The Lloydminster Heavy Oil Area
Authors: Jameson C.E. 
Published: March 2010

The Lloydminster heavy oil area has experienced an erratic growth since the first commercial oil was discovered in 1943. Prior to a tie-in to Interprovincial Pipeline to the east in 1963, the demand for the oil was very limited, resulting in an historic low price of the crude oil At the present time the field is producing about 35,000 BOPD. Husky Oil Operations Ltd. has over 1,200 oil, gas and service wells and produces about 28,000 BOPD of the total field output.

The oil and reservoir characteristics make production of the oil difficult, with oil recoveries by primary or waterflood means very low. The highly viscous oil, coupled with the fine-grained, unconsolidated sandstone reservoir, results in high rates of sand production with the oil. The low-temperature reservoirs seem a natural for some type of heat drive or stimulation process. However, cyclic steam and steam drive operations have not proved economical Results to date of a modified in-situ combustion process are encouraging. This process is expensive, requires close technical attention and presents some special operational problems. However, if successful, it will provide a several fold increase in total oil recoveries over present methods. We are confident that this process, or others that will be developed as our technology improves, will enable the vast Lloydminster Field to maintain its dominant position as the heavy oil center of Western Canada for many years to come.

Introduction

THE OIL AND GAS INDUSTRY in the Lloydminster areastraddling the Alberta-Saskatchewan border dates back to 1934 when the Lloydminster Gas Company completed the first commercial well in Saskatchewan as a gas producer just southeast of Lloydminster. This discovery allowed Lloydminster to become one of the first communities in Western Canada to be serviced by natural gas. Follow-up drilling resulted in additional gas wells and some indications of the presence of a heavy, black asphaltic-base crude oil. The first oil well was completed in 1938, but the first actual commercial production was not available until 1943.

The total oil production through 1945 was only about 50,000 barrels, which was used locally for the production of Bunker C fuel for the railroads. It was processed in a small refinery that went on stream in 1943, operated by Exelsior Petroleum.

Husky Oil Company entered the picture in 1946 with the movement of a 1,500-barre.lfday refinery from Wyoming to Lloydminster. The following year, the refinery capacity was increased to 2,500 barrels per day and Husky obtained its first oil production to help assume a steady supply of crude for the refinery.

By 1955, the field contained over 700 wells and was producing almost 3,000,000 barrels of oil per year All of the fuel oils and asphalt produced at the local refinery were consumed in the region. However, as the railroads converted from steam to diesel engines, the demand for Bunker C fuel oil declined sharply. By the early 1960's, Husky was producing less than one-half of its 180 capable oil wells and was desperately searching for additional markets for the region's crude.