The ARMS of the Grizzly
March 06, 2014
The newest oil sands plant is unique in a number of respects. The centrepiece of Grizzly’s steam-assisted gravity drainage (SAGD) development is its advanced, relocatable, modularized, standardized (ARMS) central processing facility.
Construction of the first phase at Algar Lake was completed in the winter 2013 and steam injection commenced in January 2014. Algar Lake has probable reserves of 114 million barrels plus 35 million barrels of contingent resources. The reservoir lies at a depth of approximately 225 metres, with up to 20 metres of net pay along a continuous channel. It has few complexities such as mud/clay intervals within the sands or bottom water, and has a continuous cap rock. Algar Lake is also relatively close to infrastructure, requiring only 11 km of new road. It adjoins a competitor’s producing SAGD project, and lies approximately 60 km southwest of Fort McMurray.
ARMS’ most important elements are:
- Scalability – Each ARMS core is designed to produce and process 20,000 barrels per day of steam, sufficient for bitumen production of approximately 5,000-8,000 barrels per day, depending on specific reservoir performance.
- Modular design – The plant is built in modules under controlled shop conditions. Fabrication of the components for the modules can be sourced worldwide to decrease costs and increase capacity as needed. The completed modules are transported to site along the high-load highway corridors in Alberta and are largely bolted together. ARMS modules are close-coupled and stacked, combining into one plant structure and thereby reducing the number of pipe racks and the amount of steel used. In addition to being pre-fabricated, modules are hydro-tested and pre-commissioned, further reducing the need for expensive field construction. Field construction time is targeted to take two to three months instead of 15-24 months for a conventional SAGD facility;
- Compact design – Two ARMS cores require approximately 50 percent less physical space than a conventionally designed, 12,000-barrel-per-day SAGD facility. ARMS is self-contained, with on-site power generation. The design yields significant cost savings and reduces the environmental impact.
ARMS offers a range of technical, operational, economic and financial benefits, including:
- Speed – Standardizing the design, sourcing components worldwide, and performing the bulk of the assembly work at offsite facilities cuts field construction time from typically 15-24 months for a conventional SAGD facility to just two to three months for an ARMS core. In addition, plant construction can begin before project regulatory approval is received, since most of the construction occurs off-site.
- Flexibility – The ARMS design can be used for any SAGD project, anywhere. Scale is attained simply by running two, three or more ARMS plants in parallel, achieving faster and more flexible peak production than from a conventional SAGD facility. Self-generated power reduces infrastructure requirements and improves reliability. Each ARMS core operates independently of the other, meaning that one core can be off-line for maintenance without the project’s entire production being interrupted. When production in one reservoir area winds down, the bolt-together design enables a plant to be disassembled, moved and re-used in a new area, such as reservoir edges. This addresses the conventional mismatch between SAGD pool drainage, which is ideally 15 years, and facility operating life, which is typically 20-25 years or longer.
- Repeatability – Grizzly intends to use the same ARMS design for two to three units or “cores” at Algar Lake and up to 14 at May River. Over the next decade, Grizzly plans to install a total of 25 ARMS cores at five projects with potentially 150,000 barrels per day of peak production. The plant design avoids extensive custom engineering required for each conventional SAGD facility, providing a platform for continued capital, maintenance and operating efficiency;
- Capital efficiency – Grizzly’s first ARMS plant at Algar Lake achieved industry-average capital efficiency, based on comparing the published costs per daily installed barrel of steam production capacity for a number of competitors’ SAGD facilities;
- Operating efficiency – The same relatively small engineering, construction and operations team, plus key subcontractors, can be re-deployed for successive ARMS projects, gaining experience with each iteration, while design and engineering work can be largely re-used;
- Capital requirements and risks – The smaller scale and self-contained nature of each ARMS plant reduces project risks. Project financing requirements are low, and lead times are short, reducing shareholders’ capital risks.
A further innovation is Grizzly’s highly automated “shadow” control room in Calgary, which is linked via modern telecommunications to the field plant. It will serve as a centre to train plant operations people, and to model and test advanced process controls in order to progressively optimize plant operations over time. Grizzly anticipates that higher levels of process control could improve the reliability of thermal heavy oil operations. Grizzly’s vision is to move from a conventional oilfield model of operations to more of a petrochemical or refining model, which stresses minimum downtime and maximum efficiency.
Grizzly is privately owned- 75% by Wexford Capital LP and 25% by Gulfport Energy Corporation (ticker NASDAQ = GPOR).
The ARMS concept seems compelling for a small SAGD producer like Grizzly.