OSUM Oil Sands Corp.: Taking It Underground
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By Kathryn Jones   
Monday, 03 December 2007
smc OSUM Oil Sands Corp, Calgary, Alberta, Canada
OSUM Oil Sands Corp. plans to use SAGD in an underground mining and tunneling process that could save it 60 percent of the cost of drilling from the surface.
Calgary, Alberta-based OSUM Oil Sands Corp. says it is a leading advocate for the re-emergence of underground SAGD, a mining and tunneling process that was introduced to the Alberta oil sands industry 25 years ago.

“The benefits are out of sight,” declares Andrew Squires, vice president of engineering. “The idea is quite simplistic. Instead of building multiple drill pads on the surface – with all the associated piping and road infrastructure – why not install a pair of mine shafts down the rock below the reservoir and drill your wells up into the reservoir from a tunnel system?”

Although OSUM’s process might be considered unusual in the industry, it was proven as a viable method in 1982 through a joint venture between the Alberta government and the oil industry, also known as Alberta Oil Sands Technology Research Authority (AOSTRA).

The underground test facility (UTF) was initiated northwest of Fort McMurray to conduct the world’s first SAGD tests and determined the process was economically and commercially feasible. “They figured out that this process can get up to 65 percent oil recovery,” Squires notes. “It produced for 10 years and was one of the most successful pilot projects in oil sands ever.”

However, he adds, few people seem to remember that these original tests were performed through an underground tunneling system, just like OSUM is proposing. “The oil companies extrapolated the results from the UTF to justify their own programs that favored surface-based SAGD,” Squires says.  

“It’s a fact that very few commercial projects using surface-drilled wells have replicated the results of the underground pilot, with its 2.3/1 steam-oil ratio and 65 percent recovery factor. All we’re doing is taking the UTF facility and commercializing it. We’re simply using current technology to implement the underground approach on a commercial scale.”

Advantages to Underground
OSUM’s method could save the company 60 percent of the cost of drilling from the surface. This is because gravity will allow the oil to flow towards a collection system in the tunnel, rather than being propelled upwards through a piping system.

“You can accomplish the same goal – the same SAGD project – but it’s an underground delivery system,” Squires asserts. “It’s a true gravity drainage scenario. Steam-to-oil ratios can be minimized because the oil would flow by gravity drainage from the wells, which then would not require any special high-temperature pumping systems.”

In addition, utilizing an underground approach will reduce surface impacts by 90 percent. “With the environment taking a front seat on oil sands resource development, the advantages to our approach, combined with the potential for improved economics, make it very attractive,” Squires says.

“There is going to be more of an industry realization of the benefits of this technology. We’re already seeing environmental groups that really like the look of what we’re doing because we’re willing to address [environmental] issues that are mounting in this industry.”

Securing the Right Plays
The icing on OSUM’s cake is the location of the plays themselves. The company has secured carbonate bitumen plays in the Saleski reservoirs in northeast Alberta. Squires says this is an area that “many believe to be the next giant resource play with an estimated 37 billion-plus barrels of recoverable bitumen.” In June, OSUM announced that an independent party evaluated its net recoverable resources could amount to more than one billion barrels.

“We’ve targeted very high-quality bitumen-rich assets,” he notes. “There are companies that have huge land positions, but if you took out how much recoverable oil they think they can get vs. land position, it’s a low ratio. Our company buys into the heart of a play, so we have a real high density. Our recoverable number is coming from a much smaller land base.

“Given that a lot of the surface land is muskeg and swamp, the underground approach could have substantial cost savings [vs.] building all of that infrastructure on the surface,” he adds. “It would also provide year-round accessibility into an area [that] is winter-access only.”

The company is now performing its initial delineation drilling and seismic work, and will soon undergo the regulation process. Squires predicts that in a little more than five years operations will begin full-throttle.
 
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