History of the petroleum industry in Canada (oil sands and heavy oil

Researchers began to look for ways to extract thebitumenfrom the sand. The Alberta Research Council set up two pilot plants in Edmonton and a third at the Clearwater River. These plants were part of a successful project (led by the Research Councils Dr.Karl A. Clark) to develop a hot water process to separate the oil from the sands. In 1930, the Fort McMurray plant actually used the process to produce three car loads of oil.

The most important exception was atLloydminster. While the first discovery occurred in 1938, serious development did not begin until Husky Oil moved into the area after the second world war.

This idea came remarkably close to reality.Project Oilsandreceived federal approval in Canada, and theUnited States Atomic Energy Commissionagreed to provide the device. But before the experiment could take place, public pressure for an international ban on nuclear testing had mounted. The provincial government withheld approval and thus killed the plan.

In 1943, the federal government decided to aid oil sands development, and took over the Abasand plant. The federal researchers concluded that the hot water process was uneconomic because of the extensive heat loss and proposed a cold water process. But work at the plant came to an end with a disastrous fire in 1945. In July 1943, International Bitumen Company reorganized as Oil Sands Limited.

One of the first finds was in the Ribstone area nearWainwright, Albertain 1914. The provinces first significant production of heavy oil came from the Wainwright field in 1926. Producers drew almost 6,000 barrels (950m3) of heavy oil from the field in that year. A small-scale local refinery distilled the heavy goo into usable products.

In recent years, oil sands and heavy oil development have been so successful that these resources now account for more than half of Canadascrude oilproduction.[citation needed]

Heavy crude oilis a sister resource to bitumen. It is lighter than bitumen and its reservoirs are much smaller than the great oil sands deposits. Like the oil sands, only a small percentage of Canadas large heavy oil resource is producible.

Financial difficulties delayed construction of the GCOS plant until a new investor – Sun Oil Companys Canadian subsidiary, today known as Suncor – was found. The capacity of the proposed plant increased to 7,500 cubic metres per day and the cost escalated from $122 to $190 million. The larger plant received approval in 1964 and went into commercial production in September 1967. The final cost: $250 million.

Reviewing project costs in late 1973, the Syncrude consortium found that costs had more than doubled, from $1 billion to $2.3 billion. In December 1974, Atlantic Richfield (whose American parent needed cash to develop itsPrudhoe Bayinterests) withdrew its 30 per cent participation in the project. A few days later, the three remaining partners informed the Alberta government that the maximum risk they were willing to take on the project was $1 billion. They would need to find another $1 billion of risk capital if the project were to go on. The alternative – shutting down the project – would have cost the four partners (Including Atlantic Richfield) an estimated $250 million.

These wells helped establish that the bitumen resource in the area was huge. There was now clear recognition of the commercial potential of the oil sands, and a long period of exploration and experimentation followed. The point of this research was to find a method of getting oil out of the oil sands at a reasonable price.

Heavy oil and bitumen, which have far more carbon mass than hydrogen, are heavy, black, sticky and either slow-pouring or so close to being solid that they will not pour at all unless heated. Although the dividing line is fuzzy, the term heavy oil refers to slow-pouring heavy hydrocarbon mixtures. Bitumen refers to mixtures with the consistency of cold molasses that pour at room temperatures with agonizing slowness. Oils with high viscosity and heavy gravity do not float on water, but sink.

The firstin situexperiment in Alberta took place in 1910, when a Pittsburgh-based outfit, the Barber Asphalt and Paving Company, drilled a bore hole into the bitumen and pumped in steam to liquefy the oil. The experiment failed. In the early 1920s, otherin situexperiments also took place, but none were commercially successful.

The plant went into operation in the summer of 1978 and produced 5 million barrels (790,000m3) of oil within a year. World oil prices leaped skyward in 1979-80 and remained high for the first half of the 1980s. This helped Syncrude become successful financially as well as technically. Syncrude now meets about 14 per cent of Canadas oil requirements, mostly in the form ofsynthetic oil. The plant has produced nearly 2 billion barrels (320,000,000m3) of this oil.

Drilled at a site called Pelican Portage, the well blew out at 235 metres after encountering a high-pressure gas zone. According to drilling contractorA.W. Fraser,

In the oil sands, this thick, black gunk is mixed with sand and many chemical impurities such assulfur; these must be separated from the bitumen for the oil to be useful. This can be done bysurface miningand processing and by undergroundin situtechniques.

Abasand:At about that time two American promoters, Max Ball and B.O. Jones from Denver, entered the oil sands scene. They reportedly had a secret recovery method known as the McClay process, and they claimed substantial financial backing. They negotiated leases with the federal and Alberta governments and also bought the McMurray plant of the Alberta Research Council. In 1935, Abasand Oils Limited, Balls American-backed operating company, started construction of a new plant west of Waterways.

The reason for the long gap between approval and completion was an alarming escalation of costs that beset all major North American projects in the 1970s. Highinflationmultiplied budgets for practically every aspect of the Syncrude project.

SAGD was initially tested at the Underground Test Facility (UTF), ah experimental bitumen mining project funded byAOSTRAand officially opened on June 29, 1987. The magnitude of the UTF is hard to imagine. Sinking the shafts was done with a drill bit almost four metres in diameter, weighing 230 tonnes. The two shafts below the oil sand reservoirs were 223 metres deep and neither one deviated from the vertical by more than 25mm. As a safety measure, AOSTRA constructed two parallel tunnels through thelimestoneunder the oil sand reservoir. More than a kilometre in length, each tunnel was five metres wide by four metres high.

Bitumount:Between 1930 and 1955, the International Bitumen Company Limited underR.C. Fitzsimmonsand laterLloyd Championoperated a small-scale plant atBitumount. When the Alberta government became disenchanted with federal efforts in the oil sands and decided to build its own experimental plant at Bitumount, the province engaged Oil Sands Limited to construct the plant.

The oilsands projects just described are unique in the world: They exploit near-surface bitumen from open-pit mines. The industry has also spent decades experimenting with ways to recover bitumen from deeper deposits. The only way to develop petroleum resources underground is throughin situproduction techniques.

The company agreed to buy the plant within a period of ten years for the original investment of $250,000. The cost of the plant was $750,000, however. A legal claim against Oil Sands Limited resulted in the province taking possession of the plant and property at Bitumount. The plant consisted of a separation unit, a dehydrating unit and a refinery. The plant conducted successful tests using the Clark hot water process in 1948/49 then closed, partly because the recent Leduc discoveries had lessened interest in the oil sands.

The largest single plant in Canada to usein situproduction isImperial OilCold Lakeoil sand plant. This plant uses a technique calledcyclic steam injection. Using this method, the company pumps high-pressure steam into a section of the underground reservoir for a week or so, then pumps the liquid oil out for as long as several months. Imperial also uses steam-assisted gravity drainage. In its SAGD production system, Imperial drills two horizontal wells, one five metres above the other. Steam injected through the upper well reduces theviscosityof the oil, which is recovered through the lower borehole. This plant produces more than 150,000 barrels (24,000m3) of bitumen per day.

The first recorded mention of Canadas bitumen deposits goes back to June 12, 1719. According to an entry in theYork Factoryjournal, on that dayCreeIndian Wa-Pa-Sun brought a sample of oil sand toHenry Kelseyof theHudsons Bay Company. When fur traderPeter Pondtravelled down theClearwater Riverto Athabasca in 1778, he saw the deposits and wrote of springs of bitumen that flow along the ground. A decade later,Alexander MackenziesawChipewyanIndians using oil from the oil sands to caulk their canoes. Despite the fascination of the early explorers, however, the existence of the sands did not excite commercial interests for more than a century.

Often called conventional heavy oil, this low-density oil can be recovered by conventional drilling techniques or by waterflood, a technique of injecting water into the reservoir to increase pressure, thus forcing the oil toward the well bore. When these techniques work, heavy oil is like the more commercially attractive lighter grades of oil. But heavy oil can also be quite viscous. It can need some form of heat or solvent and pressure before it can flow into a well bore to be produced. When heavy oil requires these techniques to go into production, it is known as non-conventional heavy oil.

In situbitumen production:Many companies experimented withthermal techniquesto produce heavy oil from the oilsands, especially in theCold Lakeoilsands deposit, in the 1970s and 1980s. Bearing such field-hand monikers as steam flood, fire flood and huff and puff techniques, these extraction methods – like the Barber Asphalt and Paving Companys 1910 experiment – essentially apply heat to the underground reservoir. This melts the oil – that is, decreases its viscosity – so it can be pumped to the surface. An increasingly successful system now in use issteam assisted gravity drainageSAGD).

Thermonuclear thinking:The most dramatic proposal forin situproduction from deep oil sand deposits came fromRichfield Oil Company. In 1959 Richfield suggested an experimental plan to release liquid hydrocarbons from the sand through the expedient of an undergroundnuclear explosion. The company proposed detonating a 9-kiloton explosive device below the oil sands at a site 100 kilometres south of Fort McMurray.Thermonuclearheat would create a large underground cavern and simultaneously liquefy the oil. The cavern could serve as a collection point for the now-fluid oil, enabling the company to produce it.

History of the petroleum industry in Canada (oil sands and heavy oil)

Cities Service later reapplied for a much larger plant, and the proposal received approval in late 1969. TheSyncrudeplant which resulted went on production in 1978, exactly two centuries after Peter Ponds first sighting of the oil sands. But before the plant shipped its first barrel of oil, the project went through many trials.

Husky Oilwas born during the Depression through the efforts ofGlenn Nielson, an Alberta farmer driven to bankruptcy when the bank called a loan on his farm. Nielson had moved toCody, Wyoming, by the time he founded Husky as a refining operation. He turned his attention back to Canada after the second world war, and decided to set up a refinery at Lloydminster. Steel was scarce, so Husky dismantled a small Wyoming refinery constructed during the war to provide bunker fuel to the American Navy. It loaded the pieces onto 40 gondola cars and shipped them north by railway.

In situmeans in place, and refers to recovery techniques which apply heat orsolventsto oil reservoirs beneath the earth. There are several varieties ofin situtechnique, but the ones that work best in the oil sands use heat.

No nation can long be secure in this atomic age unless it be amply supplied with petroleum . . . . It is the considered opinion of our group that if the North American continent is to produce the oil to meet its requirements in the years ahead, oil from the Athabasca area must of necessity play an important role.

His syndicate received the first (and only) clear title to oil sands lands in 1910, and he was elected to the Canadian Petroleum Hall of Fame one hundred years later. Otherwise, history has not been kind to this man, who was a bit of a dreamer, a lot of a con. According to one historian, His venture was marked by wild speculation, fraud and ultimate failure.

Because of the cost of developing theseresources(they tend to becapital intensive), they tend to come on stream later in the cycle of petroleum resource development in a given producing region. This is becau搜索引擎优化il companiestend to extract thelight, high-value oilsfirst. The more difficult-to-extract resources are developed later, generally during periods of highcommodityprices, such as the extended period of higher prices which began in theearly 1970s.

While Absher has been largely forgotten as a pioneer in the oil sands business, others have realized his dream of using heat to release oil from the sands. Today, some commercial projects pipe high-pressure steam into the oil sands reservoir. Other projects actually ignite the oil underground, then pump air below the surface to keep combustion going. These techniques effectively melt the oil, which pumps then bring to the surface.

Thefederal governmenttook a 15 per cent interest, Alberta 10 per cent and Ontario five per cent. The private partners – Cities Service Canada, Gulf Oil Canada and Imperial Oil – agreed to retain their $1.4 billion interest in the project, but gave Alberta the option to convert a $200 million loan to Gulf and Cities Service into ownership interests. Alberta also took full ownership in the no-risk pipeline and electrical utility which the plant needed.[6]

From Wikipedia, the free encyclopedia

From the tunnels the researchers drilled wells up into the reservoir to conduct two sets of tests. The Phase A pilot involved three well pairs 70 metres in length, each with 4050 metres of exposure to the McMurray formation. Phase B involved another three well pairs, 70 metres apart, each with 500 to 550 metres of direct contact with the oil sand reservoir. The results were excellent, and the petroleum industry soon began producing bitumen through SAGD well pairs drilled and operated from the surface.

Quite poor, he died in 1941 probably in his seventies in St. Albert, Alberta.

Elsewhere in Alberta, petroleum explorers made other heavy oil finds as they pursued the elusive successor to the Turner Valley oil field. They developed production from many of these fields, but only in small volumes. The recovery techniques of the day combined with the low price of oil and the nature and size of the finds meant that most of the oil remained undeveloped.

The roar of the gas could be heard for three miles or more. Soon it had completely dried the hole, and was blowing a cloud of dust fifty feet into the air. Small nodules of iron pyrites, about the size of a walnut, were blown out of the hole with incredible velocity. We could not see them going, but could hear them crack against the top of thederrick. . . . There was danger that the men would be killed if struck by these missiles.

I have all my money put into (the Athabasca oil sands), and there is other peoples money in it, and I have to be loyal. As to whether you can get petroleum in merchantable quantities… I have been taking in machinery for about three years. Last year I placed about $50,000 worth of machinery in there. I have not brought it in for ornamental purposes, although it does look nice and home-like.

In 1962,Great Canadian Oil Sands Limited(GCOS) received approval from the Alberta government to build and operate a 10,000 cubic metre per day plant near Fort McMurray. The plant was to produce 240 tonnes of sulfur and 900 tonnes ofcokeper day as by-products. Because at that time the industry was having difficulties marketing its oil, the provincial government established a policy that would limit oil sands production. According to this policy, synthetic oil from the oil sands could supplement conventional oil sales, but could not displace it. Oil from the plant could not exceed 5 per cent of total volumes in markets already supplied by conventional Alberta oil.

As has often been the case, the oil sands were different. The resources were so huge that experimentation began at about the same time as drilling forconventional petroleuminwestern Canada. Although the promise of the oil sands deposits has been clear for more than a century, oil production from theSuncorandSyncrudeoil sands plants did not becomeprofitableuntil well after the1979 energy crisis. Despite comparatively highoil pricesin world markets, forpolitical reasonsgovernment kept prices for oil from these technological pioneers at artificially low levels until well into the 1980s.

In 2003, Shell Canada and its partners began producing from theMuskeg River Mine, located 75 kilometres north of Fort McMurray. Known as the Athabasca Oil Sands Project, the entire complex consists of Muskeg River, ShellsScotford Upgraderlocated nearFort SaskatchewanAlberta, and supporting facilities.

The company began reassembling the 400 cubic metre per day facility in 1946, and the refinery went on production the following year. Strategically located between theCanadian PacificandCanadian Nationalrailroad tracks in Lloydminster, the refinery soon began to get contracts for locomotive bunker fuel. The company also found a strong market for asphalt for road building.

Frasers crew unsuccessfully tried to kill the well by casing it, then abandoned the well for that year. They returned in 1898 to finish the job, but again they failed. In the end, they simply left the well blowing wild. Natural gas flowed from the well at a rate of some 250,000 cubic metres per day until 1918. In that year a crew led by geologistS.E. SlipperandC.W. Dingmanfinally shut in the well.

An executive group representing the remaining partners invited the other governments of Canada to participate as commercial partners in the project. The province also reviewed the cost estimate given by the oil companies. When it found that the consortiums cost estimates were not out of line, the governments of Canada, Alberta andOntarioparticipated in a historic meeting in Winnipeg in February, 1975. That meeting salvaged the project.

Canadasoil sands and heavy oil resourcesare among the worlds great petroleum deposits. They include the vastoil sandsof northern Alberta, and theheavy oilreservoirs that surround the small city ofLloydminster, which sits on the border betweenAlbertaandSaskatchewan. The extent of these resources is well known, but better technologies to produceoilfrom them are still being developed.

By this time the world was in the thralls of an energy crisis. Beginning in 1973, the members of theOrganization of Petroleum Exporting Countrieshad taken advantage of tight world oil supplies to rapidly and regularly increase prices. Policy-makers in the oil consuming countries therefore considered it a matter of national urgency to develop stable, secure energy supplies. Because the resource was so large and development was clearly possible, the oil sands looked like Canadas best bet. As a result, the prospect that the Syncrude project would collapse was a matter of both political and economic concern.

Alfred Hammerstein, who claimed to be a German count (historically there are barons von Hammerstein, but not counts), was one of the colourful early players in the oil sands. He said he encounteredFort McMurray-area bitumen deposits en route to theKlondike, but stayed and turned his interest from gold to the oil sands. In 1906 he drilled at the mouth of the Horse River, but struck salt instead of oil. He continued working in the area, however, in 1907 Hammerstein made a celebrated presentation to aSenatecommittee investigating the potential of the oil sands.

Organic compoundscombining carbon and oxygen are many in number. Those with more carbon atoms per hydrogen atom are heavier and denser. Most hydrocarbons areliquidunder standard conditions, with greaterviscosityassociated with greater gravity.

Four years later, by which time Shell Canada had been wholly acquired by its parent,Royal Dutch Shell, the company applied to build a massive oil sands upgrading complex at the site of its Edmonton refinery. The project, which could cost as much as $27-billion, would be built in four 100,000-barrel-per-day (16,000m3/d) stages. Like its existing upgrader, Shells new facility would process bitumen from the Athabasca Oil Sands Project, as well as bitumen from steam-drivenin situoil sands projects.

Hammerstein (18701941), who arrived in the region in 1897, promoted the Athabaska tar sands for over forty years, taking photos with descriptive titles such as Tar Sands and Flowing Asphaltum in the Athabasca District, that are now in the National Library and National Archives Canada. Photos of the Athabaska tar sands were also featured in Canadian writer and adventurer,Agnes Deans Camerons, best-selling book(Cameron, 1908 & 71)[3]entitledThe New North: Being Some Account of a Womans Journey through Canada to the Arcticwhich recounted her 10,000 mile-round trip to the Arctic Ocean. Following this journey and the publication of her book, she travelled extensively as lecturer, with magic lantern slides of her Kodak images, promoting immigration to western Canada at Oxford, Cambridge, St. Andrews University and the Royal Geographical Society.[4]Her photographs were reproduced in 20112012 in an exhibit at the Canadian Museum of Civilization in Ottawa, Canada.(Gismondi, 2012 & 71)[5]Cameron was particularly enthusiastic about the Athabaska region and theAthabaska tar sandswhich included photos of Hammersteins oil drill works along the Athabasca River. While the Count was unsuccessful drilling for elephant pools of oil, Camerons book and its images… made her a media celebrity.(Gismondi, 2012 & 71)[5]In all Canada there is no more interesting stretch of waterway than that upon which we are entering. An earth-movement here has created a line of fault clearly visible for seventy or eighty miles along the river-bank, out of which oil oozes at frequent intervals. [] Tar there is [] in plenty. [] It oozes from every fissure, and into some bituminous tar well we can poke a twenty-foot pole and find no resistance.(1909, Cameron & 71)[3]cited in (Gismondi, 2012 & 71)[5]

4) – the simplest form ofnatural gas- has four hydrogen atoms for every carbon atom. It has light gravity, and takes the form of agasat normal temperatures and pressures. The next heavier hydrocarbon,ethane, has thechemical formulaC2H6and is a slightly denser gas. Gases, of course, have no gravity at atmospheric temperatures and pressures.

Huskys move into the area spurred drilling and production. Within two years of Huskys arrival, there were oversupplies of heavy oil and shortages of storage space. Produ

In 1875,John Macounof the Geological Survey also noted the presence of the oil sands. Later reports byDr. Robert Belland later by D.G. McConnell, also of the Geological Survey, led to drilling some test holes. In 1893, Parliament voted $7,000 for drilling. This first commercial effort to exploit the oil sands probably hoped to find free oil at the base of the sands, as drillers had in the gum beds of southern Ontario a few decades earlier. Although the Surveys three wells failed to find oil, the second was noteworthy for quite another reason.

Jacob Owen Absher:In the mid-1920s, a remarkable and persistent experimenter namedJacob Owen Absherincorporated the Bituminous Sand Extraction Company. In 1926, Absher received a Canadianpatentfor hisin situexperiments, and he carried on numerous experiments over the following five years – efforts that drew the interest of oil sands pioneers Sidney Ells and Karl Clark. Absher not only used steam to melt the bitumen, but also tried igniting fires within his wells. In the end, however, he was unable to produce oil from the oil sands. His activities ended as theGreat Depressionraged.

Under the agreement with the government, the plant was to be in operation by September 1, 1936. But forest fires and failure of equipment suppliers to meet delivery dates delayed completion. The agreement called for mining 45,000tonnesof sands in 1937 and 90,000 tonnes each year after 1938. The 1,555-hectarelease carried a rental of $2.47 per hectare per year. There was to beroyaltiesof $0.063 per cubic metre on production for the first five years, and $0.31 per cubic metre thereafter.

During the opening ceremonies for the plant,Sun Oil CompanychairmanJ. Howard Pew(a legendary industrialist, then 85 years old) made remarks which still ring true:

Gravity refers to the weight spectrum ofhydrocarbons, which increases with the ratio ofhydrogentocarbonin achemical compoundmoleculeMethane(CH

In 1913, Dr.S.C. Ells, an engineer with the federal department of mines, began investigating the economic possibilities of the oils sands. It was then that the idea of using the sands as road paving material was born. In 1915, Dr. Ells laid three road surfaces on sections of 82nd Street in Edmonton. Materials used included bitulithic, bituminous concrete and sheet asphalt mixtures. A report, ten years later, by a city engineer stated that the surface remained in excellent condition. McMurray asphalt also saw use on the grounds of theAlberta Legislature, on the highway inJasper Parkand elsewhere in Alberta.

Much of Canadas petroleum effort has focused on producing oil from theoil sands(sometimes called tar sands) of northern Alberta. To appreciate these resources, it is important to understand a simple concept fromchemistryandphysics: the gravity ofcrude oilandnatural gas liquids. The oil industry measures the weight of oil on terms of an artificial scale known as API (American Petroleum Institute) gravity. Ten degrees API is the gravity of water. Light oils use a higher API number. Generally heavier than water, bitumen typically has an API of 8-10 degrees API.

The first Asian-owned company involved in the oil sands wasJACOS, which in 1978 began participating in experiments at a pilot project in the Athabasca area. Like Imperial at Cold Lake, from 1984 to 1994 JACOS and its partners also experimented with a cyclic steam stimulation pilot project on the Hangingstone Lease. Since then the company has developed SAGD production on that lease. It is also constructing a demonstration plant usingsolvent-basedin situbitumen extraction.

It is difficult to grasp the immensity of Canadas oil sands and heavyoil resource. Fields in northern Alberta include four major deposits which underlie almost 70,000 square kilometres of land. The volume of bitumen in those sands dwarfs the light oil reserves of the entire Middle East. One of those deposits, theAthabasca oil sands, is the worlds largest known crude oil resource.

TheSuncorplant was a landmark in oil sands development. It pioneered technology for bitumen extraction and upgrading, and it was the worlds first large-scale commercial plant. In the early years it was not particularly profitable, but the plant was nonetheless able to cover operating expenses from the sale of its own production. And in 1979, when federal policy permitted the company to charge world price for its oil, the plant finally became a money-making asset to Suncor. The plant found solutions to the problems of extracting a commercial grade of oil from the sands – problems that had been the concern offinancierschemistspetroleum engineersmetallurgistsmining engineersgeologistsphysicistsand many otherscientistsand pseudo-scientists for many decades.

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Mining at the Abasand plant began May 19, 1941. By the end of September, 18,475 tonnes of oil sand had produced 2,690 cubic metres of oil, but in November fire destroyed the plant. Rebuilt on a larger scale, it was fully operational in June 1942.

The first heavy oil discoveries came with the pursuit of conventional light and medium crude oil. Because much of western Canadas heavy oil is in pools close to the surface, early explorers using older rigs discovered many of those pools before they came upon the deeper light oil reservoirs.

Although private contractors also mined oil sand as a paving material, the proposition was not economic.Fort McMurray(the community closest to the near-surface deposits) was small and far from market, and transportation costs were high.

In 1962 (the same year the Great Canadian Oil Sands proposal went up for approval) Cities Service Athabasca Inc. proposed a 16,000 cubic metre per day plant at the site of its Mildred Lake pilot project. Including a pipeline to Edmonton, the plant was to cost $56 million, with construction beginning in 1965 and completion in 1968. However, the Oil and Gas Conservation Board had concerns about competition between synthetic oil and conventional oil for limited markets. It therefore decided not to bring too many oil sands plants on stream at once, and rejected the Cities Service proposal in favor of the GCOS project.

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