Meeting unconventional challenges

In Canada’s Alberta oil sands, Vancouver-based Sunridge Energy Corp (TSXV: SRG.V) says it has signed a binding letter of agreement with a US company, Current Environmental Solutions LLC (CES) to use CES’ technology to extract bitumen. Under the terms of the five-year agreement, CES has the option, by contributing 5% of the costs, to gain a 5% interest in any of Sunridge’s oil sands projects.

Beyond surface mining, oil sands companies are focusing on two depth zones, the first in relatively shallow depths of 75-175m, which is where Sunridge says that CES’ technology is most effective, and the second at 175-275m where methods such as steam-assisted gravity drainage (SAGD) come into play. Sunridge says that it is planning to deploy CES’ technology on two projects in the final two quarters of 2011.

CES first commercialised its six-phase oil heating (6POH) in 1997 to clean up hydrocarbons in the US. Heat is generated through electrodes in the ground where the in-situ steam pushes the hydrocarbons up through collection wells. The company says that the technology has been used at over 50 sites worldwide and has a recovery rate of over 70%. For the oil sands application, CES will use 6POH to heat the bitumen reservoir to around 100˚C, when the bitumen’s viscosity will become similar to that of light oil, allowing low-cost conventional pumping. Sunridge says that no water is involved for steam generation, meaning that the operation is low-emission with less impact to the environment. “We are confident this technology will allow us to extract the extensive reserves of shallow depth targeted oil at costs comparable to or less than steam injection used at deeper depths,” said Sunridge President and CEO, Dwayne Tyrkalo, in a statement.

Process automation and optimisation

Also in the Alberta oil sands, Rockwell Automation (NYSE: ROK) and its Global Solutions team (Rockwell) has won a US$4m order from independent oil sands operator, Grizzly Oil Sands (Grizzly) to use its Rockwell Automation Plant PAx process automation system at Grizzly’s Algar Lake Project SAGD project. “This is a major win for us in the oil sands market, and an important win for our PlantPAx and the Rockwell Automation Integrated Architecture platform,” said Terry Gebert, Rockwell’s vice president and general manager, in a statement. Gebert said that the packages, “Includes architecture, software and power control in one solution, utilising a major process automation system designed to improve plant-wide optimisation and reduce extraction costs.” Grizzly’s current and future oil sites will be monitored and controlled by a shadow control room to be built at the company’s headquarters in Calgary, Alberta. In a statement, Brian Harrison, Grizzly’s engineering vice president, said, “This unique, open architecture is an important reason Rockwell Automation won the order. SAGD production has recently surpassed all other methods of in-situ oil sands recovery. We continue to look for ways to advance our ideas and optimise our efforts to recover bitumen from the 15tnbl of oil in the Athabasca Oil Sands deposit. For our unique Grizzly facility model we needed an advanced, integrated process and motor control system that would monitor multiple SAGD sites from one central location, now and as we expand.”

MFT trials

Tailings from oil sands activity has long been an environmental and publicity thorn in the side for oil sands operators with oil sands giant Syncrude Canada Ltd amongst those operators that are frequently in the news for one reason or another. The pressure is on from regulatory and from public opinion to clean up tailings. Recently, waste transformation specialist, Newalta Corp (Toronto: NAL.TO) said that it had signed a three-year contract with Syncrude for a mature fine tailings (MFT) demonstration project at Syncrude’s mining operation near Fort McMurray, Alberta. Newalta says that the companies have already been working together for two years in trial projects to prove the application of centrifugation for processing MFT.

The new contract is expected to commence in June 2012 with a contract value to Newalta of around CAD20m per year. The operations will be seasonal and probably restricted to around six months in a one-year period. In a statement, Craig Wilkie, executive vice president of Newalta, said that the contract represented an, “Opportunity to showcase our onsite services expertise and help Syncrude meet their environmental objectives in a cost-effective manner.” Newalta says that under the terms of the contract it will design, build and operate a commercial-scale centrifugation demonstration plant to process MFT and separate water from solids for Syncrude. With a tighter regulatory regime for tailings success with MFT could mean the building of a significant new revenue stream for Newalta. “The contract with Syncrude builds on our current base of eight contracts including customers that are using SAGD production,” said Wilkie.

Cutting water use

Reducing water use is issue in the oil sands too. Grizzly is active here as well and says that it will be using GE’s (NYSE: GE) produced water evaporation process at its Algar Lake SAGD project where it says that it will recycle up to 97% of the produced water. Grizzly says that until recently SAGD water could not be recycled as boiler feedwater because it was not possible to achieve the required water quality. Apparently, says Grizzly, GE’s patented evaporation process and contaminant reduction system is the only, “Commercially-proven method currently in use that achieves complete water recycling.” It looks like a win-win-win situation as the company says that GE’s method will dramatically reduce the requirements for fresh water while reducing the capital requirements and also the operating costs.

Innovations are rarely the perfect solution to everything or everyone’s agenda. However, faced with challenges and given the time and resources to develop technologies and, to be prepared to change them if they don’t work out, fossil fuels should be able to take the global economies up to and through the energy transitional zone.