Heavy oil has enjoyed resurgence as both major and junior operating companies diversify their portfolios and pursue new opportunities. The key factors for the renewed interest are:

  • Improved profitability

  • Technological advances improve productivity

  • Enormous reserve size

  • Low geological risk

  • Low capital for non-thermal projects

In addition, immediate concerns about environmental issues such as sand disposal and gas migration appear to have been resolved to the extent that there is no immediate threat to the operating environment. The key risk factors remain oil and gas price, land prices and economic means of sand disposal. This paper focuses on cold production as one of the most attractive new technologies used to produce heavy oil in the Lloydminster area. Steam assisted gravity drainage (SAGD) will be the focus of a future paper.


Western Canadian crude oil production is approximately 320,000 m3/d. Of this amount, 50 % is comprised of heavy crude and bitumen. While bitumen demand has been essentially flat since the mid to late ‘80’s, heavy oil production has doubled from 56,000 m3/d to 112,000 m3/d in the last 10 years1.

Why heavy oil?

  1. Improved profitability - while conventional heavy oil production would often result in unit operating costs of 50–75 $/m3, current operating costs for higher volume cold production leases can be as low as 28 $/m3 2, which is comparable to light oil. Price stability brought about by reside conversion investment by major U.S refineries, the Bi-Provincial Up-grader and declining conventional feedstock's has resulted in a narrowing of the differential to U.S sweet crudes. This improvement in profitability has meant that smaller operators can pursue thermal operations and cold production.

  2. Technological advances improve productivity

    • Cold production - advances in design & operation of the progressive cavity pump in the last 7 years have allowed for tremendous productivity gains.

    • SAGD - previous thermal methods such as steamflooding have often been stymied by reservoir heterogeneity, steam override and the need to use reduced well spacing to achieve high recoveries5. The use of horizontals along with gravity working in favor, instead of against it makes the SAGD approach much more effective and economic than other thermal processes in many situations.

    • Horizontal wells - increases in productivity have been tremendous, especially in bottom water applications, but sanding in unconsolidated sands, and the inability to cleanout the sand in horizontal legs has led the industry to re-evaluate the applicability of the horizontals for primary production.

    Carlson et. al.6 have provided an excellent listing of various technologies for heavy oil. Towson provides an in-depth overview of the role of horizontals in heavy oil.

  3. Reserve size - the reserve size is enormous, with estimates of over 3 billion m3 of oil and oil sands proven recoverable reserves recognized by the AEUB in Alberta alone3. Other estimates put the total resource size at over 430 billion m3 4.

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