There was much experimentation with oil sands technology in the first half of the 20th century but it was not until the 1950’s and early 1960s that the viability of commercial development began to be felt. The Government of Alberta’s oil sands development policy was announced in 1962 and the Great Canadian Oil Sands Project (GCOS) was conceived and approved. The ownership of GCOS passed to Sun Oil Company and in 1967, the world’s first integrated oil sands production and upgrading plant was started up by Suncor (formerly Sun Oil).
The first commercial crude-bitumen production project using in situ techniques in Canada began in 1978. The traditional application of in situ production techniques involved drilling a well into the oil sands and extracting the bitumen almost as if it were conventional crude oil. The maturation of horizontal well technology and the development of steam assisted gravity drainage (SAGD) extraction techniques have revolutionised the in situ production industry. With the SAGD technology, two horizontal wells are drilled into the same reservoir, one directly above the other. Steam is injected into the top well, which heats up the surrounding tar-like bitumen and causes it to drain with the aid of gravity into the well bore of the lower well.
While the cost of drilling the wells with SAGD technology is considerably higher than for a conventional vertical well, the productivity levels of the wells are increased dramatically. For example, it is not atypical for a well with these advanced technologies to produce 1,000 barrels per day (b/d) of bitumen. This is more than 20 times the productivity of the average bitumen well in Alberta. Because of the high productivity of the wells, these technologies are believed to have reduced the breakeven supply price to USD 4 to USD 5 per barrel; although lower figures have been reported.