Cost Analysis Of Current In-Situ Bitumen Production — Optimum Production Strategies And Priority R&D Needs
Authors: Wong S. , Toma P. , Singh S. , DuPlessis M.P. , Quon D. 
Published: March 2010

Abstract
The survival and growth of Alberta's bitumen industry during the continuing world oil price uncertainty will, to a large extent, depend on the development of improved technologies and enhanced cost effectiveness. It is first necessary to identify key parameters that impact production costs and to determine their relative cost sensitivities. Research can be focused on these targeted areas and production strategies can be developed which could potentially provide significant cost reductions.
This paper describes how energy models developed at the Alberta Research Council are used to identify key areas and to determine their cost sensitivity. Current technologies for in situ extraction of bitumen from Alberta's deposits are reviewed, and the implications of different world oil price scenarios are analyzed. The economic impact of a number of promising operating strategies and processes are presented and analyzed.

Introduction
Five large bitumen and heavy oil deposits with resource estimated at 400 × 109 m3 of hydrocarbon are located in Alberta(1). Defined by UNITAR(2) as a liquid hydrocarbon with a viscosity greater than 104 mPa •s and an API gravity less than 10 degrees, bitumen found in most of Alberta's reservoirs cannot be produced unless heated. There are various degrees of success of applying thermal recovery methods to Alberta's bitumen deposits — good results are reported in Cold Lake (Esso) and Peace River (Shell), while others are not that encouraging, especially in the Athabasca deposit. Even so, in the past five years, bitumen production increased six fold from less than 3400 m3/D in 1983 to about 20,000 m3/D in 1988. In the early years the production came largely from sizable piloting activity. In 1988, there were six commercial projects and 22 bitumen pilot projects operating in Alberta. Most of these projects were started during the 1983–85 era. Market opportunity, improved fiscal regimes and the high oil price prior to 1986 allowed this aggressive development. Since the precipitous price drop in 1986, the prevailing low oil price has put most new bitumen projects on hold. The bitumen production industry is at a crossroad. Its survival during the continuing world oil price uncertainty will, to a large extent, depend on the development of improved technologies and enhanced cost effectiveness. This paper analyzes the cost of bitumen production and uses a simplified Oil-Steam Ratio (OSR) model to evaluate a number of potential production strategies. A Liquid Fuel Model (ALF01), developed at the Alberta Research Council (ARC) is used to examine how, over the next 40 years, different oil price scenarios and improved technologies would impact on bitumen production. It is used to provide a basis for assessing the potential benefits of R&D in this area.

Current In-Situ Commercial Technologies
At normal reservoir temperature, bitumen is totally immobile. Mobilization of bitumen through the application of heat requires efficient convection and conduction of hot fluid into the formation. This involves a good distribution of heating sources and an increase of contact areas between the injected hot fluids and the reservoir.