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Innovative Canadian oil sands technology could revolutionise industry

PR Spring

Photo by US Oil Sands

PR Spring

Photo by US Oil Sands

6th March 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – After its invention by Karl Clark in the 1920s, the conventional oil sands processing method had generally remained unimproved till today, often resulting in oil sands companies having to deal with significant environmental footprints at projects and raising the ire of conservationists and the public alike.

These days, oil sands development is a controversial subject, what with notable figures such as rock star Neil Young earlier this year getting involved in the debate.

But what if oil sands could be developed with minimal impact on the environment at one-quarter the cost?

Right now a Canadian company – employing Canadian technology – is designing and building the first-ever commercial oil sands project in the US, and they are doing it with a revolutionary, citrus-based technology that is environmentally friendly and leaves none of the toxic tailings that have made Alberta’s oil sands the focus of such heated discussion.

Further, this technology is about 75% less expensive on a per-barrel basis than traditional oil sands development as conducted in Alberta.

CANADIAN SOLUTION

“Canada is almost a victim of its own success. The basic process to extract oil from the oil sands has not changed since it was invented, and since then, no environment-friendly solution had been found either,” Calgary-based US Oil Sands CEO Cameron Todd explained to Mining Weekly Online during the Prospectors and Developers Association of Canada’s international convention this week.

In late 2013, USO completed a C$81-million financing to fully fund the initial 2 000 bl/day commercial demonstration phase of its PR Spring project, in Utah’s Uinta basin.

The project is currently in the design and construction phase, with commercial production slated to begin in mid-2015. The PR Spring project area comprises 5 930 contiguous acres.

The oil sands are loose sand or partially consolidated sandstone containing naturally occurring mixtures of sand, clay and water, saturated with a dense and extremely viscous (thick) form of petroleum technically referred to as bitumen, or tar, owing to its similar appearance, odour and colour. Bitumen is a thick, sticky form of hydrocarbon, so heavy and viscous that it would not flow unless heated or diluted with lighter hydrocarbons.

Because bitumen flows very slowly, if at all, toward producing wells under normal reservoir conditions, the sands must be extracted by strip mining or the oil made to flow into wells by in-situ techniques, which reduce the viscosity by injecting steam, solvents, and/or hot air into the sands. These processes can use more water and require larger amounts of energy than conventional oil extraction, notwithstanding many conventional oil fields also requiring large amounts of water and energy to achieve good rates of production.

ORANGES FOR OIL?

In contrast, USO’s highly efficient and low-cost process represents a paradigm shift for the industry in terms of capital intensity and its environmental stewardship.

USO will employ a proprietary, environment-friendly process at PR Springs using a biodegradable citrus-based bio-solvent to separate oil from sand. This unique process – which employs an extract from orange peels called d-limonene – results in a 96% recovery of bitumen and the elimination of tailings ponds.

The nontoxic solvent is biodegradable and 98% recyclable. Similarly, 95% of the water employed in the process is immediately recyclable.

The USO process, which was developed in Canada, expends less than 50% of the energy per produced barrel than traditional oil sands projects, and results in the reclamation of a clean sand product that can be immediately replaced into the mine pit.

Processing will be done in modular facilities that require no permanent construction on the land. The mine footprint on the land at any given time will be equivalent to a college football stadium.

USO’s patented technology results in greater-than-75% lower capital expenditures than current oil sands mining projects, at about $15 000 a barrel per day, while providing for a rapid payout.

Todd stressed that USO’s process results in 96% bitumen recovery, the highest commercial rate in the oil industry. The plant could also be scaled-up to match any resource, thereby increasing operating efficiency.

The modular design allows for phased capital deployment, rapid construction and early cash flow, while the ability to recycle and reuse solvent lowers operating costs.

The process also has several environmental benefits, most important of which is the ability of companies to implement a concurrent mining and reclamation process, while eliminating the need for tailings ponds.

“USO’s technology requires a 90% to 95% smaller surface footprint than traditional oil sands mining projects (on a per-barrel basis), and 95% of water used in the process is immediately recycled and reused. The process used half the energy required per produced barrel than other oil sands projects, and results in the best in-class greenhouse-gas emissions, lower than some conventional oil and gas projects," Todd said.

The process uses low mechanical energy, resulting in reduced clay suspensions/emulsions that eliminates expensive water handling, bitumen froth treatment, middling sludge management and tailings storage recoveries. It works on both water-wet and oil-wet oil sands.

He said equipment components were off-the-shelf, leading to reduced fabrication schedules and increased reliability, having been tested in 24 bl/d to 500 bl/d plants since 2003.

Fully permitted, PR Spring has a discovered resource (National Instrument 51-101 compliant) of 184-million barrels of high-quality bitumen. The project represents just 20% of USO’s 32 005-acre lease holdings in the Uinta basin, of which it has a 100% working interest.

Utah itself was estimated to hold up to 30-billion barrels of bitumen in its oil sands.

The capital requirement for initial production of 2 000 bbl/d for PR Spring is expected to be about $50-million, or $25 000 per flowing barrel, as compared with $100 000 per flowing barrel for a typical Alberta project.

UNPRECEDENTED OPPORTUNITY

Canada’s Athabasca oil sands are large deposits of bitumen or extremely heavy, tarry crude oil, located in north-eastern Alberta, roughly centred on the boomtown of Fort McMurray.

These oil sands, hosted in the McMurray formation, consist of a mixture of crude bitumen, silica sand, clay minerals and water. The Athabasca deposit is the largest known reservoir of crude bitumen in the world and the largest of three significant oil sand deposits in Alberta, along with the nearby Peace river and Cold Lake deposits, where crude production majors such as Suncor Energy, Syncrude, Shell Canada, Nexen and Canadian Natural Resources have set up major operations.

Todd pointed out that owing to the lower cost of implementing USO's technology and the better operating profile, many smaller, currently uneconomical deposits in Canada, the US and around the globe could now again be looked at. USO's technology could potentially unlock the value of those smaller projects.

Edited by Creamer Media Reporter

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