American Oil and Gas Reporter - February 2016 - 74

Husky Energy Inc. utilizes a modular, copy-and-paste approach to design, construct and
operate small-scale steam-assisted gravity drainage plants, which Media and Issues
Manager Mel Duvall says enables Husky to produce heavy oil in western Saskatchewan
at a substantially lower cost than large SAGD operations in neighboring Alberta.

By comparison, Duvall says larger
SAGD plants in Alberta can take five
years to bring on line.
Husky says all the Saskatchewan thermal projects it has approved will provide
more than a 10 percent rate of return at
$40 a barrel (West Texas Intermediate)
and new investments will at least break
even at $30 a barrel.
"Thermal technologies-primarily
SAGD-allow us to recover a much higher
percentage of the oil in place than do
conventional technologies, and we are
able to achieve strong returns even at
current oil prices," Duvall said in early
January. "We also are able to take advantage of roughly 1,900 kilometers of Huskyowned pipelines in the Lloydminster
region of Saskatchewan, and our upgrader
and asphalt refinery in Lloydminster."
He says the company's Rush Lake 1
project began production in July 2015,
and the 10,000 barrel-a-day Rush Lake 2
project was sanctioned in November.
Three additional heavy oil thermal projects
are expected to come on line this year,
he adds: Edam East (10,000 bbl/d) in the
second quarter, and Vawn (10,000 bbl/d)
and Edam West (4,500 bbl/d) in the third
quarter.
The company also is proceeding with
the initial stages of a crude oil flexibility
project designed to improve reliability at
its Lima, Oh., refinery, Duvall says, which
will enable Husky to process up to 40,000
bbl/d of heavy crude feedstock from
Western Canada.
Portable Plants
Oak Point Ltd. is taking small-scale,
fast deployment SAGD further by introducing preconstructed portable units that
74 THE AMERICAN OIL & GAS REPORTER

can be assembled and disassembled in
less than 30 days, says CEO Ken James.
The limited life of heavy-oil resource
plays and the cost of permanent plants
make portability for SAGD important,
he says.
"Big, centralized facilities with all
these interconnecting pipelines add tremendously to costs and project timelines, and
each one has to be custom built for each
project and is not reusable," he reflects.
"Elsewhere in the oil and gas industry,
ultimately everything aboveground ends
being either portable facilities that can
be rented or large-scale facilities shared
by multiple users. Why has the oil sands
industry gone the other way, especially

when it is so capital intense?"
Oak Point has designed three SAGD
configurations, James outlines:
* The UltraLite plant has a capacity
of about 2,000 bbl/d for one or two
SAGD well pairs.
* The 1nSite plant has a capacity of
8,400 bbl/d for full-pad production from
8-12 well pairs.
* The MultiSite plant has a 28,800
bbl/d capacity to handle production from
two to four pads.
James says environmental benefits include a much smaller footprint and quicker
post-production remediation. Just as important, he remarks, the small-scale, UltraLite pilot facilities can be rented short
term while operators prove the economic
feasibility of heavy-oil reserves, which
can followed with longer-term rental facilities when they advance to large-scale
commercial development.
The most important aspect of determining the economic feasibility of a
heavy-oil project is the steam-to-oil ratio,
James points out. A ratio threshold of no
more than 2.5 is required for a project to
be successful in today's market, he says.
"It is vital to determine the steam-tooil ratio before spending billions of dollars," James reasons. "So why own a
plant until you can prove the feasibility
of a project?"
The facilities also are 95-98 percent
efficient at recycling water, which he
notes is an important feature for Alberta
producers facing a provincial mandate to
recycle at least 90 percent of their produced
water.
In Saskatchewan, which has no mandate, recycling still makes economic sense

Oak Point Ltd. has introduced preconstructed, portable steam-assisted gravity drainage
units that can be assembled and disassembled in less than 30 days. Chief Executive Officer
Ken James says the company offers three configurations ranging from its UltraLite plant
with a capacity of 2,000 barrels a day to its MultiSite plant, which can process 28,800 bbl/d.

American Oil and Gas Reporter - February 2016

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