Quote:
Originally Posted by Tinordi
If toe to heel, vapex, and other solvents are so great why isn't the industry using them in new wells right now?
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Toe to heel (fireflooding) does not produce commerical rates with existing drilling and completion technology. Controlling the flood front will ALWAYS be the biggest challenge with this idea that "works on paper". The geology needs to be very specifically suited for firefloods to work in practice, and the zones being produced by steam currently just don't have that right shape to them.
VAPEX & Other solvent based methods aren't being used commercially because you can't prove whether or not you recover the solvent. The cost of solvent is very large and if you can't recover/re-cycle, it does not justify scaling up especially when the cost of generating steam is "so low".* That is a huge attitude in industry right now. The main benefit of solvent assisted schemes isn't so much on the economic side, as it is a relief from the water requirements of the project (in my opinion). That's not a bad thing, its just not an economic driver. There are a lot of joint industry studies and pilots ongoing in this area. Lots of papers and research being produced.
*I say "so low" because the present value of the cost of natural gas (including carbon penalties) for a typical SAGD project (30,000 bbl/d, 3.0 SOR at peak rate, 30 year life) is about $350 million at gas prices of $2/mcf. That's not getting any lower any time soon. Just so you know, a project of this size is usually built with initial capital on the order of $25 - 50k/bbl capacity. That equates to 750,000,000 - 1,500,000,000, so fuel+carbon costs being committed to at the inception of the project are a big piece of the returns expected for that project. It makes me laugh with a full fricken belly whenever I hear the phrase "gas is so cheap" in meetings discussing steam production. When your fuel costs are equal to 30 - 40% of your initial capital outlay, in the best possible conditions, you cannot tell me that it is "cheap". Drilling costs are on that order and they're constantly scrutinized and thought to be quite expensive.
The interesting thing about LNG terminals for me is the possibility of natural gas behaving more like a global commodity... which might mean it is not strongly coupled with the price of oil, as it traditionally has been (save for the last 5 years or so). That means increasing gas prices do not necessarily mean increasing oil prices - they move more independently of one another. A scenario of increasing gas prices and flat oil prices would hurt SAGD projects signficantly.
With differentials being what they are.. I think one has to question how much they believe the emergence of tight oil produciton in the US. That's the volume thats pushing Canadian heavy out of Mid-west refineries, driving the differentials wider. There is a GLUT of this production right now, and there are a lot of questions as to what the long term production rates and ultimate recovery factors will be from these formations, for those fluids. I'm watching this one with great interest. Differentials being held wide for a long time would certainly hurt the viability of oil sands projects in Alberta unless we found other ways to either upgrade, refine, or transport our products to gain a more favourable price.