Utah Challenges Oil Sands Goliath Alberta

Tuesday, August 4th, 2015 and is filed under Oil and Gas Current Events

Utah Tar Sands DepositsAs the per-barrel price of oil bobs around $50, oil exploration and production technological advances are forging ahead. To wit: Calgary-based U.S. Sands is poised to make Utah a little Alberta. The company is putting the finishing touches on a pioneering $100 million oil sands project in eastern Utah. When in full production this fall, the project will generate an estimated 2,000 barrels of oil per day making it among the first commercial oil sands mines in the United States.

The U.S. Sand project is located in the Uinta basin, a geological formation in northeastern and central southeastern Utah formed during the Early Tertiary period some 65 million years ago. The formation is thought to have 20 to 32 billion barrels of recoverable oil and has more than 50 identified deposits.

Key to Oil Sands Extraction? Oranges

What makes this play so revolutionary? U.S. Sands is deploying a breakthrough process to extract hydrocarbons from oil sands, which are a mixture of sand, clay, water and bitumen, a tarry hydrocarbon-rich substance. The company’s technology utilizes d-Limonene, a solvent extracted from orange rinds. U.S. Sands will also be using a mining method call concurrent reclamation where the sand from the mine is replaced at the same rate the oil sands ore is extracted.

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The project will consume 50 percent less energy than conventional oil sands extraction processes, recycle 95 percent of the water used, and eliminate large tailing ponds. Tailing ponds are a byproduct of traditional oil sands production that uses hot water and agitation to separate bitumen from oil sands ore.

U.S. Sands claims production costs in the $30 per barrel range, considerably less than Alberta producers’ costs, which are in the $60 to $75 range. Consequently, global crude oil prices are wreaking havoc on Alberta’s oil sands megaprojects as producers struggle to keep pace with U.S. shale producer costs.

Clean Extraction of “Dirty” Oil

Uinta Basin MapThen there’s MCW Energy Group. Last October, the Toronto-based holding company unveiled a 250 barrel-per-day oil sands extraction plant in Vernal, Utah. The plant utilizes a process it calls “closed-loop technology,” which extracts up to 99 percent of all hydrocarbons in oil sands ore. The technology uses low temperatures without applied vacuum or pressures, and proprietary solvents—99 percent of which are recycled.

The only byproducts are the extracted crude oil and cleaned sands, which are deposited back into the earth or sold for utilization in construction or fracking projects. The company bills it as America’s first environmentally friendly oil sands extraction project. It claims efficiencies of 22:1 (energy returned on energy invested) compared to Alberta’s oil sands extraction processes, which are roughly 4:1.

The company has set a production target of 6,000 barrels of oil over a 60-day period ending September 30, 2015—an average of 100 barrels per day. The company is planning a $70 million, 5,000 barrel per day extraction plant at its Temple Mountain Energy lease site near Vernal.

Investing in Texas Permian Basin Oil

Utah’s deposits are estimated to contain 55 percent of all oil sands resources in the U.S. And these resources are relatively easy to develop, with sands located on the surface down to 400 feet. Watch out Alberta.

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