CALGARY - Canadian Natural Resources Ltd. says a "mechanical failure" at an old well is behind ongoing bitumen seepage at its oilsands project on the Cold Lake Air Weapons Range in northeastern Alberta.
The Calgary-based company (TSX:CNQ) said Wednesday the damage has been contained and the cleanup is proceeding well.
"Canadian Natural is confident the cause of the seepage is due to the mechanical failure of well bores in the vicinity of impacted locations," president Steve Laut said in a conference call. "We have a pretty good idea of the likely well bores."
At least one critic wondered if that was the whole answer, pointing out that an earlier spill at the same site was judged to be at least partly caused by CNRL's practices.
Quoting from an investigative report into a 2009 CNRL leak, the Pembina Institute noted that the regulator concluded: “The (Energy Resources Conservation Board) is also of the view that geological weaknesses in combination with stresses induced by high-pressure steam injection may have contributed to the release."
For weeks now, bitumen has been oozing to the surface at CNRL's Primrose project, which uses high-pressure, high-temperature steam to soften underground bitumen and force it up wells.
Almost a million litres of bitumen have so far leaked into the bush and muskeg and another 2,400 litres seep in every day.
Laut said each of four locations where bitumen has been oozing to the surface has been secured. The affected area has now been reduced from about 20 hectares to 13.5 hectares and much of the bitumen has already been removed.
"The bitumen emulsion will continue to seep at an ever-declining rate for a period of time," said Laut. "There is effectively little to no environmental damage to manage the ever-declining seepage."
The seepage consisting of bitumen instead of oil makes the cleanup easier in some ways, he added.
"It's heavy and it's viscous and it doesn't actually flow unless it's warm, so it doesn't go very far and it's very easy to collect."
Laut said an old well drilled in 1997 by a previous operator is the suspected culprit. The company will check records for all the wells on its lease to see if any of them might pose a future risk.
"If we see wells that are flagged as having higher risk, we're going to go back and determine if there is a risk there. If there is a risk, we'll remediate it."
If any wells aren't fixable, the company can adjust its steaming process to eliminate the risk, Laut said.
There is little chance that the injected steam has damaged the cap rock over the deposit, he said. That would require more steam pressure than the company uses.
"It's impossible to frack through (the rock) with the pressures we're using."
However, Alberta's previous energy regulator said in its investigation into the 2009 spill that the cap rock could contain pre-existing faults or might have been recently cracked. The Energy Resources Conservation Board also blamed the high volumes of steam that CNRL injected.
"The ERCB is of the view that this likely contributed to the bitumen emulsion surface release. CNRL acknowledged that the Cycle 1 injection volumes may have contributed to the release," said the board's report.
The company said there is no risk to humans from the seepage, although 16 birds, seven small mammals and 38 amphibians have died as a result.
The discoveries were immediately reported to the Alberta Energy Regulator, which is working with the company and Alberta Environment and Sustainable Resource Development to investigate and remediate affected locations.
The company's near-term steaming plan at Primrose has also been modified as a result of the spill, with restrictions on steaming in some areas until the investigation is complete.
Laut said the cleanup is likely to cost about $40 million. Another $20 million will be spent drilling new monitoring wells.
He said it's not expected that the company's production figures of between 100,000 and 107,000 barrels a day will change, although its estimates for next year's production will be about 10,000 fewer barrels a day.
Laut said the company believes the 2009 spill was also caused by a well failure, that time one of its own. Well designs were modified after that. Older wells were checked, but not as closely as they will be now.
"We didn't go through them with the same rigour that we're doing at this point in time. There was a belief that it wasn't an issue."
— By Bob Weber in Edmonton
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