Production at Baytex's Gemini project has reached 1,000 barrels a day, giving the company reason to seriously consider expanding the pilot project to a full commercial operation.
The pilot project, which is located 35 kilometers southeast of Bonnyville on the shores on Angling Lake, has been up and running for five months after officially hitting the start button on January 24.
“First oil was in March and that was not very nice stuff. Your initial flush of production at these facilities is pretty nasty stuff,” said Jody Brown, facility manager of the Gemini project. “Yesterday (June 23) we did 160 cubic meters, which is roughly 1,000 barrels. I would say that is at the upper end of what we hoped for.”
Baytex acquired the site in 2012 in a $120 million deal that saw them purchase 46 sections of undeveloped oilsands leases in the Angling Lake region of northeastern Alberta from Koch Oil Sands Operating ULC.
Regulatory approval for the construction and operation of the Gemini project, a two-stage bitumen recovery scheme using steam-assisted gravity drainage (SAGD) on approximately 2.5 sections of the acquired lands, had already been obtained by the previous owner.
The original application, approved by the defunct Alberta Energy Resources Conservation Board (ERCB), now the Alberta Energy Regulator (AER), gave approval for a project with a production rate up to 10,000 barrels per day.
After evaluating the site and considering a variety of different elements, Baytex representatives felt the initial application was too large for this site.
“We re-evaluated the reservoir and right now we are re-evaluating the well itself,” said Baytex engineer Haejin Kim. “We looked at the size and realized that 10,000 barrels a day that Koch had initially got approval for is too big. We are going with half of that and are looking at a 5,000 barrels-per-day facility.”
The move would still quintuple the size of the facility, and gives Kim and the rest of his Baytex counterparts a lot too consider.
The facility is currently drawing its water from the Muriel Lake/ Empress aquifer, a move that has been highly criticized by residents in the region. Members of the Muriel Lake Basin Management Society have let their opinions be known that they feel the industry's usage of the aquifer could be causing harm to the lake. Baytex is quite confident the company's fresh water usage is not harming Muriel Lake.
“There are many different aquifers under the ground here. There is the Marie Creek, Ethel Lake, Bronson Lake, Muriel Lake and Empress Formations,” said Kim. “The water we are drawing from is the Muriel Lake/ Empress aquifer. The two aquifers are actually in contact with each other and we are drawing from that. We are not drawing any surface water or water from the lake itself. The fact that we are over 20 kilometers away (from Muriel Lake), I don't think we physically can (draw water from the lake).”
Deciding where to access fresh water from if the Gemini project is expanded to a commercial operation is something Baytex representatives are “diligently” looking into. The original project application from Koch had listed the site possibly using brackish water (water that has a higher salinity than fresh water).
“We have been working diligently. Jody has been doing a good job here. Haejin and his group back in Calgary are crunching the numbers and looking at the different types of facilities and courses we could take,” said Andrew Loosely, director of stakeholder relations with Baytex. “We have to look at all of the other issues out there in the surrounding communities. Those are the key issues that we want to undertake. Nothing is decided as of yet, but we are looking at this in a total picture. It is all sort of a sequence of decisions that will take place over a period of time.”
Loosely said the company doesn't plan to slough off the residents concerns over Muriel Lake and had plans to meet with members of the Muriel Lake Basin Management Society while he was in town.
“We are not dismissive of the concerns that the residents have, that is important to us,” said Loosely. “The studies that we have been shown, the studies done by the AER and independent studies that we have commissioned have said there is no direct communication between the aquifer that we are drawing from and Muriel Lake.”
Concerns surrounding the effects the project might have on local water sources were addressed by the ERCB in the original application of the Gemini project, and it was approved with two conditions.
According to the ERCB, the conditions placed on the project state that operator must provide a summary of its Annual Groundwater Monitoring Program report that must be prepared annually for Alberta Environment and Water, describing any thermal effects of the scheme on groundwater and Angling Lake.
As well, Baytex had to submit a plan to mitigate the potential impacts to surface water bodies from wells and facilities associated with the pads within 100 metres of water bodies for AER review and approval.
Baytex has been approved for a temporary license to draw water out of the Muriel Lake aquifer. According to Kim, their water source well is 98 meters deep, with the water level sitting at 73 meters. The current license expires in November.
According to Loosely, senior management will be making the decision on a commercial expansion “relatively soon”.
“We are making decent numbers here,” said Brown. “Baytex is the kind of company that doesn't say a whole lot and tends to under promise and over deliver.”
If the Gemini Project is given the go-ahead, construction on the 5,000-barrel-per-day steam-assisted gravity drainage project would hopefully start in late 2014 with initial production to begin in 2016.
