James analysts. “These types of results do indicate that when applied to a
quality resource—and when the facilities can be operated reliably—SAGD
is a very effective process.”
The technology is maturing, but by no means is it mastered. As was
noted recently by Macquarie Equities Research, few SAGD projects are
achieving design capacity. Macquarie says that top-tier projects such as
Cenovus foster Creek and Suncor Mackay River maintain their positions,
while troubled projects including Nexen Long Lake and Husky Tucker con-
tinue to drag, but also points out that some of the new projects are “shoot-
ing the lights out.” Macquarie also points to Devon Jackfish, MEG Christina
Lake, and Connacher Great Divide as examples of the successful start-ups.
4. opportunities for technology innovation
As in situ technology matures, it is also evolving to increase recoveries and
improve efficiency, says Raymond James.
“There are many potential technologies on the horizon that could drastically improve recovery rates and reduce capital/operating costs for in situ
production including air injection, solvent injection, electrical heating, and
in situ upgrading.”
5. environmental footprint
The Raymond James analysts note that SAGD projects have a
smaller footprint than mining operations, based on brackish-water use and recycle rates north of 95 per cent, as well as carbon dioxide emissions that are “not that meaningful” compared to
those from mining operations.
But environmental groups including the Pembina Institute
warn against environmental comparisons between mining and
in situ that result in the in situ techniques being seen as more
sustainable.
“Calling in situ a low-impact form of oilsands development is
not accurate—it is a myth,” says Pembina oilsands program dir-
ector Simon Dyer. “While more than 4,000 square kilometres of
northern Alberta land has been leased for mining, 80,000 square
kilometres has been leased for in situ development.”
Dyer points to water use, air emissions, and habitat fragmen-
tation as environmental issues facing the in situ sector, but says
if industry followed its own best practices these concerns would
start to be minimized. SR
sAgd Versus MiNiNg
METRIC
INTEGRATED MINING
cost control
Hard to manage; several thousand workers onsite; significant
amount of in-field construction spanning multiple years.
capital cost
$60,000+ per flowing barrel just for mine and $150,000 per
flowing barrel for integrated mining; subject to inflation.
operating cost (Fixed)
Majority of costs fixed—good when production is high, bad
when production is low.
operating cost (Variable)
Purchased energy of 0.7 to 0.9 thousand cubic feet of natural
gas per barrel of synthetic crude oil; overall lower variable
costs.
Sustaining capital
Recent guidance of $5 to $12 per barrel for sustaining capital;
higher because there is more infrastructure.
Scalability
Not very scalable—minimum size usually 100,000 barrels per
day; requires 1 billion barrels of resource.
integration
Often integrated with an upgrader; can be integrated with
a refinery if pipelineable bitumen is produced (paraffinic
process).
environmental
Large footprint, uses fresh water, strip mining.
potential For technology
advancments
Some in operating costs (mobile crushers, less water); limited
upside potential to recovery rates (already 90 per cent plus).
lead-time to production
Can be over four years before first production; significant
delays in regulatory, environment permits, etc.
recovery risk
Close to absolute certainty on resource recovery—relies on
truck and shovel.
Size of resource
Project phases typically 100,000 barrels per day with billions of
barrels recoverable.
RAYMOND JAMES COMPARISON
STAND-ALONE SAGD
Easier to manage; few hundred workers on-site; less on-site
construction required.
Less than $35,000 per flowing barrel for bitumen production;
better insulated against cost inflation.
Less percentage of costs fixed—can cause per-barrel operating
costs to be high when production is higher.
Up to 1.4 thousand cubic feet of natural gas per barrel of
bitumen; more energy intensive; higher variable costs.
Guidance still around the $3 per barrel mark; less infrastructure
but need to drill replacement SAGD wells.
Very scalable due to high use of modules—usually start around
10,000 barrels per day; requires 100 million barrels of resource.
Can be integrated with upgrader or refinery; when mixed with
diluent produces pipelineable bitumen.
Small footprint; uses non-potable water with 95 per cent
recovery ratio.
Several new technologies on the horizon that could lower
capital/operating costs and improve recovery rates (currently
about 50 per cent).
Less than one year construction time; can be as quick as 1.5
years from start of process to production.
Still a well-based process—subject to reservoir “unknowns.”
Project phases typically 10,000 to 35,000 barrels per day with
hundreds of millions of barrels recoverable.
