Saleski News

January 7, 2011

Laricina Proposes Integration Of Saleski Pilot And Phase 1

Nickle's Daily Oil Bulletin

By Lynda Harrison

Laricina Energy Ltd. has applied for permission from regulators to expand its world-first, recently started oilsands pilot project at Saleski in northern Alberta by adding Phase 1.

"We consider this, Phase 1, a commercial phase," Marla Van Gelder, director of corporate development, told the DOB. "This has always been part of the plan, to move from the pilot to commercial."

The Saleski Project Phase 1's addition of 10,700 bbls per day of production would integrate with the pilot's approved output of up to 1,800 bbls per day to raise total production to 12,500 bbls per day.

Start-up is projected for late 2013.

Saleski's phases two to six of 25,000 to 60,000 bbls per day each are to be brought on every two to three years apart for ultimate capacity of more than 270,000 bbls a day.

Injection of steam into the Grosmont carbonate formation at the company's pilot project started Dec. 23, 2010 (DOB, Dec. 24, 2010).

It's the world's first steam-assisted gravity drainage (SAGD) project in the Grosmont, one of Alberta's largest in situ bitumen resources.

The pilot combines steam with solvents -- a process called solvent-cyclic SAGD or SC-SAGD - which will be a first for the industry.

The projected long-term steam oil ratio (SOR) is three on a SAGD basis, said Van Gelder.

The proposed Phase 1 will be located southwest of the pilot which will continue to operate as a stand-alone project with its own water source treatment, produced water disposal, emulsion treating and sales trucking. Additional well pairs will be added and applied for to maintain the pilot's production.

The Saleski phase 1 project has been designed for 20 well pairs and will be located northwest of the central processing facility (CPF) where water treating, steam generation and production handling will be located.

Well pairs will be in a stacked configuration to be drilled from a single surface pad. The initial pad will be directly adjacent and connected to the CPF by a sleeper rack carrying steam, solvents, produced emulsion, natural gas and produced annulus gas. Power lines, communication cables, instrument air and natural gas lines will also be laid on this pipe rack.

The well pairs -- 10 well pairs in the Grosmont C and 10 well pairs in the Grosmont D -- will be drilled with a horizontal well spacing of 100 metres. Initially, only the required 16 well pairs (eight Grosmont C and eight Grosmont D) will be drilled to use the plant steam capacity.

The well pairs' steam warm-up period is expected to last up to three months.

The proposed project consists of three main components: a central processing facility (CPF), well pads and offsite pipelines and services.

The systems associated with each component are facilities for: production (bitumen, water and gas); produced water de-oiling; solvent recycle; source and produced water treatment and steam generation.

Additional facilities include: storage tanks; flare system; fuel gas system; glycol system; utilities; and support buildings.

The project will have a temporary construction camp and permanent operations camp; power lines and substation; disposal water and sludge disposal facilities; source water wells; gathering and transmission lines; and a natural gas pipeline (for fuel gas).

An existing all-season road provides access to the project area. There will be an all-weather road from the CPF to access the well pads. This road network will be integrated with the sleeper pipe rack to and from the well pads. All-weather roads will also provide access to the source and disposal water wells.

The water source well pipeline and disposal pipeline from the Phase 1 CPF will use the existing pilot lines. The lines from the pilot plant will be tied into the Phase 1 plant, therefore there will be very minimal pipelining required with this new development.

The maximum steam injection pressure proposed for the project will be 5,200 kPaa.

The source water for the project will be from the lower Grand Rapids aquifer. Laricina currently has seven existing licensed source water wells that have a combined capacity to provide up to 2 090 cubic metres per day.

There are several deep water-bearing porous reservoirs that are good candidates for water disposal. These are the Grosmont A unit, Leduc, Cooking Lake, Winnipegosis and Granite Wash formations.

The potential saline groundwater sources for the Saleski leases were investigated by Laricina which found the Grosmont C unit is porous and water saturated on the western edge of the Saleski leases and is a good water source candidate.

The existing disposal wells are in the Cooking Lake/Leduc at 100/05-23-85-20 W4M and the Grosmont A at 100/02-26-85-19 W4M.

There are five pre-existing wells in the resource development area. Of these five wells, four were drilled by Laricina since acquiring the leases. Two of the wells drilled by Laricina have been completed as observation wells. All of the wells have been either cased or abandoned as oilsands evaluation wells.

The company is exploring further recovery techniques at Saleski. The company believes the stacked zones of the Grosmont carbonates are ideal for the use of its new, patent-pending heat harvesting technique, known as passive heat assisted recovery methods (PHARM).

With a successful application of PHARM, heating the Upper Grosmont D zone would generate incremental production from the lower zone, Grosmont C. Laricina expects this technique to further lower the SOR for the project, thereby reducing water and natural gas requirements even more.

Laricina holds a 60% working interest in Saleski and is the operator.

Osum Oil Sands Corp. holds the other 40%.

Last fall Laricina received Alberta government approval for Germain, a 5,000-bbls-per-day commercial demonstration SC-SAGD project. That project's commercial phase is to be followed by a series of expansions to ultimate capacity of more than 200,000 gross bbls per day.

Laricina will begin clearing of Germain's plant site and SAGD horizontal well pad area, commence detailed engineering, order long-lead equipment and prepare for construction in the first quarter of 2011. Drilling of observation and water source and disposal wells will begin this winter followed by the initial horizontal wells over the summer and fall of 2011. Plant construction will continue through to the first quarter of 2012 with first steam expected to occur in the second half of 2012.

The original 1,800 bbls-per-day SAGD pilot was approved by the ERCB and Alberta Environment in October 2009. The amendment, filed in November 2009, will increase bitumen production to 5,000 bbls per day and reflects several improvements over the original design. The commercial demonstration project incorporates solvent injection, diluent treating and water recycling. These modifications are expected to result in a lower steam to oil ratio, lower water usage, and lower carbon emissions per bbl of bitumen produced by thermal processes alone.

Germain is about 130 kilometres southwest of Fort McMurray within the West Athabasca oilsands region.