Imperial Oil Resources Ventures Limited is proposing to develop its first in situ project in the Athabasca oilsands and for the first time will use the SAGD technology that it patented but has never employed commercially.

The company has filed an integrated application seeking regulatory approval for its proposed $7 billion Aspen project on its Muskeg lease south of its Kearl mining operations and about 45 kilometres northeast of Fort McMurray.

Imperial plans to use steam-assisted gravity drainage to access 1.1 billion bbls of recoverable bitumen resource (410 million bbls of probable reserves and 690 million bbls of contingent resource) from the McMurray formation.

The preliminary capital construction cost in 2013 dollars is estimated at $7 billion with future construction costs of $4 billion. Total estimated project operations costs (including natural gas) are $15 billion.

Aspen would be developed in three phases with construction of the first phase proposed to start in 2017 and first production in 2020, assuming regulatory approval in the fourth quarter of 2015. As currently envisioned, the second phase would come on production in 2022 and the third in 2024.

Each phase would have processing facilities with an initial processing capacity of 45,000 bbls per day. The concept plan includes future debottlenecking of the central processing facility that could increase bitumen production to about 162,000 bbls per day.

Decommissioning would start in 2060 and reclamation in 2062.

In its application to the Alberta Energy Regulator, Imperial says it selected the SAGD process because it is a proven technology for oilsands recovery in the McMurray. SAGD has been used at Suncor Energy Inc.'s nearby Firebag and MacKay River operations and is planned for use at the Husky Energy Inc. Sunrise project. The resource is too deep to be mined because the average overburden thickness above the bitumen-bearing formation is typically deeper than 210 metres, says Imperial.

The late Roger Butler developed SAGD technology while employed at Imperial Oil Limited but it was never used at Cold Lake where Cyclic Steam Stimulation (CSS) has been extremely effective in the Clearwater formation.

Imperial also is considering enhanced recovery using solvents at Aspen but that would be the subject of another application. It is still evaluating SA-SAGD (solvent assisted SAGD) as part of a pilot project at Cold Lake, Imperial spokesman Pius Rolheiser said in an interview.

The company says it will continue to explore emerging technologies and opportunities that will enhance the project, where practicable, such as exploring opportunities to manage drill cuttings disposal through integration with regional oilsands mining operations.

Credit: Imperial Oil Resources Ventures Limited

The development would occur on a 52-section lease area within townships 93 and 94, ranges 6W4 and 7W4, about 25 kilometres east of Fort MacKay. Imperial owns a 100 per cent working interest in the oilsands lease within the project area and retains the right to develop the resources within the McMurray formation.

The project will include cogeneration units, well pads and associated field facilities and related infrastructure. Inclusion of cogeneration will be a separate business decision made for each phase of development.

The central processing facility (CPF) will be developed in three phases that will be co-located in a single plot space and centrally located to the SAGD well pads. Imperial will develop SAGD wells and well pads within the development area for the start-up of each new CPF phase.

The SAGD well pairs are expected to have a lifespan of about 15 years. As the wells reach the end of their expected lifespan new wells, will be developed in the project area over the 40-year life of the project.

Imperial plans to drill about 370 well pairs (one steam and one injection) in the project area. To assess the potential environmental effects of the project, 48 well pads with seven to 21 wells per pad have been included in the project footprint. "This is a conservative estimate of the project footprint required for the recovery of the resource in place," says the company in its application.

Imperial says it will evaluate alternatives to process bitumen from the project at its affiliated refineries or at third-party facilities or to transport blended bitumen through existing regional pipeline systems that might be developed either by it or others.

The company notes that Imperial Oil Limited's products and chemicals division operates three refineries and an extensive network of retail and wholesale outlets. The affiliated refineries, says Imperial, have the capability to process oilsands bitumen and are connected by pipelines to the oilsands development regions, including Kearl, the company's mining project.

"The preliminary expectation is that blended bitumen from the project will be transported by pipeline to Edmonton or Hardisty via the Woodlands Pipeline or by a third-party pipeline yet to be developed," says the company.

According to Imperial, the development would result in a net new disturbance of 1,532 hectares.

A gas saturation zone is present throughout the project area. The zone will be pressurized using injection wells and monitored. Observation wells will be distributed throughout the project area.

Make up water for steam generation will come from a saline source. Once all three CPF phases are online, the steady-state average daily rate is expected to be about 8,664 cubic metres per day (3.2 million cubic metres per year).

The overall project execution plan is based on maximizing the use of modules, says Imperial. Modules will be fabricated and assembled primarily in the Edmonton area and will be transported by truck to the site. The company plans to develop a detailed module transportation logistics plan to minimize the effect of module movement on highway and local road traffic.

The construction phase will be approximately six years, between 2017 and 2023. The average size of the construction workforce will be 450, peaking at 700 in 2019, 2021 and 2023. Imperial estimates that about five per cent of the construction workforce will be recruited from the nearby area, 70 per cent from other parts of Alberta and about 25 per cent from elsewhere.

The operations phase will last at least 30 years beginning in 2020 with an estimated average workforce of about 215.

Imperial estimates its Aspen project will provide direct federal and provincial tax revenues of more than $6 billion (in 2013 dollars) over the life of the project; more than $14 billion in estimated royalties to the Alberta government and estimated property taxes of about $40 million to the Regional Municipality of Wood Buffalo.