Extra heavy oil (or bitumen) production through Steam Assisted Gravity Drainage (SAGD) requires large amounts of steam, which are classically produced by natural gas combustion using Once Through Steam Generators (OTSG). Steam production is a major SAGD operating cost, which has increased significantly with current high natural gas prices.

In order to reduce these costs or to mitigate for the risk of insufficient natural gas supply, several alternatives to natural gas for steam generation have been investigated, such as bitumen itself, coal, or ultra-low API "bottom of the barrel" residual by-products resulting from bitumen upgrading.

Two methods of utilizing these by-products are available: direct combustion and gasification. The advantage of gasification is that it produces desulphurized syngas that can be substituted for natural gas in conventional OTSG boilers. Gasification of asphaltenes to a synthetic gas (syngas) can be achieved by different technologies: partial oxidation (POX) technologies being the most widely known.

Whether or not an upgrader is present at the SAGD field site may dictate the type of fuel burnt or gasified and also the type of any gasification unit.

This paper describes the main conclusions of a study into the decision drivers for each steam generation alternative. A technical and economic model has been developed, which screens various extra heavy oil development scenarios.

This model has allowed an informed evaluation of the impact of upgrader location on steam generation cost and potential environmental impact, by considering CO2 emissions, possible upgrading by-products and their disposal and valorization for each scenario.

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