The big bitumen breakthrough

The ongoing transformation of the oilsands and heavy oil sector from a poor cousin a few years ago into the cornerstone of the Alberta oil industry, was discussed. Much of this change is due to the development of SAGD (steam assisted gravity drainage) technology for the underground recovery of heavy oil and tarry bitumens, aided by partly government-funded research, and boosted by a revised provincial royalty regime. The thermal recovery process makes use of a pair of horizontal injection and recovery wells, drilled one above the other. The efficiency of this new technology could produce a shift in the petroleum industry's spending towards oil sands and heavy oil if investors conclude that it is more profitable to produce heavy oil than conventional light oil. Some of the oil sands producers that are poised to invest billions of dollars in various underground bitumen projects in Alberta over the next five years include Suncor, Syncrude, Alberta Energy Co., Amoco Canada, Elan Energy, Imperial Oil Resources, CS Resources, Koch Oil, and Gulf Resources. The ultimate goal is recovery costs of $6 per barrel, which is comparable to the costs of the conventional oil sector. The added advantage of oil sands production is, of course, the virtual elimination of the exploration risk. 3 figs