Athabasca Oil Sands: Basic Extraction and Economics

Matthew Sorensen
December 15, 2016

Submitted as coursework for PH240, Stanford University, Fall 2016


Fig. 1: A map of the oil sands in Alberta Province, Canada (Source: Wikimedia Commons)

Although more conventional oil reserves are likely not in imminent danger of depletion, the occasional spike in the price of oil (and political dispute between oil- producing and oil-importing countries) has motivated exploration of unconventional oil deposits and development of technologies to harvest them. The Athabasca Oil Sands, located in Alberta, Canada (see Fig. 1), are one such unconventional deposit, wherein the oil is present in bitumen, a very thick liquid or semi-solid hydrocarbon substance. The bitumen itself is present within a mixture of silica, clay, and water. [1,2] While processes for extracting and refining this oil are generally more complex than those for traditional crude oil, the oil sands are nonetheless of interest for the 174 billion barrels of proven reserves they represent; this represents more than the reserves of any given country except Saudi Arabia and Venezuela. [3-5]


Some of the oil sands bitumen is close enough to the ground to be accessible via simple pit-mining techniques, wherein the entirety of an area's ground covering is removed to access bitumen deposits relatively close to ground level. [1] Most deposits, however, are located too far underground for such methods, and must be extracted via a technique known as steam-assisted gravity drainage (SAGD), wherein steam injected into one well heats bitumen, reducing viscosity and allowing it to flow into another well. [6] Two wells are drilled horizontally, with the injection well roughly 5 meters directly above (and parallel to) the recovery well. The heating of the oil sand makes it less viscous and thus more prone to flowing; it then flows downward as the rising, significantly less dense steam displaces it, causing oil to flow towards the collection well while keeping the bulk of the steam trapped in the rock instead of filling the recovery well (although some water is recovered via the recovery well for reuse). [6] The product which emerges from the well is generally still of a lower grade than traditional crude oil, as it contains lower hydrogen concentrations; as such, it is often treated under high heat and pressure (up to 480°C and 100atm, respectively) at special upgrading facilities, before being forwarded to more traditional refineries to be made into a commercial product. [5,6]

Economic Viability

Even following refinements in the SAGD technique, however, oil from the oil sands is often significantly more expensive to develop than that from more conventional sources. A study from 2004 estimated that extraction costs would be roughly 10-14 Canadian dollars per barrel for oil extracted via SAGD technology, compared to 1 to 6 Canadian dollars per barrel for conventional oil deposits. [7] The resulting extracted product must be shipped to the aforementioned upgrading facilities, where the additional energy required to refine the oil to a more acceptable state increases expenses per unit mass of product oil substantially. This oil is thus estimated to be economically viable only when oil is at $36-$40 Canadian dollars per barrel; drops in oil prices can thus render the process unprofitable, though the process has frequently been profitable in recent decades. [7]


The Athabasca Oil Sands represent a form of oil deposit significantly more expensive to collect and refine than traditional oil deposits, with operators of extraction facilities being much more vulnerable to fluctuations in the oil price than those at traditional oil fields with lower costs for startup and continued operation. However, advances in technology, coupled with vast reserves and oil prices which have frequently been high enough to allow profitable oil sands extraction, have increased interest in the oil sands. While environmental and political issues may yet have significant impacts, from a purely economic standpoint, the Athabasca Oil Sands will likely continue to grow or maintain significant oil production, with profits likely being sufficient to inspire further development and continued extraction for the foreseeable future. [1,2,5]

© Matthew Sorensen. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] C. Gorin, "The Athabasca Oil Sands," Physics 240, Stanford University, Fall 2010.

[2] H. Park, "Oil Sands Conundrum," Physics 240, Stanford University, Fall 2012.

[3] "Alberta's Energy Reserves 2005 and Supply/Demand Outlook 2006-2015," Alberta Energy and Utilities Board, ST98-2006, May 2006.

[4] "BP Statistical Review of World Energy 2016," British Petroleum, June 2016.

[5] Y. Jan, "Albertan Oil Sands," Physics 240, Stanford University, Fall 2011.

[6] R.M. Butler, "Steam-Assisted Gravity Drainage: Concept, Development, Performance and Future," One Petro PETSOC-94-02-05, J. Can. Petrol. Technol. 33, 44 (1994).

[7] "Opportunities and Challenges to 2015," Canadian National Energy Board, June 2006.