Mid-January saw international engineering and project management group Amec put out a low key statement saying it had been selected by ExxonMobil unit Imperial Oil to deliver the phase one facilities of the Kearl Oil Sands project in northern Alberta, Canada.
Amec indicated neither contract value nor timescale, but Energy can report that this is a large and strategically important chunk of work, given that Kearl is a US multi-billion-dollar project that is likely to bust its current topline budget of $8billion. It is major news for the natural resources arm of Amec, led by Aberdonian Neil Bruce. And it comes at a time when oil sands projects are under pressure because of the slump in oil prices.
However, Bruce’s sights are trained on the long-term, as is UK Trade & Investment, which is anxious to attract UK/Scottish companies to the currently stalled Alberta bonanza.
The Imperial award follows on from the front end engineering design work for Kearl already completed by Amec and represents a further strengthening of the UK group’s grip on the Canadian oil-sand projects market.
Last year, Amec made a strategic acquisition in Canada designed to reinforce its already strong position in helping the extraction of oil and gas from the tar sands of Alberta.
The increasingly international engineering and project-management group bought for pin money in oil industry terms (£22million in cash,) Bower Damberger Rolseth Engineering (BDR).
Calgary-based BDR focuses on technical engineering services to the in-situ production of viable oil and gas from the sands.
With 85 employees, it has a particular expertise in thermal recovery of oil through its steam-assisted gravity-drainage methods.
Kearl exploitation will be based on four mine pits to be excavated over the period 2010-60.
There will be three trains of ore preparation and bitumen production facilities.
Though the first train is due to start production in late-2010, with the remaining two following in 2012 and 2018, a 2011 start-up for train one is now more likely, partly due to project slippage, if not market conditions.
The design capacity of phase one is given as being about 100,000 barrels a day oil equivalent. Maximum all-up production could be up to 345,000 barrels a day by the time Kearl is fully developed.
Each train will feature an 85MW co-generation facility as such projects are power hungry.
Based on evaluation drilling carried out to date, total recoverable bitumen before royalties is estimated to be 4.6billion barrels using current government guidelines.
When Exxon first proposed Kearl in 1997, estimated recoverable resources were 1.2-1.4billion barrels.
The initial cost estimate for the mine development was estimated to fall in the $5-8billion range in 2005. Exxon has never publicly updated that figure, though the assumption now is that the capex figure will be at least $8billion.
The mine’s design concept is similar to existing oil-sands mines in the Fort McMurray region. Plans are to use state-of-the-art, large-scale shovels, trucks, crushers and an oil-sands hydrotransport system.
The base mine will be developed in a staged approach. The initial development (the first train) will involve clearing and draining the surface area, removing the muskeg overburden before mining the oil sands can begin and stockpiling the muskeg for use in future reclamation.
The mined ore will be crushed, mixed with water for slurrying, transported and conditioned in a pipeline and fed to a bitumen-extraction facility.
The bitumen will be separated as froth – a mixture of bitumen, water and solids. The froth will be further treated in a froth treatment plant to produce bitumen for sale.
Current plans do not include any on-site upgrading facilities for the first phase of development.
To reduce the bitumen’s viscosity such that it can be shipped by pipeline, a number of blending options are being considered.
The product will be transported to market through a pipeline system. ExxonMobil owns extensive refinery infrastructure in Canada and the US that could receive bitumen or upgraded feedstock to make a variety of refined products.
Production may also be sold to third parties. Any future Kearl upgrading capacity or related pipelines to support future mine phases would be the subject of a separate application.