Canadian Oil Sands Output Cut 1 Million B/D What Could Go Wrong?

Abstract

When Matt Fox, chief operating officer for ConocoPhillips, was asked about how the company is managing its 100,000 B/D reduction at its Surmont project, the response was reassuring. “We’re not doing anything that’s going to take any risk either from a reservoir or wells or facilities perspective. That’s why … in Surmont, we’re going down to a minimum rate, so that we can still provide enough heat and temperature to the steam chambers to keep them intact,” Fox said during a recent call with stock analysts. To be clear, he is not saying there is no risk. ConocoPhillips and others are using various methods to turn down production that maintain the heat and pressure they spent years creating in reservoirs where pairs of wells are used to inject steam to heat bitumen. Gravity then drains the melted bitumen down to the production well in a process known as steam-assisted gravity drainage (SAGD). While what they and other companies in the oil sands are doing is commonly described as shutting in wells, they are actually slowing the production from those wells. Some use reduced steam injections in a well pair, alternate cyclic injection among wells, or injections of gas to maintain the pressure. “It is a good test case,” said Scott Norlin, a research associate at Wood Mackenzie. The geologist who used to work in the oil sands said shutting in wells is not a good description of how they are cutting production. “It is almost like cooking a turkey for Thanksgiving,” and dinner is delayed, so “you turn the temperature down. You’re not throwing it back in the freezer,” he said. Future productivity in wells that have been turned down requires maintaining the temperature and pressure at levels high enough to preserve the steam chamber - the area above the injection where the water vapor thins peanut-butter-thick bitumen so it can flow. Keeping it hot enough to maintain the steam is critical because if it is allowed to condense into liquid form, it will cause a pressure drop which can open the door for serious trouble. The minimum safe injection level will vary based on factors ranging from a water layer next to the steam chamber to the age of the well. Years of steam injections warm the rock around the productive zone, slowing cooling if the injections are stopped or reduced. If there is a water zone in contact with the production zone, too little steam may allow an influx of water, which would quench the steam chamber. “If we cut the steam rate, but keep it high enough to supply the heat loss, and thus maintain the steam temperature (which means pressure), the production rate will go down, but the steam chamber will continue to exist without resaturation,” said S.M. Farouq Ali, a distinguished professor at the University of Houston Cullen College of Engineering.