Market Snapshot: In-Situ Oil Sands Producers More Efficient, Using Less Steam per Barrel in 2014

Release Date: 2015-05-05

In-situ oil sands production is projected to be one of Canada’s largest sources of future oil growth, as well as one of the key growth areas for natural gas use due to its energy-intensive process. In order to remain competitive, in-situ producers are optimizing their operations with technological innovations that lower the steam oil ratio (SOR): the ratio of the volume of steam required to produce one unit of oil. When natural gas is used to produce steam, the SOR becomes a measure of natural gas intensity, and a key indicator of an operation’s energy efficiency.

The figure below represents SOR for the Alberta in-situ industry over the past six years as measured by ‘aggregate production-weighted SOR’: the ratio of the annual steam usage vs. annual bitumen production.

Figure Source and Description

Source: Alberta Energy Regulator - Note: 2015 data represents the months of January and February only.

Description: This line chart shows the aggregated production-weighted SOR for: All Thermal In-Situ, Cyclic Steam Stimulation and Steam Assisted Gravity Drainage for 2009 to 2015. The chart illustrates that SAGD SORs have generally remained flat in the industry from 2009 to 2013. All Thermal In-Situ’s SOR decreased from 3.13 in 2013 to 2.96 in 2014 and decreased even further to 2.89 in the first two months of 2015. This is driven by Steam Assisted Gravity Drainage, which decreased from 2.91 in 2013 to 2.71 in 2014 and even further to 2.60 in the first two months of 2015. Cyclic Steam Stimulation exhibited a modest decrease under its 2013 level of 3.66, hitting 3.65 in 2014 and increasing to 3.74 in the first two months of 2015.

The figure suggests that until recently, the effect of in-situ innovations on SAGD’s SOR was not observed. SAGD SORs were relatively flat from 2009 to 2013 then saw a 5.7% reduction in 2014. This in-turn helped to decrease the SOR for All Thermal In-Situ SOR by 5.3% in 2014, its best year-on-year improvement since 2010.

Data from January and February 2015 suggest a continued downward trend as All Thermal In-Situ’s SOR decreases 2.4% below 2014 levels. The recently released Energy Futures Supplement: Demand Sensitivities further discusses how trends in SOR efficiencies effect producers’ natural gas purchase requirements and could have large impacts on long-term natural gas demand.

In-situ innovations being adopted by producers include the use of flow control devices that direct steam more uniformly in the reservoir, injecting methane or solvent with steam, and drilling vertical infill wells, or “wedge wells" between older Steam Assisted Gravity Drainage (SAGD) wells to recover additional bitumen from beyond the existing boundaries of the steam chambers.

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