Essay: Steam Assisted Gravity Drainage in Alberta Oil Sands

Executive Summary

The purpose of this report is to rapidly familiarize the reader with the use of steam-assisted gravity drainage (SAGD) in the extraction of hydrocarbons from Alberta’s extensive oil sand formations. To that end, it introduces both the Athabasca oil sands and describes the relevance of SAGD to the feasibility of exploiting them. Next, it offers a process overview of SAGD. Third, the limitations of SAGD in its current applications are critically evaluated; the importance of energy cost, environmental degradation, and current regulatory approaches are emphasized. Based on this information, possible future directions for SAGD theory and practice are explored, including an evaluation of the importance of incremental innovations like Fast-SAGD on the one hand and disruptive innovations like combining traditional SAGD with renewable energy sources on the other. Overall, the economic importance of SAGD and SAGD-relevant technical, process, and regulatory developments are highlighted. Further attention from scholars, policymakers, and industry stakeholders is strongly indicated.

Introduction

The Athabasca oil fields in Alberta contain some of the largest and most concentrated hydrocarbon formations known to exist on the planet (Galarraga & Pereira-Alamao 2010; Graney et al. 2017). Despite the fact that an unusually large proportion of these mineral deposits are located relatively close to the surface, however, recovering them in an economically cost-effective manner poses an array of technical and environmental challenges, which largely center on the fact that these hydrocarbons exist as a thick and highly viscous mixture of sand and other relatively inert components (oil or tar sands). First proposed in the late 1970s, steam-assisted gravity drainage (SAGD) quickly gained recognition as an extractive approach that could significantly expand the proportion of the Athabasca tar sands that might be economically recoverable. Briefly, SAGD is a mining technique involving steam stimulation to reduce the viscosity of oil and bitumen so that it can be partially isolated and pumped to the surface. As the technique has developed and become more refined, it has been used extensively in Alberta oilfields and is responsible for a substantial share of their productivity.

The purpose of this technical report, therefore, is to rapidly and concisely familiarize the reader with the theory and practice of SAGD, and specifically its applications in Alberta, in a thoroughly-cited, evidence-based fashion. To that end, the discussion unfolds as follows. First, the stage is set with a contextualizing section introducing Alberta’s oil sands, including a brief review of their geology and human development, leading up to the introduction of SAGD. Next, the discussion turns to SAGD itself, including its basic concepts and an outline of its key processes, uses, and mechanisms. The third section takes a more critical look at the practice, exploring some of its major costs and limitations. The fourth section synthesizes these threads in order to offer some speculation about the future of SAGD in Alberta. Finally, a summative conclusion reviews key points and underscores questions requiring further investigation.

Discussion

Alberta oil sands and SAGD

The productive potential of Alberta’s oil sands is the result of a story of physical and biological processes interacting over the course of geologic timescales. It begins with the birth and death of a sea that once covered much of Alberta:

About 100 million years ago, streams from the western Rocky Mountains and the eastern Precambrian Shield drained into the northern portion of the Canadian Prairie Province of Alberta, forming a massive inland sea (McLennan & Deustch 2005, p. 204-1).

Over the following millennia, this sea progressed through a kind of life cycle, transitioning through its “fluvial, estuarine, and marine phases”; although it ended in evaporation, this process ultimately created substantial sedimentary deposits rich in organic material which were “capped by marine shale” (ibid.). Finally, oil “percolated” through these sedimentary pores, where it lay dormant for many millennia more before it began to attract the interest of human interests. The first exploitation of these deposits was probably by the Cree people, who collected bitumen from the surface and mixed it with fir resin in order to seal joints and leaks when building and repairing canoes, and occasionally as a waterproofing agent on their moccasins (Langley 2006; McHolm 2017).

Today, the Athabasca oil sands constitute not only the largest tar sand deposit in Alberta, but also offer the most extensive reservoirs of crude bitumen known to exist anywhere on the planet (Hein & Cotterill 2006; Galarraga & Pereira-Alamao 2010). Although even relatively early geological surveys suggested that the economic potential of Alberta oil sand deposits was substantial, estimates have been repeatedly revised upward as new technologies have made exploitation increasingly efficient and cost-effective. SAGD, therefore, can be understood as a particularly notable development in a long line of innovations that have rendered previously-inaccessible or non-viable deposits available for extraction.

Figure 1: Idealized depiction of oil sand composition. (Source: Carrigy 1964, p. 194).

Indeed, Alberta’s oil and bismuth deposits pose a range of technical challenges with respect to cost and energy effective extraction, despite the fact that the sands themselves are in many cases located just a few feet under a surface of muskeg, clay, or sand. The challenge in Alberta centers not around reaching the oil, but rather around extracting it and processing it into a usable form by removing inert components: specifically, the Athabasca sands (and particularly the McMurray formation) exist as a mixture of sand and a number of highly viscous hydrocarbons known as pentanes, and this mixture “is not usually recoverable at a commercial rate because it is too thick to flow” when in its natural state (Mondal & Dalai 2017, p. 122). Notably, the Athabasca oil sands are hydrophilic: from an anatomic perspective, they generally consist of a sand particle as a nucleus surrounded by an envelope of water, fine particulate matter, and finally bitumen film (Fig. 1). One common solution to the problem posed by separation into usable components involves targeting the most accessible deposits (i.e. those at the shallowest depths), mining the entire mixture sand and all, and transporting it to an extraction facility where its components are separated using heat, agitation, and gravity-driven separation (pp. 122-23). A significant proportion of Alberta’s tar sand deposits, however, are not sufficiently close to the surface for this solution to be viable either technically or economically. In such cases, an alternative approach known as SAGD is often preferable. This process is discussed in more detail in the following subsection.

SAGD: History and process overview

As implied above, SAGD is a process carefully designed to exploit certain chemical and physical properties of difficult-to-extract oil reservoirs in order to enhance the efficiency and cost-effectiveness with which these mineral deposits can be exploited. As with other forms of steam stimulation in the oil recovery and mining domains, the SAGD process can be thought of largely in terms of the relationship between pressure, heat, gravity, viscosity: it utilizes steam stimulation to reduce the viscosity of a target mineral deposit, allowing it to passively (via gravity) move into a collection chamber. Although steam stimulation itself represent a fairly well-established technique for facilitating the extraction of viscous mineral deposits like oil and bitumen, the specific process used in SAGD largely emerges from the innovative work of Roger Butler in the late 1970s (McClellan & Deutsch 2004).

In most applications, the SAGD process begins with the drilling of two horizontal wellbores in a vertical arrangement (i.e. one well is on top of the other, and the two are separated by a relatively narrow layer of substrate) (Fig. 2). The upper (“injection”) well serves as an injection chamber for the steam stimulation process: water vapor is injected into it at extremely high temperature and pressure. These two variables are closely related, since it is fairly well-established that steam pressure can be used as a tool to increase the heat in the injection chamber, which typically translates into increased production, as described below (Butler 1985). Indeed, for practical purposes the steam can be thought of as an affordable, plentiful, and environmentally low-risk heat delivery device with a high heat capacity rather than as a particularly useful solvent: because the viscosity of most liquids decreases with increasing temperature, heating the target deposit reduces its viscosity and makes it more amenable to extraction. In this case, that is made possible through gravity drainage.

a. Concept illustration

Figure 2: Two depictions of the well arrangements and mechanisms characterizing SAGD. (Source: Polikar, Cyr, & Coates 2000, p. 5)

b. Dual perspective diagram.

Figure 3 : SAGD process and heat chamber. (Source: JAPEX 2017)

This is where the second wellbore comes into play. By using the thermodynamic stimulation provided by steam injected into the upper well, SAGD substantially reduces the viscosity of the target deposit (either heavy crude or bitumen). This allows it to seep through the thin barrier of geologic substrate separating the two bores and drain into the lower (“producing”) well. There, it collects with cooled and condensed water and is pumped to the surface, generally using tools like progressive cavity pumps or electric submersible pumps (Mayo 1996; Zhou et al. 2013). Because steam and other gasses released during the heating process are comparatively low in density, they tend to move upwards, loosening deposits and allowing them to seep into the producing well, rather than excessively heating pooled deposits and enabling them to flow downwards out of it and escape capture. Thus, the physical parameters of the substrate in the mineral formation (e.g. porosity) typically warrant careful analysis and consideration so that the wellbores can be spatially arranged in a manner that permits optimal seepage, collection, heating, and cooling. In some cases, a small quantity of steam is allowed to penetrate the producing bore in order to maintain slight viscosity reductions—ideally enough to facilitate out pumping and bitumen mobility, without allowing the target mineral to leak out of the producing chamber.

Limitations of SAGD

Despite its capacity to significantly increase the scale and scope of economically recoverable oil reserves in Alberta, however, SAGD is far from a silver bullet. Any balanced analysis of the utility of current SAGD applications—or expected future developments, for that matter—requires a critical assessment of its limitations, as well as the costs associated with those applications in all their forms. With this in mind, a brief overview of several key problem areas is presented in this section.

As suggested previously, the SAGD process is highly dependent upon the characteristics not only of the targeted deposit, but also the geologic substrates containing it. Substrate permeability is particularly critical for SAGD to be effective: the barrier separating the injection and productive wells must permit the passage of reduced oil or bitumen viscosity. However, mineral formations like the Athabasca tar sands are commonly associated with shale layers, which are often (though not always) quite low in permeability; depending on their “size, vertical and horizontal location, and continuity throughout the reservoir”, shale layers can pose permeability barriers that can significantly undermine the effectiveness of SAGD (Shin & Choe 2009, abstract; Barillas, Dutra, & Mata 2006). This risk can be mitigated to some degree through careful surveying and design modifications, but nonetheless the presence of shale barriers can reduce the proportion of oil recovered while increasing the optimal steam rate required to recover it (pp. 37-39).

Excessive permeability can undermine the viability of SAGD-based recovery solutions as well. The classic example of a high permeability efficiency problem is that posed by thief zones, or formations “encountered during drilling into which circulating fluids can be lost” (“Thief zone” 2017). It is important to note that thief zones are defined largely in terms of their effects on well productivity rather than with respect to their own physical features, which can make them exceptionally difficult to identify in advance. Indeed, the development of complex mathematical and computational models designed to enable geologists to identify thief zones in active wells represents an active area of ongoing research (Feng et al. 2011; Li, Yang, & Lu 2016).

It is well worth noting that the limitations outlined above are articulated from the perspective of mining interests themselves. If a more environmentally-oriented perspective is adopted, then there is a case to be made that even the most compelling advantages of SAGD can be interpreted as among its most serious threats. After all, simple supply and demand suggest that by increasing the quantity of economically recoverable reserves, SAGD contributes to keeping the price of crude low, thereby making investments in more sustainable low- or zero-carbon technologies less competitive and generally undercutting the growth of the green energy sector (Barillas, Junior, & Mata 2008; Levi 2009; Speight 2013). It is important to note, of course, that in many respects such arguments are contingent upon the assumption that prevailing regulatory frameworks will be maintained, particularly with respect to taxation and environmental costing.

Current approaches both domestically and internationally have created ample space for mining and energy interests to externalize many environmental costs associated with the extraction, refinement, and use of their products. In the case of oil sands extraction in general and SAGD in specific, for instance, it takes energy to make energy: fossil fuels are typically burned to power mining equipment (notably including water heating and injection) as well as to transport and process the resulting crude products. Alterations to the regulatory environment, such as the introduction of a carbon tax, more stringent cap-and-trade scheme, or even more restrictive policies regarding water and environmental remediation, could substantively impact the economic calculus surrounding the cost-effectiveness of SAGD as a practice—both in Alberta and beyond (Nasr & Ayodele 2006; Mohebati, Maini, & Hughes 2009; Lawal 2014).

Future directions: Improving SAGD

Based on the discussion presented above, it may be useful to take a moment to consider how the advantages, limitations, and costs of current SAGD approaches might influence the development of the practice moving forward. How can SAGD be improved in order to better address these issues without sacrificing its key advantages over approaches like surface mining in Alberta?

As with any extraction process, the competitiveness of SAGD can be improved through design modifications aimed at improving speed, productivity, and efficiency; thus, it should come as no surprise that research is underway seeking to optimize SAGD in precisely these ways. A particularly notable development is the growing popularity of Fast-SAGD. Initially proposed in the form of a theoretical model nearly two decades ago, Fast-SAGD was marketed with a compelling tagline: “Half the wells and 30% less steam” (Polikar, Cyr, & Coates 2000, abstract; Fig. 3). Briefly, this approach involves configuring the wellbore arrangement in order to include an additional offset well “equidepth and parallel to” but displaced from the producing well, such that differential steam stimulation of the producing and offset wells creates steam communication, enabling a “markedly increased rate” of production while simultaneously reducing the ratio between steam and oil pumped from the well. (p. 1). In field testing, this configuration may not have lived up to the promise of half the wells and 60% required steam, but in many settings Fast-SGD can measurably improve performance efficiency (Shin & Pilikar 2007).

Figure 4: Transverse section of the Fast-SAGD process (Source: “Criteria” 2008).

Even so, it is important to note that Fast-SAGD represents a relatively incremental innovation insofar as it preserves the basic design, processes, and mechanisms of traditional SAGD, with only minor conformational alterations. It is entirely possible, however, that the future of SAGD holds more disruptive innovations as well. While such innovations are by definition difficult to predictively characterize in any specific or reliable fashion, the discussion presented above may shed some light on the problem areas that such innovations might target. At the paradigmatic level, two basic problems seem to loom above the rest: namely, the energetic and resource costs associated with water heating, steam production, and pumping; and the overall economic and environmental sustainability of the practice.

Although it may seem counterintuitive, it is not outside the realm of possibility that the environmental and economic calculus of SAGD could be significantly altered by the introduction of renewable energy sources into the process. Some industry professionals have proposed utilizing thermal solar power stations, which utilize “large arrays of mirrors” to capture and focus solar energy, in order to heat water and produce steam, which can then be used either directly to steam wells or more indirectly as a means of producing cheap electricity which can then be used to power mining operations (Wohlberg 2014, p. 1). Similarly, Kraemer et al. (2009) propose using solar energy in order to generate mid-temperature steam in conjunction with “the thermal mass of the oil sand formation” itself as a means of enabling cycles of steam injection “during solar availability while still yielding continuous bitumen recovery” (p. 1437). Another approach involves searching for more energy-efficient alternatives to steam stimulation: Suncor Energy, for instance, is actively exploring the possibility of using high-energy radio waves in lieu of steam to stimulate reduced bitumen viscosity (Jamasmie 2015).

Conclusion

For better or worse, today’s global economy continues to rely heavily on the energy produced by fossil fuel combustion. In that context, SAGD’s capacity to cost-effectively (at least under current regulatory regimes) render previously inaccessible segments of Alberta’s extensive hydrocarbon reserves economically recoverable is no small accomplishment. In its most basic form, SAGD involves drilling two horizontal parallel wellbores, one located slightly above the other. Pressurized steam is injected into the upper bore to reduce the viscosity of oil and bitumen and stimulate its gravity-driven drainage into the lower well, where it is pumped to the surface and processed. The utility of the practice is limited to a large degree by its direct and indirect environmental consequences as well as the energetic requirements required to power the process, both of which make its economic viability vulnerable to regulatory changes penalizing carbon emissions and environmental degradation. The future of SAGD will likely be shaped partially by incremental innovations like Fast-SAGD; however, more disruptive developments like steam generated through the concentration of solar thermal energy could have far more substantial repercussions for the practice due to their potential to significantly improve its cost-effectiveness while mitigating the scale and scope its negative environmental costs. Further attention by policymakers, scholars, and industry professionals, therefore, is strongly advised.

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