Long Lake (oil sands)
Encyclopedia
The Long Lake oil sands project is an in situ
oil extraction project 40 km (24.9 mi) southeast of Fort McMurray in the Athabasca oil sands
region of Alberta
. The project is a joint venture between Nexen
, with a 65% interest, and OPTI Canada
, with the remaining 35%. Phase 1 of the project is currently operational and when at full capacity is expected to produce 72000 oilbbl/d of bitumen, which is to be upgraded on site into 58500 oilbbl/d of "Premium Synthetic Crude", a product that does not need to be diluted to transport in pipelines and fetches a higher price at refineries. The project aims to use a proprietary technology called "OrCrude" to extract gas from produced bitumen which is then used to heat the steam for injection and as a source of hydrogen
for hydrocracking. The owners hope this will greatly reduce their need to purchase natural gas
for operation.
The project has been plagued with technical problems and has failed to meet production projections. As of early 2011, the site was producing about 30000 oilbbl/d and OPTI was struggling under a heavy debt load and lack of liquidity. On February 1, 2011, OPTI appointed Lazard Freres & Co.
, a bankruptcy specialist, raising speculation that restructuring or bankruptcy for the company was imminent.
Phase 2 of the project, expected to add a similar upgrader and have similar SAGD production as Phase 1, was approved in April, 2010. A third phase is also planned for the Long Lake location. Following this, three more phases are planned in other locations: two in the Leismer
area and one in the Cottonwood
area.
s into the reservoir. One well is used to inject steam, which reduces the viscosity
of the bitumen. The previously stable bitumen then drains into the second well, which extracts it to the surface.
Steam-assisted gravity drainage is typically a high-cost process, due to the energy costs in generating the steam. The Long Lake project intends to avoid these costs through the use of OPTI's proprietary OrCrude process, which refines by-product
s of the extracted bitumen into usable fuel, which is used to generate steam. This process also generates hydrogen, which fuels the refinement of extracted bitumen through hydrocracking.
In situ
In situ is a Latin phrase which translated literally as 'In position'. It is used in many different contexts.-Aerospace:In the aerospace industry, equipment on board aircraft must be tested in situ, or in place, to confirm everything functions properly as a system. Individually, each piece may...
oil extraction project 40 km (24.9 mi) southeast of Fort McMurray in the Athabasca oil sands
Athabasca Oil Sands
The Athabasca oil sands are large deposits of bitumen, or extremely heavy crude oil, located in northeastern Alberta, Canada - roughly centred on the boomtown of Fort McMurray...
region of Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
. The project is a joint venture between Nexen
Nexen
Nexen Inc. is an energy company based in Calgary, Alberta, Canada.-History:Nexen started in 1969 under the name "Canadian Occidental Petroleum Ltd.", aka CanOxy, and was 80% owned by Occidental Petroleum, a Los Angeles-based oil company...
, with a 65% interest, and OPTI Canada
OPTI Canada
OPTI Canada is a Calgary, Alberta based oil sands development company. Established in 1999, its sole project is the Long Lake oil sands project, of which it owns 35%. The remaining 65% is owned by project operator Nexen Inc.-History:...
, with the remaining 35%. Phase 1 of the project is currently operational and when at full capacity is expected to produce 72000 oilbbl/d of bitumen, which is to be upgraded on site into 58500 oilbbl/d of "Premium Synthetic Crude", a product that does not need to be diluted to transport in pipelines and fetches a higher price at refineries. The project aims to use a proprietary technology called "OrCrude" to extract gas from produced bitumen which is then used to heat the steam for injection and as a source of hydrogen
Hydrogen
Hydrogen is the chemical element with atomic number 1. It is represented by the symbol H. With an average atomic weight of , hydrogen is the lightest and most abundant chemical element, constituting roughly 75% of the Universe's chemical elemental mass. Stars in the main sequence are mainly...
for hydrocracking. The owners hope this will greatly reduce their need to purchase natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
for operation.
The project has been plagued with technical problems and has failed to meet production projections. As of early 2011, the site was producing about 30000 oilbbl/d and OPTI was struggling under a heavy debt load and lack of liquidity. On February 1, 2011, OPTI appointed Lazard Freres & Co.
Lazard
Lazard Ltd is the parent company of Lazard Group LLC, a global, independent investment bank with approximately 2,300 employees in 42 cities across 27 countries throughout Europe, North America, Asia, Australia, Central and South America...
, a bankruptcy specialist, raising speculation that restructuring or bankruptcy for the company was imminent.
History
The first phase of the project received regulatory approval in 2003 and was sanctioned in 2004. Construction at the site began in 2004. Steam injection began in 2007 and the first production was in 2008.Phase 2 of the project, expected to add a similar upgrader and have similar SAGD production as Phase 1, was approved in April, 2010. A third phase is also planned for the Long Lake location. Following this, three more phases are planned in other locations: two in the Leismer
Conklin, Alberta
Conklin is a hamlet in northern Alberta, Canada within the Regional Municipality of Wood Buffalo. It is located on Highway 881 between Fort McMurray and Lac La Biche. It has an elevation of .The hamlet is located in census division No...
area and one in the Cottonwood
Wood Buffalo, Alberta
The Regional Municipality of Wood Buffalo is a specialized municipality located in northeastern Alberta. Formed as a result of the amalgamation of the City of Fort McMurray and Improvement District No. 143 on April 1, 1995, it is the second largest municipality in Alberta by area...
area.
Process
The Long Lake project uses steam-assisted gravity drainage (SAGD) to extract bitumen from the underground oil sands. The process involves using two separate horizontal wellDirectional drilling
Directional drilling is the practice of drilling non-vertical wells. It can be broken down into three main groups: Oilfield Directional Drilling, Utility Installation Directional Drilling Directional drilling (or slant drilling) is the practice of drilling non-vertical wells. It can be broken down...
s into the reservoir. One well is used to inject steam, which reduces the viscosity
Viscosity
Viscosity is a measure of the resistance of a fluid which is being deformed by either shear or tensile stress. In everyday terms , viscosity is "thickness" or "internal friction". Thus, water is "thin", having a lower viscosity, while honey is "thick", having a higher viscosity...
of the bitumen. The previously stable bitumen then drains into the second well, which extracts it to the surface.
Steam-assisted gravity drainage is typically a high-cost process, due to the energy costs in generating the steam. The Long Lake project intends to avoid these costs through the use of OPTI's proprietary OrCrude process, which refines by-product
By-product
A by-product is a secondary product derived from a manufacturing process or chemical reaction. It is not the primary product or service being produced.A by-product can be useful and marketable or it can be considered waste....
s of the extracted bitumen into usable fuel, which is used to generate steam. This process also generates hydrogen, which fuels the refinement of extracted bitumen through hydrocracking.
Ownership
The Long Lake project was originally developed as a 50/50 partnership between Nexen and OPTI. In January 2009, OPTI divested 15% working interest in the project to Nexen for $735 million.External links
- 2009 in-situ progress report submitted to the ERCB