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Alberta regulator says CNRL steam extraction caused bitumen leaks

Wildlife deterrents are set up around fissure where bitumen emulsion seeps out of the ground at Canadian Natural Resources Limited's (CNRL) Primrose Lake oil sands project


Canadian Natural Resources Ltd.'s method of injecting large volumes of high-pressure steam in closely spaced wells was a "fundamental cause" of the long-running bitumen surface leaks that began last year at its Primrose site, Alberta's energy regulator says.

The conclusion from the Alberta Energy Regulator (AER) Tuesday lends additional credence to the idea that cracks in hard, overlying rock allowed the sticky, heavy oil to escape – not just faulty, old well holes, as has been the long-standing position of the company.

The AER said Tuesday it's not prepared to approve a return to full operations at CNRL's Primrose sites until all the risks can be mitigated. The restrictions the regulator ordered on underground steaming – which softens bitumen and allows it to rise to the surface in pipes – at Primrose East and within one kilometre of Primrose South in June 2013 will remain in place.

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"We need to get some steam into that reservoir and monitor with the enhanced monitoring that we have in place. That will assist us in completing our investigation," AER spokeman Bob Curran said. The regulator is not prepared to allow anything other than a gradual test with low steam pressure, he added.

Beginning in May 2013, about 1180 cubic metres of bitumen has leaked at four sites on CNRL's Primrose project on the Cold Lake Air Weapons Range, killing some small animals and affecting 20.7 hectares of land and water – much to the consternation of local First Nations and environmentalists. The bitumen release has been contained and cleanup efforts are ongoing.

The company has maintained the leaks were caused by faulty engineering on old wells and that bitumen reached the surface unintentionally by travelling up old vertical wells, escaping when it hit defective spots in the casing or cement.

"The seepages at Primrose are a technical and operational issue. They are totally solvable," said chief executive Steve Laut on a conference call earlier this year.

However, the energy regulator's review of a CNRL causation report – submitted last month – and an independent technical review of CNRL's report has determined that the leak factors fall into two main areas: issues with the wellbores, or well holes, and the steaming strategy used by CNRL.

"The independent technical review indicated that CNRL's strategy to inject large volumes of steam at fracture pressure in closely spaced wells was a fundamental cause of the (flow-to-surface) incidents," the regulator said in a news release Tuesday.

Mr. Curran said there are a number of reasons for the leaks, including vertical fractures in the geological zone above the reservoir, the heaving of the overburden above the reservoir – and cracks or "pathways" that include existing wellbore or natural fractures.

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In a statement, CNRL said its conclusion that the most likely cause of the bitumen leaks were mechanical failures of wellbores has not changed. Still, the company said it's committed to reviewing all options.

"It is important to remember that the mitigation strategies we have developed going forward will mitigate against any pathway to surface – most likely mechanical failure of wellbores – but will also mitigate against the very low probability that geologic failures in the massive Colorado shale cap rock could provide a part of the pathway to surface," spokeswoman Zoe Addington said in an e-mail.

She added the steaming restriction has been incorporated into the 2014 corporate guidance, and the company is not intending to apply for high pressure steaming in Primrose East until a final report has been submitted.

Chris Severson-Baker, managing director of the Pembina Institute – an environmental think-tank – said that CNRL's June report made the critical admission that the cap rock could have been breached, either through natural fractures or fractures that were induced by the injection of steam. He said the design of the project is based on the premise that the capping rock does not contain natural fractures and will not fracture in response to man-made pressure.

The independent technical review released by the AER on Tuesday, he said, "really points to a concern with the fundamental design of this project."

With files from Jeffrey Jones in Calgary

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