The days of oilsands producers sanctioning new megaprojects may be over, but that doesn’t mean companies have stopped seeking production growth.
In the lower-for-longer oil price world, producers are closely examining their assets to see where existing operations can be optimized, and many are having luck.
And in the spirit of an industry characterized by long-term, low-decline investments, the regulatory process for some new projects continues to advance, even starting fresh in recent months.
1. Cenovus Energy: Second project restart expected in June
In December Cenovus Energy announced it would restart construction of the 40,000 bbl/d Phase G expansion at its Christina Lake SAGD project, and then in February—shortly before the announcement of its $17.7 billion buy of SAGD and Deep Basin assets from ConocoPhillips—the company hinted it would restart another thermal project in the near-term.
In June Cenovus will release details on the timing and cost estimates for the 30,000 bbl/d Foster Creek Phase H and 45,000 bbl/d Narrows Lake Phase A (a first commercial application of solvent co-injection).
“We could be in the position where we’re reactivating one more phase in 2018 and then potentially one more phase in 2019 but stay tuned for details on that in June,” CEO Brian Ferguson said.
2. Canadian Natural Resources: SAGD restart and upgrader debottleneck
Even before its $12.74 billion acquisition of oilsands assets from Royal Dutch Shell and Marathon Oil, Canadian Natural made it clear it is interested in oilsands growth.
In late 2016 the company restarted construction of its 40,000 bbl/d Kirby North SAGD project, and in early 2017 announced that it will soon decide whether to proceed with a debottleneck at its Horizon upgrader that could add production of up to 15,000 bbls/d.
Meanwhile, the company is nearing completion of the 80,000 bbl/d Phase 3 expansion at Horizon.
3. Suncor Energy: Setting up for long-term SAGD
Suncor may not be building new greenfield SAGD projects right now, but the company continues to advance them through the regulatory process.
In January 2017 Suncor initiated the environmental impact assessment for the proposed 40,000 bbl/d Meadow Creek East SAGD project. Suncor filed the regulatory application for the adjacent Meadow Creek West project in 2015.
Construction of Meadow Creek East is expected to begin in 2019-2020, followed by first oil in 2023, while construction of Meadow Creek West is expected to begin in 2022, with first oil in 2026.
4. MEG Energy: Expansion, tech testing and new SAGD application
MEG energy is proceeding with further roll out of its successful eMSAGP production enhancement system across its Christina Lake SAGD project this year, planning to increase production by 20,000 bbls/d. Volumes are expected to start coming online later this year.
Meanwhile, in February 2017 the company filed the regulatory application for its planned May River SAGD project, a phased facility with total production capacity of 164,000 bbls/d.
May River would use its eMSAGP technology “where applicable” to improve efficiency, MEG says. Construction on the first 40,000 bbl/d phase could begin in 2019.
MEG also recently filed an application to expand its field trail of a new propane-based in situ oilsands technology, just five months after the start pilot operations.
The system, called eMVAPEX, co-injects propane with steam with the goal to dramatically reduce water use and increase efficiency, lowering costs and greenhouse gas emissions.
5. Pengrowth Energy: Optimizing and expanding SAGD
Pengrowth Energy divested of $272 million in Montney and Swan Hills assets in March as it continues its focus on development of its core Lindbergh SAGD project.
The company plans to increase production by about 3,000 bbls/d this year through new well pairs, infill drilling and associated facilities.
Meanwhile, Pengrowth expects to be 70 percent finished design for the 17,500 bbl/d Phase Two expansion at Lindbergh by the end of the year, ready to execute as funds become available.
The company also filed a regulatory application in February 2017 to increase approved Lindbergh capacity from 30,000 to 40,000 bbls/d without adding any additional steam generation capacity, thanks to strong performance at its existing operations.
6. Sunshine Oilsands: Finishing touches on capacity-doubling SAGD
Sunshine Oilsands signed an MOU with China Petroleum Engineering & Construction Corporation in March 2017 to explore completion of activities to increase production capacity at its new West Ells SAGD project from 5,000 to 10,000 bbls/d.
The expansion is expected to cost just $50 million, but that’s because it is already nearly finished. The main surface facilities already exist and all eight SAGD wells have already been drilled.
Sunshine commissioned West Ells Phase 1 in late 2015 after delaying start-up twice due to market conditions.
7. Husky Energy: SAGD production capacity increase
Husky Energy is seeking AER approval to increase the capacity of its Sunrise SAGD project to 69,000 bbls/d from the current design capacity of 60,000 bbls/d.
In an application to the AER in late 2016, Husky said it believes it can boost the oilsands project’s capacity by 9,000 bbls/d by optimizing existing infrastructure and by operating all 10 once-through steam generators at their full capacity of 100 megawatts.
The company said debottleneck studies concluded production capacity could be increased without additional equipment, infrastructure or surface footprint.
8. Osum: Optimizing SAGD at Orion
Osum Oil Sands says it has found a way to increase production and improve efficiency at its Orion SAGD project without proceeding with a full project expansion.
While the company has regulatory approval to expand capacity from the current 10,000 bbls/d to 20,000 bbls/d, the expansion has been put on hold.
Meanwhile the company filed an application in April 2017 to increase Orion production from 8,000 to 13,500 bbls/d by drilling eight new SAGD well pairs on existing well pads, and adding central processing facility infrastructure including a third evaporator for water treatment.
Osum plans to start working on the project by November 2017, with commissioning and first steam by mid-2018, a schedule is contingent on receiving regulatory approval by September of this year.
9.Japan Canada Oil Sands: SAGD production restart
JACOS filed an application with the AER in January 2017 to restart production at its Hangingstone SAGD project, which it suspended in May 2016 due to market conditions.
Hangingstone was expected to be idled for 10–12 months.
“JACOS requires AER approval such that we are able to react quickly when market conditions support a restart of the demo project,” JACOS regulatory director Enzo Pennacchioli wrote to the AER.
The company continued in its submission that bitumen prices have “recovered to the point where restarting the project is being considered.” Timing on the restart is uncertain, JACOS said, but indicated that it would take about four months following regulatory and corporate approval to return to operations.
10. Koch/Pengrowth: New SAGD application
In December 2016 Koch Oil Sands filed an application with the AER for a new 12,500-bbl/d SAGD project owned jointly with Pengrowth Energy.
The project, called Selina, would be located near Pengrowth’s high-performing Lindbergh SAGD project, south of Bonnyville, within the Elizabeth Metis Settlement.
The application says that construction is expected to take 12 months, starting in late 2018.
In December Koch also asked that the AER rescind its approvals for another SAGD project called Muskwa.