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Although it's easily taken for granted, we all need energy. We hit the alarm clock, turn on the lights, run a shower, start the coffee maker, hop in a car, bus or train--hundreds of seemingly insignificant actions each and every day that all have one thing in common--the need for energy.
Even as the sources of energy expand and diversify, global demand for energy will continue to rise sharply as emerging nations strive to achieve the standards of living enjoyed and expected in the developed world. The supplies needed to meet that demand will become increasingly difficult and expensive to find and deliver.
Energy derived from hydrocarbons, including oil and gas, will continue to play the leading role in the overall energy supply mix for several decades. While alterative sources of energy constitute a growing and important portion of the energy mix, the International Energy Agency projections suggest that fossil fuels and other hydrocarbons (such as coal) will supply 84 percent of the overall increase in energy demand between 2005 and 2030. The combined consumption from China and India will account for nearly half of that total. Oil imports for both countries will increase fourfold in the next 20 years, surpassing current combined imports from Japan and the United States.
Finding Reliable, Sustainable Supply to Meet Demand
Finding the additional supply to meet that demand is increasingly difficult. Companies now have to look at more remote and difficult locations to ensure supply and are turning more to unconventional sources to fill the gap.
Many of the world's current producing oilfields are maturing to the point of production decline. In addition, almost 80 percent of the world's current reserves are held by state-owned national oil companies. These countries develop their own resources to meet their own needs first. Many have mixed records of doing business with foreign investors. Of the existing 20 percent of the world's current reserves open to private sector investment, approximately half are located in Canada's oil sands.
In Canada's oil sands and around the world, the challenge is not simply to develop enough energy to meet our own needs; many new sources of energy bring new environmental challenges. Our industry addresses these challenges through investment in, and development of, new innovations and technologies that reduce environmental impacts and ensure sustainability.
The development of Canada's oil sands has been a story of continuous technology and scientific innovation. In the early years, it focused on developing technologies to unlock oil from the sands. Next came the challenge of making extraction economically viable enough to attract billions of dollars in investment. Today, the greatest challenge facing oil sands development is making it more efficient and sustainable. Again, the challenge rests with professionals working to tackle tough issues with good science and innovative engineering. Much progress has already been made. Over the next several pages you will see some of the ways innovation and technology have already had a positive impact on sustainable development practices and the reduction of the industry's footprint on air, land and water.
Air and Climate Change
The challenge we all face is how to reduce greenhouse gas emissions while demand for energy--and the amount of energy the world is consuming--is growing.
Canadians expect the oil sands industry to do its part to help fight climate change. As an industry, we account for five percent of Canada's total emissions and Canada accounts for two percent of total global emissions. Though oil sands represent a small fraction in the greater context, it's still a big number and industry understands it must improve its performance.
Climate change is a global issue that requires global solutions. Everyone needs to play a role. The world has to find ways to both produce and consume oil and gas more efficiently because consuming fossil fuels accounts for 80 percent of the emissions created from fossil fuels and makes up a large part of worldwide emissions.
We firmly believe that new, innovative technologies will help produce more oil and gas to meet growing demand, while also reducing GHG emissions. There are a variety of technologies that we're researching and working with now to make this happen.
Solvents In Situ Production: the Hybrid Car of the Oil Sands
Oil sands operators are exploring the use of solvents with steam-assisted gravity drainage (SAGD) to help loosen and extract bitumen. Laricina Energy CEO Glen Schmidt likens the technology to a hybrid car.
Laricina is one of several oil sands companies that are exploring the use of solvents with steam-assisted gravity drainage (SAGD) to help loosen and extract the bitumen.
Conventional SAGD--using natural gas to create steam--is like a car that burns gasoline. Oil sands operators that are using electrical currents to heat the bitumen are like plug-and-play electric cars, and those using a mix of solvents and steam are somewhere in between the two; like a hybrid car.
"Most things are a spectrum" says Schmidt. "From cold solvents, which use no steam to SAGD or thermal which use pure steam, my expectation is the more optimal design may be somewhere in between."
Laricina has conducted a series of very promising tests with solvents in its Grosmont Formation at Saleski, southwest of Fort McMurray. There are an estimated 318 billion barrels of bitumen about 300 metres underground in the carbonate rock--not traditional sands--in Alberta's Grosmont deposit.
"The overall capacity and quality of the bitumen reservoirs within the carbonates are clearly world class," says Schmidt. "There's an opportunity to use another tool beyond steam because of their greater ability for oil to flow or drain."
Using solvents instead of steam could mean reducing the operating steam-to-oil ratios by 30 percent, with the accompanying reduction in GHG emissions. Laricina is also looking at using a non-condensable gas along with the solvents to see whether steam can be cut out completely, thereby dramatically reducing capital costs and the carbon footprint at the same time.
"Costs and environmental impacts tend to go together in our industry," says Nell Edmunds, Laricina's vice president of Enhanced Oil Recovery, and adjunct associate professor in the Department of Chemical and Petroleum Engineering at University of Calgary's Schulich School of Engineering.
Laricina has recently conducted a second field test of solvent injection into the Grosmont carbonates and its work simulating and modeling solvent-steam combinations is continuing. The company expects commercial production at Saleski could begin in 2013 and advance steadily for 10 to 15 years; with improved recovery techniques, lower operating costs and fewer carbon emissions.
At its Germain project in the Grand Rapids Formation, Laricina is using solvent-SAGD in a demonstration project of 5,000 barrel of bitumen per day to further validate the solvent process.
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Turning Waste into Fuel
Nexen and OPTI Canada's Long Lake project uses innovation to create premium synthetic crude oil, with a unique ability to capture significant volumes of C[O.sub.2].
The project, southeast of Fort McMurray, is the fourth major integrated oil sands project in Canada. In traditional SAGD production, steam is injected into an upper horizontal well which heats and loosens the bitumen so it can drain into a lower well and be pumped to the surface. The bitumen is then diluted and sent to a refinery for upgrading into lighter oil products.
But at Long Lake, the bitumen is upgraded to a premium synthetic crude oil on site with a proprietary OrCrude[TM] unit, a gasifier and a hydrocracker.
As part of the gasification process, asphaltene residue from the bitumen (that's usually waste) is converted into a synthetic gas to run the SAGD and the upgrading operations, significantly reducing the amount of natural gas that's required. In fact, compared to most other traditional SAGD operators, Long Lake uses one quarter the amount of natural gas per barrel of oil produced.
While there's no reduction in emissions using synthetic gas, the project is one step ahead when it comes to carbon capture and sequestration technologies. Long Lake's unique gasification process will allow it to capture a pure-stream of C[O.sub.2], which in turn will make it much simpler and cost-effective to sequester the C[O.sub.2] underground.
The plant at Long Lake was designed to ensure emissions are below regulatory limits and very little surface water is used in the operations. Nexen and Opti are pursuing technologies and strategies to reach a goal of using zero surface water and further reducing the amount of water required.
Construction of Long Lake began in 2004 and the project produced its first synthetic oil in January 2009. Nexen chose the Long Lake site because it had already been used for industrial activity, therefore greatly reducing the land disturbance. Further, Nexen collaborated with Alberta Pacific Forest Industries (APFI) to clear and harvest the trees in the area so the two companies in different industries could share their environmental footprint.
With the OrCrude system at Long Lake, Nexen and Opti are able to create a barrel of high quality, sweet synthetic crude for about ten dollars less a barrel than other operators.
Water Use: Reducing Impacts
Water is an important part of oil and gas production, and as Canada's oil and gas industry grows, so does the demand on water resources. In oil sands production, water is used in the following ways:
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