Nexen Long Lake in situ mine site
photo credit: Pembina Institute blog, May 28, 2010, http://www.pembina.org/blog/384.
According to an April 17, 2017 article in the industry publication, The Daily Oil Bulletin, oil sands producers have been in discussions with the Government of Alberta for some time regarding the establishment of a new, joint government-industry project that would develop and test technologies for steam-assisted gravity drainage (SAGD) extraction of bitumen from the oil sands.
In this article, CAPP’s Vice President (Oilsands), Ben Brunnen, says that this project, “possibly producing somewhere around 25,000-30,000 bbls of bitumen a day—would cost hundreds of millions of dollars.”
The article–unfortunately pay-walled, but accessible by subscription–further states:
According to CAPP’s calculation, if steam/oil ratios could be cut by five per cent, the province could add an additional 140,000 bbls of bitumen production per day within the emissions cap. To put that in perspective, Imperial Oil Limited’s total Cold Lake bitumen production averaged 159,000 bbls a day in the fourth quarter of 2016. In other words, cutting steam/oil ratios by five per cent would allow investments almost on the scale of Cold Lake, which took decades to develop, to occur under the 100-megatonne cap. An additional 140,000 bbls a day of bitumen production would have a huge economic benefit. “We translated that into an additional 20,000 jobs and $500 million of royalties annually in a post-payout scenario,” said Brunnen.
Another article in JWN also reports on CAPP’s “new AOSTRA” proposal.
Cenovus, having recently bought a significant ConocoPhillips holding in the oil sands, is counting on a “technological renaissance” to make extraction of bitumen at $50/barrel US oil prices profitable.
Various technologies for substituting steam with solvents are outlined in a report by the Canadian Energy Research Institute (CERI), released in March 2017.
Environmental risks associated with the injection of solvents and with the mobilization of toxins from bitumen deposits have not yet been adequately researched, but there are reasons for concern about contamination of ground water and of the areas around the drilling sites. Moreover, in situ mining damages and disturbs large areas of habitat.
Google satellite image of in situ development near Cold Lake, Alberta
Photo credit: Simon Dyer, “In situ production not an environmental gamechanger,” Pembina Institute blog, May 28, 2010, http://www.pembina.org/blog/384.
In its submission to the Royalty Review Panel in 2015, CAPP recommended:
* the removal of the Scientific Research and Experimental Development (federal tax credit) expenditure limit;
* doubling the Innovative Energy Technologies Program (IETP) funding envelope (royalty credit administered by Alberta Energy) “to further encourage innovation in the extraction and production of oil and gas, and the mandate be expanded to include environmental technology”;
* the creation of a new set of “allowable costs” related to R&D that may be deducted from royalty payments;
* and the creation of “an oil and gas research authority, building on existing collaborative organizations, to coordinate public and private sector research efforts to enhance innovation and technology commercialization of oil and gas extraction technologies and environmental performance” (Executive Summary, p. 11).
In its July 2017 communication to the Government of Alberta, entitled “A competitive policy and regulatory framework for Alberta’s upstream oil and natural gas industry,” CAPP again asked for more tax credits for R & D related to oil sands technologies:
- Prioritize oil sands technology commercialization, such as solvents, that lower costs and per barrel GHG emissions.
- Meaningful policy changes to encourage investment in the commercialization of technology such as solvents and partial upgrading the [sic] increases bitumen value to the Province, reduces SOR and GHG foot print in development of the resource, and Increases market share and competitiveness.
- Potential financial levers include Accelerated Capital Cost Allowance for clean technology (federal and provincial coordination), municipal tax caps (pre and post payout), investment/ R&D tax credits, favorable financing terms/ access to capital (p. 27).