Cover Story: The truly great Canadian oil sands

Albian Sands joins ranks of oil sands producers

$5-billion Athabasca Oil Sands Project prepares to grow

The oil sands contain as much as 1.7 trillion barrels of bitumen, not all of which is recoverable. The official number for the recoverable resource is 174 billion barrels, according to Bill Amdahl of the Athabasca Regional Issues Working Group. “But 315 billion barrels is more like it,” he added. Already bitumen produced from the oil sands is equivalent to 31% of Canada’s 2.1 million bbl/day consumption. That figure will rise to more than 50% of demand–at least 1.5 million barrels per day–within the next decade.

The growth is based on having such a huge resource and the long-term cash flow to develop it. The oil sands mines have lives of 30 to 50 years, and all three major producers are expanding. Here is an update, beginning with the newest, Albian Sands Energy Inc.

The latest bitumen producer in northern Alberta, Albian Sands Energy Inc., is far from the least. The project boasts an impressive list of firsts at every step: the world’s first 400-ton haulage truck and the first caustic-free, dual flotation bitumen recovery process, to name just two. The result is a clean and efficient operation.

The total cost of this multi-billion-dollar undertaking is shared by Athabasca Oil Sands Project (AOSP) owners Shell Canada Limited (60%), Chevron Canada Limited (20%) and Western Oil Sands Inc. (20%). The AOSP includes the Muskeg River mine, 75 km north of Fort McMurray, Alta., and the Scotford upgrader next to Shell’s refinery at Fort Saskatchewan, Alta., near Edmonton. There are also several commercial partner facilities associated with the AOSP including the $600-million corridor pipeline to carry bitumen to the upgrader and diluent to the mine; a $37-million natural gas pipeline to the mine site; and two co-generation plants, one each at the mine ($200 million) and at the upgrader ($120 million). Albian Sands is the new company established by the AOSP joint venture to operate the Muskeg River mine.

All this has been done against a timeline that was established in 1999. Approval was given in the fourth quarter of that year, and the first ore was fed into the plant at Muskeg River in mid-August 2002. Crude will begin flowing from the Scotford upgrader early in 2003.

“From approval to ore in the plant it has been only 140 weeks,” said construction manager Emilio Maestrini, “and that is noteworthy.”

Mining the Human Resource

The Muskeg River mine’s initial production rate is 155,000 barrels per day (bpd), and that rate will expand. Over the next 30 years the mine will supply 1.65 billion barrels of crude oil. In total, the leases held by the AOSP project owners have an oil sands reserve of over 5 billion barrels (bbl) of minable bitumen.

How does one begin to mine such vast potential? Start by hiring the best people available. That’s always been a priority of general manger of mining operations Jeff Stibbard. He told CMJ that Albian benefits two ways–from the passion of the mining people at the project and from the deep pockets of the oil companies that back it.

Stibbard wants employees not only with a talent to do their jobs, but with an awareness of accountability for the bottom line. He is always looking for what he calls “million dollar team members”. By his definition these are people who do their jobs smarter and faster, who regularly make contributions to the bottom line that positively impact the organization by millions of dollars. He admits he is focused on making money for his employer.

Stibbard is a firm believer in hiring team players. He encourages them, like himself, to work together, to overcome any challenge, and to get things done efficiently. All team members must learn and conform to Albian Sands’ code of practice, the “Albian Way”. Although Albian Sands employees are not unionized, some of the contractors’ employees who have worked at Muskeg River are union members. Stibbard holds them all to the same high standards, and attributes a lot of the mining group’s success to the excellent co-operation provided by the contractor and union leadership buying into the Albian Way. This attitude is reaping benefits, particularly in the area of safety. There were no lost time accidents in the mining operation during four years of development.

This attitude gave Albian Sands’ mining operations a tremendous advantage in productivity and accountability. The tailings dike and starter pit were completed in October 2001, five months ahead of schedule. The extra months gave Stibbard and his team time to work on procedures, training, operating protocols, and codes of practice.

“We achieved a leadership position in demonstrating that you can produce [a project] ahead of time and under budget and deliver quality. We’ve demonstrated that people truly make a difference,” added Stibbard.

At the peak of construction last June there were about 4,200 people at the mine site. That number is dropping rapidly toward the permanent staffing level of about 600, divided evenly among mining, processing and support crews. Albian Sands’ training needs are supported through outsourced services. Keyano College in Fort McMurray offers an eight-month mining course and operates truck and shovel simulators. Equipment maintenance is also outsourced to equipment manufacturers and vendors working on site as part of the mine operations team.

Albian Sands has not set an aboriginal hiring quota. Stibbard likes it that way. “Statistics are meaningless in the absence of true results. Get results that support all five project goals and the numbers presentation will follow,” he said. “About 12% of the local population is aboriginal. Employees are hired for their attitude and abilities; we value diversity, to capitalize on strengths that all team members bring regardless of their ethnic background. Ultimately, the percentage of local aboriginals in the Albian team could exceed 12%, reflecting their high level of commitment and skills.”

Mining the Mineral Resource

The Muskeg River mine is a huge undertaking. To reach the first production target of 155,000 bbl/day, the mine will have to deliver 300,000 tonnes of oil sands daily, or somewhere in the neighbourhood of 90 million to 95 million tonnes annually, to the plant. (Compare that rate to the world’s largest open pit copper mine, Chile’s Escondida, where 125,000 tonnes of ore are hauled daily.)

The construction engineering was done by Muskeg River Contractors (MRC). This is a joint venture of Fluor Daniel, AGRA Monenco Simons and three principle subcontractors, namely GKO Engineering, Colt Engineering Corp., and AGRA Earth & Environmental Services.

The starter pit is located north of the plant site. Overburden removed from it was used to build the 12-km-long tailings dike. The starter pit is 40 m deep and was about 2 km square when CMJ visited in August. The depth of the pit allowed recovery from the full thickness of the deposit, which permits sampling of all ore types. Three general types have been identified: coarse fluvial, non-coarse estuarine, and tidal. The fluvial ore is high grade, and the other two types can be subdivided into both high and low grades. They will be blended to average about 11.5% bitumen and 16.6% fines to feed the plant.

Pivotal, literally, to the mine plan is the 35-m-diameter by 45-m-tall crushed ore silo. It is situated about 1 km northwest of the plant. The silo provides 45 minutes of surge capacity. The starter pit is immediately northeast of the silo. When the pit is about 4.5 km square, mining will move further northeast, away from the silo. When the limit of the deposit is reached, the active mining areas will be developed in a pattern moving counter-clockwise around the silo. Over the life of the mine, the waste-to-ore strip ratio will average 1:0.8. As mining progresses, finished pits will be used for tailings storage.

The mine is a conventional truck and shovel operation. Albian Sands has not scrimped on its trucks. The first Caterpillar 797B, 400-ton haul truck ever made is working at
Muskeg River. It bears the factory number “101” on its radiator and sits proudly on a set of Michelin tires. The fleet will eventually have 23 Cat 797B haulers, each worth about $5 million. Four Bucyrus 495 HF electric rope shovels with 100-ton buckets will load these monsters in four swift passes. Finning (Canada) supplied the trucks as well as dozers, graders and front-end loaders as service equipment. A special ceremony on Oct. 1, 2002, marked the commissioning of the first truck and shovel.

Development and mining of the starter pit was contracted to North American Construction, which has its own fleet of vehicles–300-ton Hitachi trucks, Hitachi excavators in various sizes, and an O&K 400 hydraulic excavator.

Even in the frigid northern Alberta winters, no explosives will be used in mining. The worst of the frozen ore might need to be ripped, but there are plans to avoid that problem. Albian engineers are prepared to keep the faces active and relatively small, thereby exposing less of the oil sands to freezing. Vehicle traffic on the ore will be limited to avoid pounding in the frost.

The oil sands is hauled to a pair of 14,600-tonnes/hour Krupp semi-mobile gyratory crushers where it is reduced to -40 cm. The truck dump/crusher area is built of mechanically stabilized earth, a technique that is economical to construct and that facilitates moving the crushers every five or six years. One of the largest conveyors in the world transports crushed ore to the silo. It has a 2,500-mm-wide belt and three motors with a total output of 10,400 hp. This conveyor moves 18,000 tonnes of oil sands per hour.

Cleaner Extraction Technology

The oil sands extraction plant adjacent to the Muskeg River mine is as environmentally neutral as Albian Sands could make it. No caustic or other reagents are used to recover the bitumen. The two-stage flotation circuit is the only such plant to refloat the bitumen, increasing total bitumen recovery to 94-95%. Only extraction takes place at the mine site, and that decision simplified greenfield construction at the mine and plant.

“Albian has designed its plant to maximize recovery,” said process engineer Kevin Thompson, “and recovery is driven by the amount of fines in the ore.” Albian Sands ran a pilot plant at Muskeg River for one year during which time the designers optimized the process.

The extraction plant has two parallel processing circuits, and some systems are built in triplicate, creating a standby unit for critical systems. There are three conveyors from the crushed ore silo to the three Krupp breakers. Each breaker consists of a 10-m-long by 4-m-diameter hollow drum with 14,000 perforations, which are each 5 cm in diameter. Hot water (40C) is added to the breakers. Pebbles rejected from the breakers are transported to the tailings impoundment. The slurried oil sands are pumped through the conditioning pipeline to the primary separation cell (PSC).

The conditioning pipeline is 2,000 m long with an inside diameter of 70 cm. The elbows are lined with chrome carbide to resist abrasion. More hot water to dilute and heat the slurry and air are added at the end of the pipeline. Provision has been made to add reagents to the pipeline, but the process will reach designed recovery rates without them.

The PSCs are 28-m-high cone-shaped vessels with a diameter at the top of 24 m. In the simplest terms, bitumen froth is drawn off the top and clean sand is removed from the bottom. That said, there is also a middlings fraction that is drawn off and piped to the primary flotation cells. The primary tails are returned to the PSCs about half-way up the cone.

After the bitumen froth is drawn off the PSC, it is passed through a 22-m-tall, 2.5-m-diameter de-aeration tower. Steam is added to release the entrained air. As bitumen is drawn out of the tower bottom it passes over a Delcor screen to remove tramp material. This type of screen consists of a moving belt of fine wires. Its use is another first for the oil sands industry, although Delcor screens are commonly used in the South African mining industry. After screening, up to 24 hours’ worth of bitumen production is stored in tanks.

The froth treatment circuit is unlike any built before by an oil sands producer, a counter-current decantation (CCD) circuit. It consists of three 50-m-diameter, covered Westec thickeners. Froth is introduced into the first thickener and solvent into the third. As the underflow moves down the circuit, bitumen-containing overflow from the third vessel is pumped to the second, from the second to the first, and from the first to the solvent recovery columns.

When the overflow leaves the CCD circuit, it contains about one-third bitumen and two-thirds solvent. Steam is injected to remove 70% of the solvent from the diluted bitumen (dilbit). Pumped from the bottom of the columns, dilbit is stored in tanks before entering the pipeline to the Scotford upgrader. The solvent from the columns is cooled, stored and reused in the CCD circuit. At the Scotford refinery, the remaining solvent is recovered and returned to the mine site.

The new Scotford upgrader is 450 km away, adjacent to Shell’s existing refinery in Fort Saskatchewan, Alta. The decision not to build the upgrader at the mine site simplified greenfield development north of Fort McMurray.

The underflow from the CCD circuit is a slurry of asphaltenes, clay and water. By precipitating the asphaltenes, Albian Sands has eliminated the coking step and its undesirable byproducts. This is another first among oil sands producers. The CCD underflow is treated in a two-stage tailings solvent recovery system. In this process solvent is removed in a pair of stirred vessels with the injection of steam and then recycled to the CCD circuit. The tails are pumped directly to the tailings storage area.

To follow the remainder of the tailings stream, we must return to the PSC at the head of the process. The middlings drawn off the PSC go to five 125-300 ft3 Dorr-Oliver primary flotation cells. The primary float tails, containing fine clay that would otherwise build up in the process stream, is either returned to the PSC or combined with the PSC tails and passed across a tailings tramp screen.

The screened tailings next pass through a bank of secondary flotation cells. This two-stage oil sands tailings treatment circuit is unique to the Albian Sands plant. Again, froth recovered from these cells is returned to the PSC. Secondary tails are cycloned in a bank of 31, 15-inch Krebs units. Cyclone overflow goes to a 90-m-diameter agitated tailings thickener. Cyclone and thickener underflows are pumped to the tailings impoundment area. Final tails consist of -44-micron clean sand and -10-micron clay. When the pit has advanced and tails are placed in the mined-out portions, cyclone underflow and thickened fines will be mixed with gypsum to promote settling.

Tailings thickener overflow water has a temperature of 30C and is recycled both for its heat content (another energy-saving Albian innovation) and for its moisture.

How to Grow Oil Sands

The potential of the Athabasca oil sands deposits is immense. So are the future plans of the AOSP joint venture owners, with an ultimate goal of 525,000 bbl/day. They have both the resources and resourcefulness to reach it.

Production is beginning at a planned rate of 155,000 bbl/day. Engineers expect a smooth run-up to this rate because of the twinned extraction circuits. If problems develop in one, the other will be available to maintain throughput. The rate could go up as debottlenecking is completed. Sometime between 2005 and 2010 the Muskeg River mine could be putting out 225,000 bbl/day.

On the horizon are two further expansions. Phase 1 of the Jackpine mine, located east of the Muskeg River mine and also on Lease 13, is foreseen as another stand-alone mining and extraction facility. After that, Phase 2 of the Jackpine mine would encompass mining additional resources to the northeast on Leases 88 and 89. The potential exists to add another 200,000 bbl/day during Phase 1 and 100,000 bbl/day during Phase 2.

These develo
pments would depend on a number of factors, including market conditions, a strong economy, ability to meet the owners’ sustainable development principles, and the outcome of the respective regulatory processes.

“We have a lot of oil in the ground next door to the Muskeg River mine and it makes sense for us to take a long-term look at developing this world-class resource. An important part of the process is getting input from our aboriginal neighbours and other key stakeholders. We want to start this dialogue now, well before any investment decisions are made,” said Neil Camarta, senior vice-president, Oil Sands, Shell Canada Limited.

What is Albian Sands?

The Albian Sea moulded the landscape we know as northern Alberta over 100 million years ago. It deposited a blanket of marine shale over the McMurray Sands, trapping the hydrocarbons of the McMurray Formation below. The Muskeg River mine reserves are a legacy of the Albian Sea. The newest company to bring the oil sands into productive development proudly bears the name of this ancient sea –Albian Sands Energy Inc.

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