1. SAGD Basics

2. Presentation Overview
Forces driving current oil sands development
What are oil sands
General SAGD process overview and project lifecycle
Reservoir and operating considerations
SAGD surface facilities and produced fluids processing
Benefits & Challenges, related technologies and the future of SAGD
Questions
The goal for this presentation today are to give everybody an introduction to processes putting us through oil sands developments, What are Oil Sands, What is Oil Recovery Options, What are the general SAGD Process Overview. We have to focus on what is going on in the reservoir because if you can understand what is going on in the reservoir you tend to understand why you are building the plant, the way it’s built and what is designed to do. SAGD is very much a steady state unit operation in a processing plant, that is a steady state process. The emphasis today is to give an overall picture. Of course we are going to touch on some of the surface elements. There will be future presentations that go over what those elements are and how to size them. We are determined to bring everyone up to the same baseline in the company. To make us a better company to compete in the market for these types of projects. The more everyone knows the better off we are.
The topics today include operating considerations around the reservoir, the surface facilities, some benefits and challenges, the future of SAGD and SAGD derivatives.

3. Introduction Declining “conventional” oil reserves
Global demand for energy is steadily increasing
Enormous deposits of heavy oil (bitumen) in oil sands
Until recently, production of these resources was uneconomical
Alberta oil sands reserves are estimated at 174 billion barrels (second only to Saudi Arabia)
So why are we chasing heavy oil?
There are declining conventional oil reserves and we are finding continuous trend across the world that light oil (being conventional) is being depleted at steadily increasing rate. Also energy demand is steadily increasing and the only way we can make up the reserve quantity required, to make the demand needs is to start producing the heavy reserves. Of course, one of the largest reserves (the are three deposits Athabasca, Peace River and Cold Lake.) is in fact in Alberta with continuation into Saskatchewan as well in the Athabasca deposits. Until oil hit the sky high levels in price production of these resources were generally uneconomical and now we have reached the point that it is not only economical but exceptionally attractive (practically given the 1% pre-capitial-payout royalty that the government allows). Until project payout a fantastic deal for the producers, so very attractive.
Where do we rank? At a 174 barrels, puts us basically 2nd to Saudi Arabia. If you add on the continuation into Saskatchewan it would be more than Saudi Arabia.

4. What are oil sands?
Water
Sand
Crude deposits that are substantially heavier (more viscous) than other crude oils
Consist of sand, bitumen, clays and water
Result of millions of years of biodegradation of conventional (light) crude oil
Each grain has three layers: an envelope of water surrounding a grain of sand, and a film of bitumen surrounding the water
Bitumen requires more processing than conventional crude
Bitumen does not flow at reservoir conditions
Bitumen
So what are Oil Sands?
Oil Sands are crude deposits that are substantially heavier than other crude oils. If you go up to the tar sands you’ll find that the oil present it is a joy to work on. It is a near solid substance embedded with sand and gravel etc.. It has to be heated to a point where it’s mobile.
It is comprised of three things: a sand layer surrounded by a water layer which is in a continuous phase of bitumen. When a reservoir is deemed totally saturated, we are talking about a combined solid that surrounds 16-18% bitumen, so 84% of it is sand. The oil itself is contained in the void space between sand grains.

5. Viscosity and Temperature
Due to high viscosity bitumen will not flow at reservoir conditions (>1,000,000 cP)
The key to in-situ production is mobilization of the bitumen (lower its viscosity)
Viscosity is a function of temperature
Viscosity of Bitumen vs. Temperature
Reservoir Conditions
Mobility Limit
Typical Viscosity for Treaters
Viscosity and Temperature
Bitumen really does not xxx reservoir conditions. It is a theoretical viscosity and we could measure it over a million xxx, again it is just like xxxx you can’t really tell the difference. It is a very hard solid, you xxxx. Heated xxxx is of course mobilizing the bitumen lowers viscosity so it feels like xxxx. Viscosity of course production function of temperature so, the viscosity temperature graph, reservoir conditions adhere mobility limits to 5000 xxx, which is to us Process Engineers, we use this curve and that is where we come up with tracing temperature. We will put any of our typical hold temperature on any hydro carbons xxxxx. We find that the hold point is around 60 degrees, which if you look on the graph is about 5747.
Some background on that. Further down the graph, you find treating viscosity at xxx, and of course, that falls in the xxxx

6. SAGD Process Overview
Typically in the SAGD process two horizontal wells are drilled near the bottom of the pay zone
Payzone thickness usually between 20 & 75 meters
The top well is called the injector and is positioned approximately 5 m above the lower well called the producer
Lower well located at bottom of producing zone
Depending on reservoir conditions, the oil is pumped or lifted to the surface
Previously, SAGD projects tended to use gas lift (i.e. the introduction of gas under pressure) rather than pumps if artificial lift is needed.
Trend toward Electrical Submersible Pumps (ESP)
Vertical depth of the wells in Alberta ranges from 150 m to 750 m
Horizontal portion of the well pair between 250 and 1000 meters
Each project will consist of a large number of horizontal well pairs
So focus overview, What is SAGD?
Typically it is two horizontal wells drilled near the bottom of the pay zone filled with bitumen. Payzone thickness is usually between 20 & 75 meters. The two wells are located 5 meters apart with upper one being the injector and the lower one being the bitumen producer. The lower wells will be right on the basement block, xxx so right on the water xxx. Depending on the reservoir conditions primarily being xxxx the oil will be either pumped or lifted to the surface by gas or steam or some other method. Having to trend away from gas xxx, of course using pumps is a gentler way of recovery.
Generally applicable to a depth of 150 – 750 meters. The horizontal portion of the well pair is up to 1000 meters long and of course, there are many well pairs on the project.
So it is quite a drilling exercise to drill two well pairs 5 meters apart and the end of the well pad is 2 km away from the rig. It is an interesting piece of science. (I could not make out this sentence, it ends like this) very impressive technology. It is about a half a million dollars to develop, so by all means it is not small change.

7. SAGD Configuration Looking at the SAGD well pair.
That’s a typical configuration.

8. Normal Operations
100% Quality steam is injected into the reservoir through the upper horizontal well
Steam rises through the formation to heat the bitumen forming a steam chamber
Steam condenses at the interface
The heated bitumen and water then flow by gravity to the production well
Production well is fitted with a slotted liner to prevent sand production
Steam fills the void left by the bitumen – chamber grows up and out

9. Development of Steam Chamber
Vertical Cross-section Through Fully-Developed Steam Chamber

10. Blowdown Phase No Steam Injected
Occurs usually 6-9 years into well life

11. Steam Chamber Pressure Considerations
Steam in the Steam Chamber is at saturated conditions therefore steam temperature is determined by pressure
The following must be considered with regard to operating pressure:
Formation fracture pressure
Three operating modes:
Balanced pressure
Low pressure
High pressure
Requirements for lifting produced fluids to the surface
Thief zones (gas and water)

12. Keep Dp small to maximize stability
steam + oil
+water + CH4
liquid level
oil and water q
lateral steam
chamber extension
“insulated”
region
countercurrent
flow
CH4 + oil
Keep Dp small to maximize stability
overburden
water leg
cool bitumen plug

13. Other Reservoir Considerations
Net pay thickness
Presence of cap rock
Potential thief zones (either top gas or top water) should be restricted in thickness and lateral extent
Bottom Water
No connective shale layers
May affect design and operations

14. SAGD Surface Facilities Overview
Field Gathering Facilities
Distribution and gathering systems (production gathering, steam distribution, water supply & disposal)
Well pads and associated facilities
Central Processing Facility
Produced liquids treating
Water treatment
Produced gas treating
Steam generation
Product tankage

15. Generalized SAGD Process Overview
Brackish &Fresh Water Make-up from Water Supply Wells
Utility
Neutralization Losses
Water Treatment
Produced Water
Skim Oil Recycle
Deoiling
Slop Recycle
Utilities
Treated Water
Interface Fluids
Oily Water
Desalting
Fuel Gas
Fuel Gas System
Produced Gas
Diluent
Bitumen
Steam
Production Separation & Degassing
Reservoir
Sand
Produced
Water
Steam Generation
To pipeline or tanks
Produced Gas
Dilbit
LACT
Blowdown to
Disposal Wells
Sand

16. Field Gathering Facilities Distribution and Gathering Systems
Consist of above ground pipelines connecting central facilities to well pads
Steam and produced liquids pipelines are insulated to prevent heat loss
Pipelines for:
Gas distribution
Water Supply and disposal
Production gathering (bitumen, water, gas)
Steam distribution

17. Field Gathering Facilities Well pads
Minimize site disturbance and optimize operational efficiencies
Project’s consist of multiple pads with multiple well pairs (5 – 13 pairs per pad)
Connected to central processing facility by pipelines
Contain:
Wellheads
Separators
Production measurement facilities

18. Well Pads - Production Side Schematic

19. Pad Facility

20. Central Processing Facility Produced Liquids Treating
The SAGD process will produce both bitumen and water
Two main approaches to treating
Diluent treating
Results in a “dilbit” product that can be transported by a conventional pipeline
Subject to diluent shortages
May see trend to use SCO
MEG Energy, Foster Creek, Surmont
Flash treating
Product requires a heated pipeline
JACOS, MacKay River

21. Produced Liquids Treating Diluent Treatment System
Produced liquids are cooled prior to diluent addition
Until oil floated from water
Separation of bitumen and water:
Possible Slug Catcher
Free Water Knock Out Vessel
A Treater
(Desalter)

22. Produced Liquid Treating: Diluent Treatment Schematic

23. Produced Liquids Treating Flash Treatment System
Produced liquids are heated to 220°C
Water floats on oil
Skim water from oil
Pressure is reduced to boil remaining water
Separation of bitumen and water:
High temperature separator
Flash treater
Ancillary equipment

24. Central Processing Facility Water Treatment
Facilities are designed to minimize water usage through recycling
Water that cannot be recycled is sent to disposal wells
Make – up water from water supply wells is combined with recycled water between the oil removal and water treatment systems
Water treatment is required to ensure that produced and make-up water meet quality standards required for the steam generating equipment

25. Central Processing Facility Water Treatment
Water treatment facilities include:
Oil removal systems:
Skim tanks
Induced gas or induced static flotation
Oil filters
Water treatment systems (reduce hardness)
Warm lime softener
Gravity filters
Strong and weak acid cation exchangers

26. Water Treatment Schematic
Slop Oil

27. Central Processing Facilities Produced Gas Treating
Gas is produced with the bitumen and water as well as by gas lift when used
Systems may include
Gas sweetening unit
Gas dehydration unit
Sulfur recovery unit

28. Produced Gas Treating Schematic

29. Central Processing Facility Steam Generation
Steam generation system used in SAGD must be capable of delivering 100% quality steam
Water from the steam separator can be flashed to generated medium and low pressure steam for:
Hot lime softener
To recover high quality boiler feed water
Waste heat power generation
(The upgrading process)

30. Central Processing Facility Steam Generation
Boilers
Minimum requirements:
Steam generators capable of generating sufficient quantities of 80% steam
High pressure steam separators to bring the steam to 100% quality
Once – Through Steam Generator (OTSG)
Cogeneration (Cogen)
A number of current and planned projects include co-generation facilities to deliver steam and electricity
Improved efficiency
Power Boiler
No need for steam separator

31. Steam Generation Schematic

32. Processing Facility

33. Long Lake Steam Generators

34. Benefits of SAGD Economic Recovery High recovery High sweep efficiency
Improved Steam Oil Ratio (SOR)
High recovery
High sweep efficiency
Potential for production from closed fields
Continuous production
Smaller Footprint
Type
Recovery Rate*
Oil sands Mining
90+ %
In-Situ Oil sands*
20 – 60%
Conventional Light Oil
30% Average
Conventional Heavy Oil
Up to 20%
* Recovery rates vary according to the qualities of the reservoir and the recovery method used. Bitumen recovery rates at Cold Lake, where cyclic steam stimulation technology is used, have improved from initial estimates of about 17 percent to more than 25 percent today. At the Mackay River oilsands facility, steam-assisted gravity drainage results in recovery of more than 60 per cent of the original oil in place.

35. Challenges to SAGD
Low initial oil rates
Limited reservoir applicability (low perm., low pressure, bottom water, thick pay zones)
Gas over bitumen
Resource intensive (water, energy)
Water treatment (AEUB 95% recycle rate target)

36. Summary
Market forces and technological developments are leading to increased production from Alberta’s vast oil sands deposits
SAGD is a leading method of bitumen recovery if reservoir conditions are right
Surface facilities are required for bitumen treatment
Several variations of SAGD are under development
SAGD provides higher recovery and a smaller footprint than some other recovery methods
SAGD is capital and resource intensive (water, gas)