Alberta Regulator Quietly Halts High Pressure Steam Injection for Bitumen Mining Near Fort Mac, After several leaks, production frozen while technical review is conducted

Alberta Regulator Quietly Halts Steam Bitumen Mining Near Fort Mac, After several leaks, production frozen while technical review is conducted by Andrew Nikiforuk, March 5, 2014,
The Alberta energy regulator has suspended the fastest-growing source of bitumen production around Fort McMurray due to concerns about fracturing the region’s cap rock. Last January, the regulator quietly issued a bulletin announcing the freeze on development in the Wabiskaw-McMurray deposit of the Athabasca Oil Sands Area while it completes “a thorough technical review of the factors that affect reservoir containment of steam-assisted gravity drainage (SAGD) projects.”

The suspension affects the development of steam operations in one hundred townships where bitumen developers plan to inject hot steam 100 to 150 metres into the ground to melt shallow formations of bitumen.

To date, five companies have been affected by the freeze including Silver Willow Energy and Ivanhoe Energy, whose 7,520-acre Tamarack Project is valued at $1.8 billion.

“The [regulator] believes that the risk of steam and reservoir fluids being released at surface is greater if reservoir containment is compromised in this area due to the shallow nature of the resource,” reported the bulletin.

A cap rock must have “sufficient thickness and competency and be continuous across the project area to contain steam and heated reservoir fluids.”

Review long overdue: critics
Geomechanical engineers have warned for years that steam plant operations that extract bitumen from formations just 100 metres from the surface are much riskier than deeper formations and require “more careful determination of maximum operating pressure” for the steam. Preventing bitumen blowouts to the surface cap rock integrity demands high degrees of complexity, including “comprehensive field measurements, detailed laboratory measurements and collation of all information in a geo-mechanical modeling exercise to determine the safe maximum operating pressure.”

Critics say the technical review is long overdue and highlights growing problems with different kinds of in situ technology, including toxic air pollution in Peace River, dramatic bitumen releases in Cold Lake, groundwater depletion and contamination in Athabasca and rising steam-to-bitumen ratios, an indicator of extreme energy waste.

“Alberta’s review and permitting process for high-pressure bitumen extraction projects has been overly permissive and risky for groundwater, surface lands and wildlife resources,” says Carolyn Campbell of the Alberta Wilderness Association. Campbell would like to see more restrictions on steaming projects “where cap-rock layers can be fractured by geological weaknesses, such as the dissolving salts formation in the Cold Lake-Conklin area or by poorly sealed, poorly documented well bore sites.” Kevin Timoney, who co-authored a critical report on Canadian Natural Resources Limited’s huge bitumen-to-surface seepage event, said the bulletin “suggests that the regulator may have concerns that the safety of in situ steaming operations may have been overestimated in the past.”

Since 1998, the province has approved more than 50 steam plants. It has done so with no cumulative impact assessment on groundwater impacts, natural gas consumption or carbon emissions. Last year, the federal government excluded oil-sands steam plants, which represent the future of oil-sands production, from federal environmental assessments. … The bulletin, combined with Canadian Natural Resources Limited’s massive 12,000-barrel bitumen seepage, indicates that production dependent on fluid injection is not as safe or reliable as industry advertisements present. Television ads by Cenovus, one of the largest steam plant operators in the oil sands, suggest that thermal operations are “a different kind of oil sands” and somehow cleaner than open pit mines.

But in recent years, petroleum and geo-mechanical engineers have raised repeated concerns about the dangers of high-pressurized steam operations. They can experience the same sort of problems now plaguing the hydraulic fracturing of shale gas and tight oil formations. By pumping large amounts of steam at high pressures underground, operators have to carefully consider rock formations around the bitumen deposit. High-pressured blasts of steam can create fractures in the protective cap rock that keeps the bitumen from flowing to the surface or into aquifers. Fluid injection can also reactivate existing faults or fractures and lead to leaks to the surface, other bitumen wells or groundwater.

Review expected in months
Due to growing concern about cap rock integrity in the region, in 2009 the regulator promised a transparent “In Situ Oil Production Incident Review Database” that would report uncontrolled releases of steam to surface and groundwater. To date, no such database has been released. Asked why the database had not been made public, the regulator’s senior public affairs advisor Carrie Rosa replied that “the AER publishes all incidents on its Incident Reporting tool, on the AER website.” The regulator did not explain why it chose to launch a review of shallow bitumen operations now, as opposed to 2006, when Total’s Joslyn project created a 300-metre hole in the boreal forest after pressurizing a 70-metre-deep formation. The regulator did not report on the “catastrophic event” until four years later, and there is still no consensus on its cause.

For more than three decades, petroleum engineers have known that fluid injection in shallow bitumen formations creates fractures that propagate primarily in the horizontal direction and tend to migrate upward. [Emphasis added]

Why an accidental leak should send shivers up big oil’s spine by Jeff Rubin, February 18, 2014, The Globe and Mail
Oil leaks are a regrettable fact of life in the business, but this one might send shivers up the spine of even a veteran oilman. CNRL insists the seepage is due to the failure of four well bores that are supposed to draw oil from its Primrose project, near Cold Lake, to the processing facilities on the surface. Others, including even Alberta’s pro-industry energy regulator, aren’t so sure.

The well bores are separated by several kilometres, which calls into question why four would fail at the same time. A more frightening theory that’s gaining currency suggests CNRL may have overpressurized the underground formation causing the caprock closer to the surface to fracture, which is allowing the bitumen to seep upwards.

The carbon trail from in situ projects isn’t the only worry. The extraction method may also be having more of an impact on the earth itself than was previously thought. Geologists have found that injecting massive amounts of steam into bitumen deposits can actually lift the ground cover by more than a foot a month. If this upheaval fractures the caprock then that’s one less barrier left to stop the uncontrolled flow of bitumen to the surface.

So far, the Alberta Energy Regulator has yet to deliver a final verdict on the Primrose leak, although it did recently move to limit the amount of steam that CNRL can inject into its wells. While the provincial energy regulator – led by a former EnCana executive and president of the oil industry’s lobby group – does seem to be suspicious of CNRL’s proffered explanation for the seepage, it has yet to order the company to stop injecting steam at its Primrose operations. The longer bitumen keeps seeping to the surface, though, the more pressure the regulator will face to do so. Whether CNRL’s problems at Primrose are specific to that site or will become a more generic issue for the industry remains to be seen. But with 80 per cent of the massive expansion planned for the oil sands coming from in situ production, it’s a question that investors in oil sands stocks will soon want answered. [Emphasis added]

[Refer also to:

“You can fix a wellbore, but you can’t repair a fractured cap rock,” ]

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