Abstract

Amoco Canada is currently engaged in a significant thermal recovery development in East Central Alberta, Canada. The authors are Co-Managers of an Alliance with Colt Engineering Calgary, for the design and construction of surface facilities for the Bonnyville, Alberta development.

The paper briefly describes the development of the area beginning with the first horizontal well pilot in 1993, through to the completion of the 10th phase of a commercial development at Primrose and several horizontal well projects at Wolf Lake.

The projects have been planned to take advantage of Amoco's large heavy oil resource base, acquisition of processing facilities at Wolf Lake and horizontal well technology. To date approximately 200 horizontal wells have been drilled in the Bonnyville area and another 200 are planned for future phases. Amoco is expected to invest more than $500million in the area before the end of the century.

The engineering procurement and construction have been executed using local contractors and "preferred suppliers". Costs have been reduced from phase to phase by accumulating a base of informed suppliers and contractors working together to supply lower cost goods and services.

The authors will share some of the project execution methods and specific cost savings encountered and suggest areas of future potential.

Introduction

Canadian oil companies have identified a need to reduce fixed costs and overhead in order to be more flexible and responsive to market variations. Many companies have encouraged initiatives to outsource "non-core" competencies. The Power Of Strategic Partnering by E.E. Scheuing illustrates current philosophy driving the trend towards Project Alliances in the engineering business: "In a highly volatile environment, companies must steadily re-examine their missions and related core competencies…. All other functions…can - and perhaps should - be outsourced to other organizations who can provide them better and perhaps less expensively."

Amoco Canada has several strategic alliances in place with suppliers and contractors and continues to look for new ways of doing business in a more cost effective manner.

Several engineering contractors in Canada have also recognized the market trends and have responded by establishing long term relationships with their customers to reduce marketing and overhead costs and secure a more stable pool of work.

In 1992, Amoco Canada and Colt Engineering entered into a strategic alliance. Colt assists with the engineering, procurement and construction management of Amoco's heavy oil properties in East Central Alberta. The following paragraphs will outline the experiences gained from the formation and ongoing operation of this Alliance in Calgary.

Background

For any alliance to survive, there must be an expectation of continuing work in the area in which services are provided. Several factors indicate that heavy oil will continue to be a high growth area in Alberta: the Province has a wealth of heavy oil, Canadian oil companies are developing the technology to produce it, the tax structure is defined and the markets and pipeline systems are established.

The Resource. It is estimated that Alberta's oil sands contain 1.7 – 2.5 trillion barrels of bitumen in-place. These oil rich formations are in four geographic deposits: Athabasca, Cold Lake, Peace River and Wabasca (see Fig. 1). These deposits underlie about 30,000 square miles of the province. It is estimated approximately 300 billion barrels are ultimately recoverable. This is comparable to the proven reserves of Saudi Arabia. Using current technology, over 3.0 billion barrels have been classified as proven reserves. P. 121^

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