'Shifting the paradigm': Calgary company touts pilot project that yields heavy oil with low emissions

A Calgary-based company says it has succeeded in producing 125,000 barrels of oil using a new process that uses no water and results in dramatically lower greenhouse gas emissions than traditional oilsands production.

Nsolv Corporation announced on Tuesday that its three-year pilot project to test a new solvent-based extraction technique is showing "game-changing" results as it enters its final stages. 

"I believe that our results are shifting the paradigm for the future of the oilsands industry," said company CEO Joseph Kuhach in a release.

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The pilot project, which uses heated solvent vapour to stimulate oil flow, began in Fort McKay, Alta., in January 2014, and no safety or environmental incidents have been reported since, the company says.

Compared to traditional steam-assisted gravity drainage (SAGD), the company says the solvent technology will generate a higher return on investment thanks to lower capital and operating costs, at the same time producing a "partially-upgraded, higher quality oil product." 

"It's much cheaper than what's being done today," Kuhach told CBC News. "A SAGD plant is effectively a giant water plant on the surface. There's so much water handling and use that goes on."

SAGD uses one barrel of water for every four barrels of oil produced. Even though much of that water gets recycled, critics of the oilsands industry consider the process to be ecologically unsound.

Nsolv estimates its new technology — thanks to its lower greenhouse gas intensity — will allow the industry to produce 800,000 more barrels a day under Alberta's 100 megatonne carbon cap.

Kulach says the next big hurdle is coming up with the estimated one hundred million dollars needed to build a commercially viable plant capable of producing 5,000 to 10,000 barrels per day. And public support, either from the province or from Ottawa, will likely be needed, he said.

"I think government can be an enabler to make that happen," he said. 

"We really need to get that boost to get over the highest hurdle, which is the first commercial demonstration project. After that, we've talked to many companies, and there are many that are very eager to be the very first to be second." 

'Potentially significant'

Harvey Yarranton, who researches heavy oil extraction at the University of Calgary's Schulich School of Engineering, says governments should help get the new technology off the ground, since its success could be good for both the environment and for Alberta's economy.

"I do think there is potential in these processes to certainly reduce CO2 emissions and more economically recover bitumen," he said. 

'It's potentially significant and could bring in a new wave of heavy oil projects."

Benjamin Israel, an analyst with the Pembina Institute, which has consulted with Nsolv about its project, says there are still other environmental issues to consider.

"I'm talking about land-use impact, bio-diversity," he said. 

The pilot project is expected to be completed and shut down by mid-2017.