Japan Petroleum Exploration Co. (JAPEX) plans to invest ¥65-70 billion (US$830–893 million) in its Canadian oil sands projects, Chief Executive Osamu Watanabe told Dow Jones Newswires. Watanabe said that JAPEX has no immediate plans to sell the output beyond Canada and the US in the near term.
Earlier Wednesday, CNOOC Ltd., China’s biggest offshore oil and gas producer, said it will buy Canadian oil-sands developer OPTI Canada Inc. (OPCDF) for $2.1 billion. [Earlier post.] China, the world’s second-largest oil consumer after the US, has been investing aggressively in Canada's energy sector to fuel its rapidly growing economy, with state-backed Chinese firms having spent billions of dollars in the past two years to acquire similar assets.
...The JAPEX project, in Alberta province, still requires government approval, but the company expects to get the go-ahead this year. It will produce 25,000-30,000 barrels a day once production starts in 2014, Watanabe said. “After that we will...develop the neighboring area in Canada,” Watanabe said. “We have lots of concessions.”
JAPEX, through its subsidiary JACOS, holds the rights to leases covering approximately 46,000 ha in the Athabasca region for future development. These leases include the Hangingstone, Chard, Corner, Liege and Thornbury areas which are expected to contain approximately 1.7 billion barrels of recoverable bitumen resource.
JAPEX established Japan Canada Oil Sands Limited (JACOS) in 1978. The company “farmed in” on leases held by Petro-Canada, Canadian Occidental (Nexen Inc.) and Esso (Imperial Oil) to form the PCEJ group. All of these companies are currently active in pursuing oil sands development in the region.
JACOS and its partners experimented with a cyclic steam stimulation pilot project on the Hangingstone Lease from 1983 to 1994. From 1992 to 1997, JAPEX participated in the AOSTRA SAGD pilot experiments at the UTF (Underground Test Facility) site. With the positive results from the UTF project, JACOS decided to further pursue SAGD technology at the Hangingstone site. JACOS designed and constructed a 3-phased demo project, with the first phase becoming operational in 1999. Current production is approximately 8,000 barrels of bitumen per day.
JACOS (75%) along with NEXEN (25%) are pursuing development plans for the larger portion of the Hangingstone lease. Commissioning and start-up of the facilities is expected in the third and fourth quarters of 2014.
JACOS has focused on the steam-assisted gravity drainage (SAGD) process. For SAGD, two wells with horizontal sections of between 500 and 1,000m are drilled at an exact distance of 5 meters between the upper and lower wells. This drilling process involves heating the oil sands layer by continuously injecting high-temperature, high-pressure steam into the upper well to provide liquidity to the bitumen, which in turn flows down to the lower well and emerges above ground along with warm water. JACOS says it is achieving operational efficiencies that minimize fresh water consumption by recycling at least 90% of the warm water produced.
|Oil sands production using SAGD. Source: JAPEX. Click to enlarge.