Low Oil Prices Call for a Change

The Alberta oil sands market is facing a challenging time. The rapid drop in oil pricing from $110 per barrel to $40 per barrel, and then recovery to around $60 per barrel recently, is putting a lot of stress on new developments and making it almost impossible to raise capital.

Oil-producing companies are looking for a way to make new projects viable, a challenging task to accomplish after previous projects break even at $80 per barrel. The market is looking for lower capital investment; reduced installation efforts and risks; and shorter project execution time. In order to make a steam assisted gravity drainage (SAGD) project more cost effective and competitive, the capital investment in equipment should be reduced and the operation of the site must be maintained in maximal availability to ensure steady income flow.

Developing a new SAGD project is around a $500-million to $1-billion high-risk operation. The economics are highly affected by the steam to oil ratio (SOR) as well as the selection and performance of the water treatment equipment. At the SAGD site, more than 97 per cent of the produced water is being recycled and reused for steam generation, a process done mainly by evaporators.

Produced water evaporators are robust equipment, which distill the produced water to pure water than can be fed into steam generators. The evaporators are a critical element in the water treatment process and also consume a major part of the capital investment.

Installing produced water vertical evaporators in Northern Alberta could be a challenging logistical operation, starting with transportation of the vessel to the site following by a long and expensive site erection effort. To reduce the site construction costs and minimize project risks, the market is turning to modular and prefabricated solutions. Today, horizontal evaporators are available, which are completely prefabricated and can be easily transported to the site in small modules. The modules are placed on piles driven to the muddy ground and save expensive concrete works. In addition, the modules are designed for fast connection, minimizing work on site and shortening the erection time from 4 to 6 months to 6 to 8 weeks.

The cost savings on the site are significant, but in order to have a successful project, the daily operation and the oil production must be maintained at maximum. One of the problems SAGD operators are facing is maintenance and cleaning of the evaporator tubes from fouling and scaling of the tubes, which results in expensive downtime. Developments in horizontal evaporator designs are fitted with a removable tube in the evaporator shell, which in case of failure can be replaced with a spare tube bundle. This also provides high system availability, which means higher oil production and better project economics.

In summary, the SAGD market is calling for a change. We can’t keep doing what we were doing in the $100-per-barrel environment. New water treatment technologies and developments are becoming available, and the market is willing to take a risk and implement them to rejuvenate project viability in today’s $60-per-barrel environment

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