What’s the difference between an all-inclusive vacation resort and a steam-assisted gravity drainage (SAGD) in situ oil sands facility? Not a lot, really. Both are hot and steamy, involve copious amounts of oil and operate a full schedule of activities around the clock.
While it’s unlikely Club Med will be opening up destinations in Alberta’s oil sands region anytime soon, the number of SAGD in situ facilities in the area are expected to grow significantly in the coming years.
That’s because 80 percent of oil sands reserves are too deep to be mined and can best be recovered in place (or in situ) by drilling wells. SAGD drilling injects steam into the reservoir to warm bitumen so it can be pumped to the surface.
As we noted in a previous OSQAR comparing oil sands recovery methods, a downside of in situ development is that it often requires lots of energy. Most of the energy is in the form of natural gas, which is burned to heat water to make steam.
It’s no wonder in situ operators are preoccupied with making their facilities as energy efficient as possible. Burning less natural gas, of course, has solid economic and environmental benefits.
How do you measure the energy efficiency of a particular facility? Steam-oil ratio or SOR, is the key metric many use, especially those in the ratio-obsessed investment industry.
SOR is a measure of the amount of energy required - barrels of steam - to produce a barrel of bitumen. The less barrels of steam involved in producing barrel of oil, generally the more efficient the facility is. (The characteristics of an operations’ bitumen reservoir also affects the SOR).
As a ratio that neatly sums up energy inputs and outputs, SOR numbers are similar to fuel economy ratings used in the car business. The in situ industry has its penny-wise Ford Fiestas (with SOR ratios of two-to-one and less) but also has its share of GMC Yukons too (SOR ratios of six-to-one and higher.)
So how do Suncor’s two in situ facilities – Firebag and MacKay River - stack up? Firebag falls about in the middle of the industry range while MacKay River is at the low end. (See slide 17 in Suncor’s Q2 2011 Investor Presentation (PDF))
Though a useful metric, SOR doesn’t tell the whole story, especially when it comes to measuring overall environmental impacts beyond greenhouse gas emissions. That's why some take a more comprehensive view when assessing facilities. The Pembina Institute, for example, last year published a ranking of in-situ projects’ environmental performance. (It’s worth noting that both Firebag and MacKay River scored above industry average in this assessment).
While visitors to Firebag and MacKay River will never mistake them for Punta Cana or La Caravelle, efforts are underway to make these and similar facilities better. Look for in situ energy efficiency performance to increase in the coming years, much like automobile fuel economy has since the Ford Model T was discontinued in 1927.