackfish oilsands plant, and Nexen Energy (TSX:NXY) is building its $3.4-billion Long Lake plant and upgrader.
Nexen and its partner Opti Canada (TSX:OPC) hope to slash operating costs significantly by using new technology to produce synthetic gas that will fuel the plant. And company spokesman Kevin Finn said his company will succeed.
"Go back in history, go back to Syncrude and Suncor, they went through many of the same issues with respect to technology that companies are going through now," he said. "And ultimately they nailed the technology, the technology works very well."
"As with all technology, there's an evolutionary process and we have no doubt that we are going to achieve our goal."
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