Progress and Problems

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John Wright, CEO of Calgary-based Petrobank Energy and Resources Ltd., told Oilweek that he is "highly optimistic" that the two-year fire flood project south of Fort McMurray "has the potential to revolutionize the heavy oil industry on a global basis.”41 Dubbed THAI, for "toe-to-heel air injection," initial work on this concept of fire flooding began in 1993 while the pilot project follows $4 million spent in 2003 by Petrobank on computer-simulated models. Potential benefits include the fact that no fuel other than the bitumen itself will be needed to produce steam. THAI is expected to burn 10 per­cent of the bitumen in the sand, and recover up to 80 percent. It will involve far less surface disturbance than mining, with no sand nor tailings from a separation plant to be disposed of. The underground combustion is expected to burn most of the carbon, sulphur, and other impurities, eliminating the need for surface processing facili­ties to handle this aspect. Carbon dioxide emissions are expected to be reduced by 20 percent compared with either in situ or mining operations, and further reductions might be achieved by returning the carbon dioxide into bitumen-depleted sands, rather than venting it into the air. The pilot project, which received Alberta approval early in 2004, is being conducted by Petrobank subsidiary Whitesands Insitu Ltd.

Another $30-million in situ pilot program, in which propane and other vaporized solvents are being used to thin the bitumen and wash it from the sand so that it can be pumped to the surface, began operat­ing late in 2003. Called VAPEX, it is claimed that the system could reduce carbon dioxide emission by 85 percent as well as reduce water consumption and possibly fuel requirements.42 The pilot program, which is to operate for a period of five to 10 years, will use the Underground Test Facility at which AOSTRA developed the SAGD in situ method more than a decade earlier. Financed 50 percent by the Alberta and Canadian governments, 50 percent by half a dozen oil com­panies, the program is being conducted by Devon Canada Energy.

Oil sands production has been projected by the Canadian Association of Petroleum Producers at nearly three million barrels a day by 2015.43 That would amount to three-quarters of Canada's oil production, and one-­fifth of total North American production from Canada, the United States, and Mexico.

Until 2004, all oil sands production had gone to Canadian and U.S. refineries. With an oil pipeline network extending from Athabasca country to the Gulf of Mexico, it seemed taken for granted that U.S. refiners would continue to buy all of Canada's oil sands exports. But a new probable buyer emerged — China, the world's second largest oil-consuming country. Both Enbridge, with a proposed new pipeline from the oil sands to B.C.'s northern coast, and Terasen, with a mooted expansion of its existing line to Vancouver, were in talks with China's major oil companies. Both had sent tanker shipments of oil sands synthetic crude for trial runs in Chinese refineries. China was widely expected to invest billions of dollars for long-­term supplies from the oil sands.

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