Oilsands Review - September 2006

R&D
Economics of MSAR ^TMvs. Natural Gas

1,000

800

• MSAR ^TMincreases IRR by 6. 7 percentage points (2.5 SOR)

• As SOR increases, the economic advantage of MSAR ^TMincreases

NPVBT (C$millions)

600

400

200

ILLUSTRATION: Quadrise Canada

0 0.0%

-200

Natural Gas @ 2.5 SOR MSAR @ 2.5 SOR Natural Gas @ 3.0 SOR MSAR @ 3.0 SOR

NG IRR @ 2.5 SOR

MSAR IRR

@ 3.0 SOR

MSAR IRR @ 2.5 SOR

2.0%

4.0%

6.0%

8.0%

10.0%

Discount Rate 12.0% 14.0% 16.0%

-400

Note: McDaniel “SAGD Feasibility Study: MSAR ^TMvs. Natural Gas” dated November, 2005

McDaniel WTI price forecast; bitumen price = 40% of WTI price; 6:1 oil:gas pricing

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Total, with partner ConocoPhillips, is also looking at possible fuel alternatives to natural gas for the companies’ Surmont SAGD facility, says Cartwright. Phase one production is scheduled to start later this year at about 30,000 barrels per day.

Besides Total and Quadrise, three other major oilsands players backed the MSAR pilot at Joslyn: ConocoPhillips, Paramount Resources, and Petro-Canada.

Quadrise, in developing MSAR, didn’t go it alone, either. The company lists several strategic partners, including Akzo Nobel nv, a Netherlands-based chemical company that holds patents on the surfactant chemistry used in MSAR. Quadrise Canada is the sole licensee from Akzo Nobel for the MSAR technology in Canada.

The MSAR technology can use feedstocks that range from minus 10 to plus 14 degrees API. MSAR has been combustion tested at the CANMET facility at the National Research Council in Ottawa. About 15 feedstocks have been successfully tested for combustion and stability with MSAR. These include commercial asphalt, Lloydminster heavy oil, Cold Lake and Athabasca bitumen, upgrader and refinery vacuum residues, and asphaltene bottoms (with bitumen), according to a recent Quadrise presentation.

Adaptability appears central to MSAR technology—and the Quadrise approach to it.

“The type of bitumen [used] affects the process enough to change cost points and how we manufacture the emulsion,” says Lennox. “We have a lab here [in Calgary], so we can assess [the feedstock] within a week or so, and assess what it will take to emulsify and turn into fuel.”

Noting that many oilsands producers are using once-through steam generators, Lennox says the emulsion characteristics can be adjusted to specific boiler-type requirements.

“We can custom-make a stable emulsion that lasts for a specific time, and make it with different chemical, combusting, cost, and stability characteristics.”