Oil Sands Truth: Shut Down the Tar Sands

Company plans more than 100 In-Situ Plants

Company plans more than 100 oilsands wells
Japan Canada wants to eventually produce 35,000 barrels per day

Ashok Dutta, CanWest News Service
Published: Friday, April 13, 2007

CALGARY -- Japan Canada Oil Sands Ltd. (Jacos) is pressing ahead with a three-year program to drill more than 100 delineation wells and shoot over 65 square kilometres of new 3-D seismic data at its lease in Athabasca's oilsands.

The efforts will be the first step toward setting up a commercial venture with capacity of up to 35,000 barrels per day -- and which ultimately could help the oil starved industrial giant meet its demand for energy.

With gross domestic product growth of 2.8 per cent, Japan imported an average 5.84 million bpd of crude oil in 2006, a number that will only increase.

"We came to Canada as part of Tokyo's plans to diversify energy sources, which has been 90 per cent dependent on the Middle East for its oil imports," Brian Harschnitz, Jacos' vice-president of operations, said on Wednesday. "Athabasca will represent one of the successes in the overall strategy."

"Forty-two delineation wells have already been drilled since the winter of 2006 and we plan to drill a similar number next year," Harschnitz said. "Nearly 32 square kilometres of 3-D seismic data has also been acquired."

Jacos plans a staggered total investment of $50 million in the initial program, along with its partner Nexen Inc.

At the same, it is pursuing plans to de-bottleneck its existing oilsands demonstration plant at Hangingstone, to increase steam capacity by 10 per cent. Debottlenecking is when a project is expanded without any major modifications. For Jacos, the project will include the installation of a 50-million-BTU boiler and modifications to the water system entailing an investment of about $10 million.

"We have just filed for regulatory approval to install the boiler. The target will be to install the facility by the third quarter," he said.

Calgary-based Jacos, which in 1978 signed a farm-in agreement with Petro-Canada, Canadian Occidental (now Nexen) and Esso (now Imperial Oil), was the first foreign oil company to gain a foothold in the oilsands of Athabasca.

Its current focus, OSL 70, is located 50 kilometres southwest of Fort McMurray and is home to a demonstration plant that was started in 1999.

Jacos' leases, with estimated resources of two billion barrels, are spread over 44,600 hectares.

Jacos is 88 per cent owned by Japan Petroleum Exploration Co., five per cent by Inpex, four per cent by Mitsui & Co. and the remaining three per cent by Japanese institutions.

Development and application of cutting-edge technology has been central to Jacos, which has in the past nearly three decades been fine-tuning various bitumen extraction methods.

"In 1999, we started a three-phase SAGD [steam-assisted gravity drainage] operation. Phase 1 utilized some of the original CSS facilities and included plant modifications and well additions," Harschnitz said.

Subsequent phases have resulted in the drilling of a total 15 horizontal well pairs and the installation of four boilers of total capacity 480 million BTUs.

Looking ahead, Harschnitz said Jacos is weighing options for the development of a solvent plant that will use propane instead of steam to recover the bitumen.

© The Vancouver Sun 2007

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