After more than five years of oil sands extraction technology research, MCW Energy Group, a Canadian company, has initiated production of its first extraction plant in Vernal, Utah. The facility, a 250 bbl/d unit, was tested successfully in October 2014, and the company has spent the past several months enhancing component and process efficiencies.
Despite slumping world oil prices and a flurry of canceled conventional and unconventional oil exploration projects, this company continues to thrive because its production costs are among the lowest in the industry. MCW’s proprietary extraction technology, the first out of the starting gates in the U.S., requires no water, high pressures or temperatures and results in no tailings ponds. The clean sand is either sold as construction or fracking sand or is replaced back to its origin. MCW plans further expansion in Utah with additional extraction plants and higher capacities in the face of low oil prices because of its success in reducing processing costs below $30/bbl.
MCW CEO Dr. Jerry Bailey has more than 50 years of experience in international oil and gas projects. “MCW has a ‘first-of-its-kind’ technology that will finally unlock Utah’s enormous oil sands reserves,” Bailey said. “Our low-cost production creates a new energy frontier in America, answering the call for more secure domestic oil resources and providing positive economic benefits while showing how the environment and resource development can work harmoniously,” he added.
While revising its revenue projections using the current low world oil prices, the company found a silver lining in the lower crude selling levels due to corresponding lower costs for petroleum products used in its extractionprocess. Items such as diesel fuel, propane, solvents and condensates are 40% to 50% lower than they were in mid-2014. These lower costs, coupled with an excellent feedstock supply cost on a long-term contract, contribute to netbacks of $22/bbl to $24/bbl.
Oil sands extraction
The first plant in Utah has been dubbed “America’sfirst environmentally friendly oil sands project” and represents a breakthrough in technology that works in tandem with the environment rather than damaging it. The proprietary continuous-flow closed-loop extraction technology requires no water, a major factor in a state that has little water available throughout most of its desert topography.
The hydrocarbon extraction rates are 99.5%, and the technology works on both oil-wet and water-wet deposits. It also may be applied to remedial projects such as the lingering tailings ponds projects in Alberta. The MCW system uses benign solvents, creates no greenhouse gases and requires no high temperatures or pressures. Nothing leaves the closed-loop system except for oil and clean sand.
The extraction plant itself requires a very small footprint and is very mobile and scalable. And its operating system is extremely efficient, with an energy return on energy invested ratio of 22:1 compared to most steam-assisted gravity drainage operations, which average from 4:1 to 6:1.
How it works
In the preparatory stage, feedstock is mined and crushed to prepare for processing. Standard strip mining procedures are used to deliver the feedstock to the extraction plant’s conveyor system. In stage 1, crushed ore is delivered into the patented, fluidized bed extraction column. The extraction process is performed at temperatures between 50 C and 60 C (122 F and 140 F).
In stage 2, the solvent composition with extracted oil bitumen is delivered from the extraction column to the evaporator and then to the distillation column. In stage 3, hydrocarbons are extracted from the solvent in the distillation column and pumped to the storage tank. In stage 4, the solvent is 99.9% retained, warmed and returned to the extractor within the continuous-flow closed-loop system.
Finally, in stage 5 the purified sands leave the extractor and go through the drying process. After processing, the extracted crude oil is free of sand and solvents and is pumped out of the system and into a storage tank. All of the company’s current production is purchased by a local distributor and delivered by tanker truck to the refineries in Salt Lake City. Several of these refineries are capable of processing MCW’s crude output, which averages 14°API and has a very low sulfur content. There are plans to increase the API gravity with slightly higher quantities of solvent, which will increase market value. And there are future plans for the state to build a nearby pipeline to the north.
The company is now implementing Phase Two of its production expansion program, with funding activities to finance a 5,000 bbl/d plant on its Asphalt Ridge lease. There is ample room for development because Utah contains more than 50% of America’s oil sands deposits, with 30 Bbbl of oil untapped in eight major deposits. All of these deposits are easily mined as strip mining projects, with most of the resource existing from the surface to 122 m (400 ft). MCW also is looking to expand future revenues via licensing and joint venture opportunities, especially with countries that possess extensive oil sands/shale deposits.
Agreements in the form of joint venture partners together with upfront royalties will be integral to new revenue streams. The company already has received inquiries from several countries and also has successfully lab-tested several oil sands/shale samples and tailings from Alberta. It represents an opportunity for many countries to develop their oil sands resources without substantial infrastructure investment. And the environmentally friendly technology dovetails well in Utah’s “Responsible Resource Development” program.
The startup of these operations in Utah represents a benchmark leap forward for safe environmental resource development and, at the same time, a small step forward for America’s energy independence.
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