Alberta approves 95,000 b/d in oil sands projects

The Alberta government has approved three oil sands projects representing 95,000 b/d of oil production and $4 billion (Can.) of potential investment.

Blackpearl Resources Inc.’s Blackrod steam-assisted gravity drainage (SAGD) development, Surmont Energy Ltd.’s Wildwood SAGD development, and Husky Energy Inc.’s Saleski development now await final investment decisions, the timetables of which are uncertain given lower crude oil prices.

Although oil sands production costs are falling, an IHS report late last year estimated that SAGD projects required a West Texas Intermediate price of $55-65/bbl to breakeven in 2015.

The 80,000-b/d Blackrod project is 200 km southwest of Fort McMurray in the Athabasca region. As of Dec. 31, 2015, the firm’s independent reserves evaluator assigned 180 million bbl of proved plus probable bitumen reserves to its Blackrod leases and an additional 453 million bbl of contingent resource, representing a production life of more than 20 years.

“In addition to extensive delineation drilling and seismic coverage over the application area, we have run a successful SAGD pilot at Blackrod during the last 4 years that validated the SAGD process on our lease,” said John Festival, BlackPearl president and chief executive officer. The pilot averaged 550 b/d of oil over the last 16 months with an oil-steam ratio of 2.8.

The 12,000-b/d Wildwood project is 65 km south of Fort McMurray, immediately west of ConocoPhillips Canada’s Surmont oil sands project. The SAGD project comprises 800-m long horizontal well pairs drilled at depths of 485 m.

Surmont Energy says Wildwood’s design incorporates comprehensive measures to minimize environmental impacts, including a low surface footprint, no surface water use, recycling up to 97% of water produced by the bitumen extraction process, utilization of natural gas to fuel steam generation and electricity cogeneration, and progressive surface reclamation throughout the life of the project.

The firm assesses production from the Wildwood leases to be capable of expanding to 30,000 b/d assuming required additional regulatory approvals.

The 3,000-b/d Saleski project is 100 km to the west of Fort McMurray. Husky holds the oil sands rights in the bitumous Grosmont, Ireton, and Nisku formations, covering more than 241,000 acres.

The proposed developments by the Calgary-based firms will fall under the new 100-megatonne greenhouse gas emissions limit for oil sands projects, announced with Alberta’s Climate Leadership Plan late last year. The Alberta government says the three projects combined represent about 2.5 megatonnes of GHG emissions.

Contact Matt Zborowski at matthewz@ogjonline.com.

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