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News Release January 2, 2004
FOR IMMEDIATE RELEASE
EUB RELEASES REGIONAL GEOLOGICAL STUDY
Study does not state which natural gas wells to be permanently shut-in
Calgary, Alberta (January 2, 2004)
The Alberta Energy and Utilities Board (EUB) has released a regional geological study of the geological strata known as the Wabiskaw-McMurray in the Athabasca Oil Sands Area. The EUB study identifies where natural gas is in contact with bitumen in the Wabiskaw-McMurray. The study does not specifically identify individual gas wells that may be subject to permanent shut-in.
EUB staff will use the study to prepare recommendations respecting the production status of specified gas wells in the study area. The EUB staff recommendations will be released on January 26, 2004.
The study contains a list of 464 gas pools found to be in contact with bitumen and 313 gas pools that are not in contact with bitumen in the Wabiskaw-McMurray. EUB staff will analyze all of the gas pools and make recommendations as to which gas wells negatively impact bitumen recovery.
Following the release of the EUB staff recommendations, gas and bitumen producers will have the opportunity to challenge any recommendation at an interim and a final EUB hearing. The interim EUB hearing will be held on March 8, 2004, and will address the production status of wells in dispute on an interim basis. If required, a final EUB hearing will be held to decide the final production status of wells that continue to be in dispute.
The release of the study marks the beginning of Phase 3 of the EUB's bitumen conservation requirements, as set out in EUB General Bulletin (GB) 2003-28. The requirements address the immediate and continued risk of natural gas production on bitumen recovery in the Wabiskaw-McMurray. The requirements are a result of six years of consultation, public hearings, and related work by the EUB.
The Wabiskaw-McMurray contains natural gas that is in contact with some of the highest quality bitumen resources in the province. As this natural gas is produced there is a drop in pressure within the gas pools. The EUB believes this leads to an unacceptable risk to bitumen recovery using thermal techniques, such as steam-assisted gravity drainage (SAGD).
On September 1, 2003, the EUB ordered the interim shut-in of gas production from 938 Wabiskaw-McMurray wells. Temporary exemptions were provided for gas wells where operators had evidence that gas production was not associated with potentially recoverable bitumen. To date, 330 gas wells are shut-in on an interim basis (representing 40.5 per cent of the area's daily gas production), and 608 gas wells have temporary exemptions and continue to produce.
The EUB ensures that the discovery, development, and delivery of Alberta's resources and utilities services take place in a manner that is fair, responsible, and in the public interest.
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This news release, attached documents, and the regional geological study report are available online at www.ercb.ca. Paper copies of the study with a CD are available for $75 from EUB Information Services at 297-8190. The CD contains the study report, a number of databases, maps and figures that provide more detail than the hard copy report. Additional copies of the CD are available for $25.
Questions regarding the regional geological study can be directed to AWM.RGS@gov.ab.ca. Answers to the most frequently asked questions will be posted on the EUB website.
Note to Editors:
Attachments include:
For more information, please contact:
Tom Neufeld, EUB Communications
Phone: 403-297-8565
Fax: 403-297-3757
Email: tom.neufeld@gov.ab.ca
NR 2004-01
EUB Regional Geological Study Backgrounder
Fast Facts
Oil Sands
- Alberta's oil sands are a mixture of sand, clay, water and bitumen.
Bitumen
- Bitumen is thick, heavy oil with the consistency of molasses and is contained within the spaces between sand grains in the oilsands.
Regional Geological Study
- Work began on the study on Sept. 3, 2003 and was completed on Dec. 31, 2003.
- The EUB/industry team that conducted the study consisted of 15 geologists and engineers from 11 companies and 27 full time staff from the EUB. Dozens of other EUB staff also contributed their expertise to the study.
- Companies contributing resources to the regional geological study included Paramount Energy Trust, Canadian Natural Resources Ltd., Imperial Oil Resources Ltd., BP Canada Energy Company, ISH Energy Ltd., Husky Energy Incorporated, EnCana Corporation, Petro-Canada Oil & Gas, Devon Canada Corporation, Nexen Canada Ltd, and ConocoPhilips Canada Resources Corporation.
- The study encompassed about 136 townships, or approximately 5000 square miles.
- Data for the study was provided from well logs, core samples, and pressure and production data.
- The team conducting the study examined about 3600 well logs and approximately 6600 boxes of core samples. Laid end to end, the core samples would measure nearly 10 km in length.
- The team also evaluated 3280 wells for the presence of gas and bitumen, including bitumen and gas wells that were operating, suspended and abandoned.
Bitumen Conservation Requirements Next Steps
The timeline for the next steps in the EUB's bitumen conservation requirements process is as follows:
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January 26, 2004
- EUB staff submission group release recommendations to continue or vary gas production status of wells subject to EUB General Bulletin (GB) 2003-28.
February 9, 2004
- Parties that disagree with the recommendations must notify the EUB's Board of the wells for which they wish to present their case at the interim hearing.
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February 23, 2004
- Parties file evidence supporting their case.
March 1, 2004
- Parties file reply evidence.
March 8, 2004
- EUB interim hearing begins.
Date to be determined
- EUB final hearing begins, if required.
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EUB Regional Geological Study Backgrounder - Map of Study Area
Steam assisted gravity drainage (SAGD) is a process used to recover bitumen from oil sands. Typically, pairs of horizontal wells are drilled, one for steam injection and one for production. Under the ground, the horizontal wells run parallel to each other in the bitumen zone, with the production well located below the injection well. Steam is injected into the reservoir from the injection well, and as the steam permeates the oil sands, the bitumen is heated, allowing it to flow, and the bitumen is then pumped to the surface via the production well.
Two schematics are available that illustrate the effect a pressure depleted gas pool can have on the steam injected by a SAGD operation in an underlying oil sands zone. In the undepleted case, the steam is mostly contained within the oil sands zone where it is able to heat the bitumen so that bitumen can flow to the producing well. In the depleted case, some of the steam escapes into the lower pressure gas pool and this steam is not available to heat the bitumen.
January 2, 2004
To: All Oil, Gas and Oil Sands Producers
RELEASE OF REGIONAL GEOLOGICAL STUDY ATHABASCA WABISKAW-MCMURRAY
I am pleased to announce the release of the Regional Geological Study for the Athabasca Wabiskaw-McMurray Oil Sands Area. The study was completed on time with the significant contribution of EUB staff, and seconded staff from eleven gas and oil sands producers.
The release of the study begins Phase 3 of the Bitumen Conservation Requirements outlined in GB 2003-28. On December 17, 2003 the schedule for Phase 3 was provided to you to assist in planning for your participation.
You are encouraged to begin your review of the study immediately. Please bear in mind that the study was designed to provide an assessment of where gas is associated with bitumen that meets the EUB's cutoff for potentially recoverable (10 + meters of bitumen with 50% saturation). EUB staff will take the study results and make specific recommendations to vary or continue the production status of gas wells on January 26, 2004.
Two weeks later you must indicate if you wish to challenge the staff recommendations, and on February 23, 2004 you must file your written evidence. With another week for reply evidence and one week for hearing preparation, the interim hearing will commence approximately two months after the release of the study. The schedule is rigorous, however the EUB believes this is necessary to address the outstanding bitumen conservation risk by the end of the first quarter of 2004, which was our target when GB 2003-28 was issued last July.
The study was a challenge to complete within the timeframe established and all those who contributed to the study are to be complimented for their dedication and hard work. Once again, I would like to extend my appreciation to those companies who contributed expert resources to assist with this important work.
[Original signed]
Neil McCrank
Chairman
