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Oilsands emerger

Oilsands emerger

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Published by Ted Renner

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Published by: Ted Renner on Jan 26, 2011
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09/21/2012

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Possibly Canada’s next big resource play – The bitumen carbonate deposits hold significant
resource potential, representing approximately 26% of Canada’s 1,700 billion barrels of Original
Bitumen In Place (OBIP). The Grosmont Formation contains 71% of the bitumen carbonate
deposits in Canada, with the C & D zones estimated to contain 70% of the bitumen found in the
entire Grosmont Formation. The C & D zones also have better reservoir characteristics,
demonstrated by having thicker pay, higher porosity and higher bitumen saturation than the lower
Grosmont A and B zones (see Exhibit 27). We expect the Grosmont C & D zones to be the logical
focus of industry activity.

Exhibit 27: The Grosmont A-D Formations

Grosmont Unit

Initial BVIP
(billion bbl)

Initial
BVIP

Average Pay
Thickness (m)

Average
Porosity

Average
Bitumen
Saturation

Average Water
Saturation

Upper Grossmont 3

67%

(Grossmont D)

(85-95%)*

Upper Grossmont 2

75%

(Grossmont C)

(85-95%)*

Upper Grossmont 1
(Grossmont B)
Lower Grosmont
(Grossmont A)

Total

317.6

100%

33%

60%

69%

40%

31%

25%

16%

20%

20%

11%

31%

39%

15%

14%

10

5

125.1

16

10

61.9

33.8

96.8

*Published by Osum in CIPC Paper 2009-067
Source: Canadian International Petroleum Conference, Petroleum Technology Alliance Canada and RBC
Capital Markets

Unlocking the bitumen carbonates could make Canada number one in the world – A 35%
recovery factor from the Grosmont C and D zones would imply an increase of 78 billion barrels to
Canada’s total current oil reserves of 179 billion barrels (174 billion barrels of oil sands and 5
billion bbls conventional). Unlocking the commercial potential of the bitumen carbonates in the
Grosmont C and D zones would catapult Canada into first place as the country with the most
recoverable oil reserves in the world.

The unique challenges of the bitumen carbonates – The challenge is that the Grosmont contains
the heaviest and most viscous oil deposits to be found in a carbonate reservoir anywhere in the
world with an average oil quality of 5–9 degrees API and an average viscosity of 1.6 million
centipoises. For contrast, the heavy oil found in the other carbonate discoveries around the world
contain oil ranging from 10–20 degree API with viscosity ranging from 100–4,600 centipoises.
These amounts make the Grosmont reservoir unique, without an analogous reservoir to be found.
The other unique challenge is that the Grosmont Formation is an oil wet reservoir with areas of
mixed wettability, not water wet like the Wabiskaw-McMurray formation in the Athabasca region.
Water wet reservoirs produce more easily because they are physically easier to break the water
bond holding the oil to the reservoir than it is to free the oil bonded directly on the reservoir.

Initial pilots were encouraging – We found one pilot test dating back to the 1970s (Chipewyan
River) and four pilot tests in the Grosmont dating back to the 1980s (Orchid, Algar, Buffalo Creek
and McLean) (see Exhibit 28). These pilots were undertaken by Alberta Oil Sands Technology
and Research Authority (AOSTRA), Unocal and Chevron.

Between December 1974 and April 1975, the Chipewyan River Pilot ran one steam cycle from
two vertical wells that quickly resulted in vertical steam loss. Unocal’s Buffalo Creek, which ran
between 1980–1986, was the most successful pilot test in the carbonates. The test consisted of one
vertical CSS well. The pilot produced 100,000 barrels of bitumen from 10 steam cycles before
losing steam circulation. The Cumulative Steam: Oil Ratio (CSOR) of the Buffalo Creek pilot was
6.4x.

The Oil Sands Manifesto

December 13, 2010

26 Mark Friesen, CFA

Exhibit 28: Grosmont Carbonates

The Grosmont vs the Wabiskaw/McMurray

Grosmont Net Pay Isopach

Source: Alberta Energy Utilities Board (AEUB), Laricina Energy Ltd. and RBC Capital Markets

The pilot tests from the 1980s had encouraging, but mixed, results. The pilot tests proved the
ability to mobilize oil and, therefore, the ability of the reservoir to produce. The pilot tests,
however, ultimately lost steam circulation due to the high vertical permeability and heterogeneity
of the reservoir. Technological improvements in drilling and completion techniques during the
past three decades (better mud control, horizontal drilling, quick setting cement, etc.) could be
expected to help with completions in the carbonates. Horizontal drilling may help because
production is a function of gravity drainage rather than pressure mobilizing the bitumen. The use
of lower pressure steam and solvents are techniques that could also improve the economic
potential of the Grosmont.

December 13, 2010

The Oil Sands Manifesto

Mark Friesen, CFA 27

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