Grosmont finding its place in the spotlight

Posted: Jan. 03, 2013     Author: Tonya Zelinsky

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Grosmont finding its place in the spotlight

There is a new neighbourhood of unconventional oil development growing in the Western Canadian sedimentary basin and companies large and small are staking claims and moving in.

The neighbourhood is the Grosmont carbonate formation in north-central Alberta. Although not considered a new play, it has become an interesting one in recent years due to a pilot project spearheaded by juniors Laricina Energy and Osum Oil Sands.

Since 2006, dozens of delineation wells have been drilled, determining that the carbonate reservoirs “lend themselves to very sophisticated geophysical imaging”, says Osum vice president of geosciences Peter Putnam.

Complexities

Based on the geology, there are similarities to the Cantarell oilfield in the Gulf of Mexico and rocks in Montana.

Putnam says that Grosmont, much like Cantarell, is complex in that it has a series of highly fractured and broken up carbonate beds.

“I can show you exactly the same kinds of rocks from off Mexico from wells that will produce 80,000 to 100,000 barrels per day per well and they look just as heterogeneous and complicated as the Grosmont,” Putnam says.

“The key learning on that is just because it looks complicated at a small scale does not make it complicated at the reservoir scale.”

Backing up the assessment is the Laricina-operated Saleski Grosmont pilot project, a joint venture with Osum.

The C$660-million (US$669 million) project, located within the Athabasca oil sands region, is targeting the Grosmont formation at a depth of about 325 metres. The 1800-bpd Saleski pilot began production in 2011 and is considered the world’s first carbonate project using thermal horizontal well recovery for bitumen.

In October, Laricina filed for regulatory approval to expand the project to 12,500 bpd. It has since revised the project to use single-well cyclic steam-assisted gravity drainage, instead of traditional steam-assisted gravity drainage well pairs.

Laricina chief executive Glen Schmidt says: “As we’ve completed the tailoring of the pilot, we have learned that a single horizontal well receiving the injected steam and then, in turn, producing oil, is the starting point for the commercial development and exploitation, and the platform from which we will continue to optimise.”

Single well operations are considered optimal for phase one of the commercial project based on the formation’s characteristics.

Canadian majors such as Cenovus are watching Laricina’s results before proceeding with their own plans in the formation.

Huge potential

Cenovus has drilled test wells to map and delineate the resource but vice president of the Pelican Lake region, Dave Goldie, says development in the area is low on its list of priorities until others have found success.

“The big unknown right now is what is the scale of the resource?” Goldie says. “The Grosmont could potentially be a huge resource. The nut is cracked and if people can figure out how to produce it commercially it can be very significant.”

In early 2012, Shell Canada began construction at its North Field Test pilot west of oil sands hub Fort McMurray. The project is testing Shell’s in situ upgrading process, which will heat the reservoir with electrical heaters to convert the heavy oil into lighter crude and gas.

No production is expected in this phase of the project given the pilot is testing the effectiveness of the technology.

A spokesman for Shell says commercial project sanction is years away and will depend on the results of the North Field test.

Osum is confident of success at Grosmont and it has acquired all of the acreage surrounding Saleski.

Putnam says: “We believe what we sit on is very big. This is not news — people have known for decades there is this enormous resource in the carbonates. But it has been more a question of access, focal points, and expertise has been historically directed to the sand source of the resource.

“Not one barrel is booked out of the carbonates yet. That is why this is transformational. Beyond our little parochial view of business, this has enormous implications for Alberta, for Canada, and for Canada’s position in the global oil supply chain.”

The Alberta Energy Resources Conservation Board is currently evaluating the potential of the Grosmont formation.

Laricina estimates the Grosmont contains at least 400 billion barrels of oil in place.

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