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US looks to Canada for oil sands advice

Governors from Mississippi and Alabama are seeking help developing their oil-sands deposits, writes Shaun Polczer

Governors from Mississippi and Alabama are looking north to Canada for help developing their states' oil-sands deposits. On 27 July, Mississippi governor Phil Bryant and Alabama governor Robert Bentley said they would set up a joint commission to study the Hartselle formation's oil-sands resources, which stretches from northwest Alabama into northeastern Mississippi.

The Hartselle is of Mississippian age, dating to the Carboniferous period. The play is a mixture of sand, shale and coal. It is also a source of tight gas.

The presence of oil in the Hartselle has been established for decades; the earliest references date back to 1891. The Department of Energy has been studying enhanced recovery techniques to develop the oil sands since at least 1994.

The most recent estimates by the US Geological Survey, made in the 1980s, suggest the region could hold 7.5 billion barrels of recoverable bitumen - with 350 million barrels located within 50 feet of the surface. Now those deposits are considered technically recoverable, using technology developed in Canada's oil-sands patch.

By unlocking Canada's vast oil-sands deposits that technology has helped turn Canada into a major oil producer. Canadian oil sands accounted for 15% of US crude oil imports in 2011.

Bryant told energy regulators from 16 states and two US territories at a Southern States Energy Board meeting that Mississippi and Alabama would draw on Canada's technical expertise and experience to kick start development of its own resources. "Canada has proven to be a leader in oil-sands recovery, and we hope through this evaluation process we can collaborate and share knowledge on best practices," Bryant said.

Utah, with deposits of around 32bn barrels, holds more than half of the US' total oil-sands resource. However, Mississippi and Alabama enjoy more favourable market access. Development would take place next door to Gulf Coast refineries that can process the extra-heavy crude.

Oil sands can be mined or produced in situ using steam injection. The Hartselle would likely see a combination of both techniques - steam injection in the deeper pockets of Alabama and surface mining in shallower areas of Mississippi.

A refined geological and economic assessment will be coordinated among several government agencies, including the Geological Survey of Alabama, the Mississippi State Oil and Gas Board, the Mississippi Development Authority, the Mississippi Office of Geology and the Southern States Energy Board.

A modern reserves evaluation will be based on new data, including detailed reservoir modelling and an assessment of the infrastructure needed to support development. The various government departments will look at ways to streamline regulations governing oil-sands development.

The governors will also seek to enlist help from the governments of Canada and Alberta, as well as broaden ties with Canadian universities and research institutes. However, as Canada's experience has shown, large-scale development could take decades. Bryant cautioned: "it is going to take full cooperation from industry, state officials, and technical experts to get this formation into production."

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