History

SAGD which stand for Steam-Assisted Gravity Drainage was invented by Dr.
Roger Butler during his time with imperial. Butler was born in October 14,1927 in
England where he obtained his PhD in Chemical engineering and then moved to
Canada in Ontarios Queens university until 1955. His next career transition was him
joining Imperial Oil in Sarnia where he worked until his big idea came in the 1960s.
During the 1960s IMperial oil had discovered a large deposit of oil which they
were planning to lease if they had an economic way of producing it and Butler came up
with the solution. He proposed injecting steam underground into the reservoir and letting
the heavy oil turn into a lighter oil and producing through a production well. He wrote his
patent in 1969 and pursued his idea in 1975 when imperial moved him from Sarnia to
Calgary. In 1978 Imperial were successful in establishing the first vertical steaminjection well at Cold Lake Alberta.
http://imperialoil.ca/Canada-English/about_who_stories_rogerbutler.aspx
When Butler was initially testing the idea he went to the Alberta Oil Sands
Technology and Research Authority (AOSTRA) for about a year, where he convinced
them to test and refine the SAGD process at the organizations Underground Test
Facility (UTF) near Fort McMurray. There the UTF engineers discovered that they could
recover 60% of the bitumen in the reservoir with twin wells as well as made a very
handsome profit due to the economics of the project producing approximately 2000 bpd
of bitumen.

The UTF engineers also discovered that they needed to keep the pressure of the
wells less than the fracture pressure as they did not want gas pockets in the formation
to escape. Also another progression was that they came up with ways to control sand
infiltration and prevent steam from entering the producing wellbore. during this time
Schlumberger was producing directional which gave AOSTRA the ability to drill their
wells precisely, efficiently, and most important, cheaply.
http://www.investorvillage.com/smbd.asp?mb=294&mn=113769&pt=msg&mid=9279953

Theory
The Basic theory for SAGD is that steam injected into the ground where the
bitumen is, and it reduces the viscosity of the bitumen to a lighter fuel type so that it can
be pumped back up through a production well. This process is repeated and it is
forecasted that in-situ production will reach near 1.9 million barrels per day by the year
2022.

(http://www.drillingcontractor.org/wp-content/uploads/2012/09/web_DEA-164-Update2012-06-27-1.jpg)
The injection wells are horizontally drilled, with steam injection well being
approximately 4-6 meters above the production well. Steam generators produce steam
that is superheated vapor and is then pumped to the steam injection well. The wells are
drilled down to depths of over 1300 meters because this is where the majority of the oil
sands are. The produced steam emulsion is then sent to various treaters where the oil
and water are separated and the sands are separated from the bitumen.
http://www.energy.alberta.ca/OilSands/pdfs/FS_SAGD.pdf
The amount of steam and its pressure as well as temperature are very reservoir
specific. The pressure needs to be kept below fracture pressure as mentioned earlier,
due to the potential for gas leakage which is not only harmful environmentally but also
wasteful economically. The amount of steam depends again on reservoir conditions as
well as the rate of production desired by the owner company. This can be controlled by
various simulation softwares designed by AOSTRA for individual company needs
The Steam-to-Oil Ratio is a measure of the efficiency of the plant. The lower the
ratio, the more efficient the plant. This means that the less steam needed to produce a
barrel of oil, the more efficient the plant is. The generation of steam is the biggest cause

of Carbon emissions in SAGD as a huge amount of thermal energy is required to

produce the right quality of steam as well as keeping it warm through the Canadian
winters as this technology is specific to the Canadian oil sands.
http://www.conocophillips.ca/technology-andinnovation/unconventional/Pages/sagd.aspx

Economics
The initial cost of a SAGD plant is the construction the plant. Most SAGD plants
have two sections which it is divided into. Field Facilities (FF) and Central Processing
Facility (CPF). The FF include the vast majority of the production related technology as
well as steam-generators and needs a sturdy logistics network as well as a capable
Drilling and Completions team. The costs of these facilities are mainly of construction
contractors from the clients point of view, from a contractor's point of view the costs are
mainly labour and equipment. These are the initial costs of field facilities. The
operational costs include labour, energy for the steam generators, pumps needed to
transport emulsion and steam through piping as well as the electric costs of running the
various equipment.
The Central Processing Facility consists of the main separators, treaters and
holding tanks in which the treated bitumen is held. The initial costs of the CPF will be
the construction the facility as well as the labour involved. The equipment used for the
various steps along the process are highly specialized and require modules for their
construction. The equipment also needs very specific heat tolerances and need be
insulated during the winter. these add additional costs to already highly specialized
equipment such as boiler and other pressure vessels.
The Last step of the costs involved in a SAGD project is the Midstream facilities.
These include the transportation of bitumen to the Downstream facilities (refineries) and
the diluent required to make the bitumen less viscous in order to transport it. Most if the
refineries are located in USA and the costs for the transportation of over thousands of
miles need to accounted for.
The majority of the Canadian Oil Sands projects are in joint-partnership with
another major company which makes the initial costs of the projects more bearable due
to the extremely high startup costs of the plant. For Huskys Sunrise Phase 1 project
alone costed approximately 2.7 billion dollars and it has multiple phases these kinds of
the startup costs make it difficult for small scale SAGD operations to take place.