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New steam extraction methods, political stability and a rising oil price have started a new 'gold rush' of construction in Canada's once forgotten oil sands. Adrian Greeman reports.

New roads are being laid past beaver dams and straggly spruce in the swampy 'muskeg' forests south of trading town Fort McMurray in northern Alberta.

Giant multi-axle trailers are moving big process vessels, pipe racks and tubular pile loads. Concrete trucks roar past newly strung power lines into fenced-off clearings.

Canada sits on the world's second largest oil reserves, beaten only by the giant resource of Saudi Arabia.

A third of the world's oil potential lies here. Yet no one except a few diehard mining companies has paid it any heed, says Ken Marsh, engineering and operations vicepresident for Meg Energy, one of a dozen new investor groups setting up drilling and insitu extraction projects in the area.

But its treasure, about 1.4 trillion barrels of bitumen, is not as easily extracted as Gulf crude. It is locked into underground sand in thick and viscous deposits.

'At room temperature it is like molasses, ' Marsh says. 'It costs money to extract it, separate it and process it.'

Neither he nor any of the other companies building steam injection and extraction plants will reveal how much. The level of investment return is a sensitive subject on the Calgary finance market.

'But the mining companies, which started operations in the 1960s, have kept going even at a $12 [£6] per barrel, ' points out Brian Harrison, thermal heavy oil leader with a nearby project for Devon Energy, a US oil firm. 'With oil up above $50 [£26] or even $70 [£37] a barrel it becomes highly protable.'

Like Meg Energy, Harrison's project is south of Fort McMurray in deeper oil sand, one layer among many of interleaved beach, shore, and estuarine flats and mud at deposits east of the Rocky Mountains.

Mining operations began further north, where groups like Suncor and Syncrude use open-cast on a huge scale to get at the oil, shifting up to 70m of overburden and then millions of tonnes of sand with the world's largest excavators and trucks.

The sand is mixed with warm water, the bitumen separated and the clean sand is replaced. The bitumen is then either 'cracked' with additional hydrogen added catalytically to make it lighter or 'coked' to separate lighter fractions from a dense asphaltic residue.

These processes require huge capital investment; and so does environmentally disruptive mining.

Some of the oil near is the surface.

'The Athabasca deposits are partly in a river eroded area, ' explains Harrison. 'The First Nation natives used it for centuries to caulk their canoes.'

But more than 90% of oil sand lies up to 800m deep. Methods to extract it insitu have been under development since the 1980s, mostly using steam injection, though solvents have also been tried.

First was cyclic steam stimulation (CSS), where high pressure steam is forced into the ground for several weeks through a drill line. Hot melted bitumen and water are pumped out over several months until the yield drops when the process is repeated.

Imperial Oil was the first user at a deposit at Cold Lake.

But in the 1990s the governmentfunded Alberta Oil Sands Technology & Research Authority developed steam assisted gravity drainage. SAGD uses two parallel cased drill holes one 5m above the other, running horizontally.

'Steam is injected into both to begin with but then only the top one, ' explains Harrison. 'Bitumen runs down to the lower line and is pumped out with the water.' The process uses lower pressure than CSS, he adds, which is 'above fracture level'.

The 'steam chamber' forming around the porous drill case gradually expands upwards and outwards so that thicknesses of sand up to 100m can produce oil. And by using runs of parallel drillings about 100m apart and 1-2km long, a large area can be covered from a small headworks.

Drilling is done from pads. These are mostly formed with 'mats', substantial timber flats several metres long which are placed on geotextile and compacted fill material - usually a local till or sandy material. 'We spend tens of thousands [of dollars] on the mats, ' says Marsh ruefully.

'Most drilling platforms are in the muskeg, ' he explains - swampy ground of 1-3m deep water and rotting timber, with the scrawny black spruce growing through it.

Nearly half the region is like this.

'Winter is our busiest season, because everything is frozen, ' says Marsh. 'We can use 'winter roads' and ice bridges, both formed by spraying water, to move rigs around more easily.' The downside is that temperatures can drop to -45degreesC, and then it becomes hard to work effi iently. But high wages and workload are attracting labour from the rest of Canada.

For the central plant, however, a more substantial site is needed.

Harrison says he scouted out a suitable plot by helicopter, identifying dry sandy ground by the type of trees growing on it.

Something the size of a small oil refinery must fit on this 400m by 800m area. For Harrison's Devon Oil Jackfish project it will be a 35,000 barrels a day set-up, involving about C$550M (£260M) worth of equipment. A second phase will double this.

The plant produces steam for injection and then separates the oilwater mixture that comes back up.

Residual water is removed from the oil by standard technology and it is then diluted using either gas condensate or synthetic crude.

'That makes it transportable in a pipeline, ' says Harrison.

Devon Energy and Meg Energy are cooperating on construction of local pipelines to export the mix and to import the 'diluent' as far as Edmonton. From there long distance pipelines radiate outwards to refineries.

Harrison says the bulk of the site equipment is to clean up the water.

Water is recycled for both economic and environmental reasons and to recover the residual energy it contains; it comes out of the ground at 200degreesC. Top-up water comes from saline non-potable aquifers.

'You have to heat nearly three barrels of water to get one of bitumen, ' he says. Natural gas, which is found in the area, is the main fuel, but it is expensive.

A series of heat exchangers and vessels use gravity, baffles and gas separation to break down emulsions and remove residual oil. Lime softening and de-ionising remove silica and other minerals before the water goes to a bank of six steam makers.

These do not make dry steam. A 20% water content remains which carries any residual minerals and is separated off to recirculate through the recovery cycle. Clean 15MPa steam goes through an insulated pipeline for injection at 5MPa.

At the Meg Energy plant one steam unit will produce only 3000 barrels a day when it comes on line in 2008.

'It is pilot plant scale, ' says Marsh, 'but we will expand that to full size immediately afterwards.'

The main project, like many others, will be a combined cycle generator plant producing electricity for both plant use and sale to the grid. A total 140,000 barrels a day will eventually be achieved.

Like Devon Energy's project, the plant is being assembled from modules manufactured in Edmonton which gives better control and is cheaper; labour shortages and severe conditions preclude insitu construction.

Sitework involves mainly piling.

Harrison has installed 3200 driven precast concrete piles and Marsh the more usual but currently expensive steel tube piling. There are also earthworks and some assembly of larger tanks as well as connection of the modularised pipe racks and components.

The stream of 100t to 500t multiaxle loads coming up the main Edmonton to Fort McMurray highway has led to vociferous local demands for a dualling of the twolane highway.

Design for this is under way and the concession companies also have to build lengths of road and utilities for their compounds.

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