Good afternoon, Mr. Chairman and members of the committee.
Thank you for the opportunity to share, and I think with some pride, what I believe is a great news story. Laricina is an example of a Canadian-founded in situ oil sands company leading in innovation to support the goals of all Canadians, responsibly developing the valuable resources of Canada while contributing needed energy, and providing positive economic impacts balanced with environmental performance.
In situ oil sands, which will produce for centuries, are the future for oil production in Canada. The International Energy Agency, the IEA, identifies these resources as the largest oil deposit outside of OPEC countries and considers it necessary to meet the world’s energy demand for oil. Think of in situ as drillable oil sands, and the cousin of conventional oil. The footprint of a horizontal well in drillable oil sands is very similar to that for a conventional horizontal well. For example, the same land surface is required as a resource; however, in return, up to 10 times more energy will be produced.
Unlike many conventional oil and gas projects, we operate commercially with non-potable water, but what is really exciting is not what we have done but where we are going. We're working as an industry in the field today at testing the combination of steam and solvent for enhanced recovery that would decrease the carbon footprint per barrel on a full-cycle basis to less than that of much of the crude imported into the United States. You may have seen or heard about various documentaries, such as the CBC documentary on oil sands. What this program did not discuss is what drillable oil sands are doing to meet the needs for economic prosperity, energy supply, and responsible environmental performance through continuing innovation in our industry.
Canadian companies, including Laricina, are giving the government and Canadians many reasons to be proud. Included in those are the quality of the work and the quality of production compared to that of alternative oil producers, as well as the economic participation in this Canadian resource. The October Conference Board of Canada report shows that one third of the economic benefits of meeting the needs of this development extend beyond the province. In 2011 alone, $300 million in labour income was invested in workers from Newfoundland, B.C., and Saskatchewan. In this world of economic uncertainty, energy is providing strong support across the country.
Laricina is a private company founded by Albertans. I was born in Calgary and educated at the University of Calgary in chemistry, engineering, and business. Laricina, in a little more than seven years, has positioned projects for development to recover more than five billion barrels of oil over more than 30 years. While this is a part of the larger in situ oil sands development, we are leading in the understanding and recovery of a new geologic resource, the Grosmont, and innovating to improve both the economic and environmental performance. We are doing this while contributing to our communities through more than just jobs.
Laricina began steaming at the first steam-assisted gravity drainage—or SAGD—pilot in the Grosmont carbonate at Saleski in December 2010, after nearly five years of delineation, studies, research, and testing. The Grosmont formation is a carbonate reservoir that is dolomitic rock, like what is quarried in Manitoba, and has been used in buildings like the Banff Springs hotel.
This is unlike the sand reservoirs mined in Fort McMurray and more like the large carbonate oil reservoirs in the Middle East. The Energy Resources Conservation Board, the ERCB, has identified that more than 400 billion barrels of bitumen-in-place—or 25% of the bitumen potential in Canada—is contained in this formation, representing a material growth opportunity for Alberta and Canada.
We estimate that the project area contains approximately 150 billion barrels of recoverable bitumen. Carbonate reservoirs have yielded the world’s largest conventional light oil fields, and the Grosmont could be a carbonate reservoir nearly as big as Ghawhar, Saudi Arabia's largest giant oil field. Laricina, one of your Canadian companies, is the frontier to opening up this valuable resource for the benefit of all Canadians. Positive results will launch a new development area for oil resource development for Canada.
Recently we advanced the first commercial-scale development for regulatory filing, based on our pilot results. We expect approval in 2013, with an on-stream date in the third quarter of 2015.
The oil sands are changing. More than 50% of production is from in situ or drillable techniques and, as stated, this is the growth area for the future. This is even before unlocking the carbonates. At Laricina, we are not satisfied to just utilize existing techniques. We believe it is possible to balance the economic benefits of developing the oil sands with environmental management. We also believe that technology provides the way for us to improve our environmental management and still generate attractive economic investments.
For example, we have developed a method for the combination of light hydrocarbons and steam to potentially reduce the steam requirements in half, as well as halving the water utilized and carbon emissions. These enhancements are aimed at reducing energy needs and, thereby, production costs, on a per barrel basis. These designs will be tested in both our Saleski pilot and our second and adjacent project at Germain, in the Grand Rapids formation, which is now under construction.
A technology and energy production consortium that includes Laricina, Nexen, Suncor, and Harris Corporation in the U.S. has successfully completed initial proof-of-concept testing of a unique oil sands extraction method that has the potential to improve environmental performance and reduce development costs. This group is looking at the delivery of energy without steam or burning of natural gas.
Our initial testing confirms the ability to successfully generate, propagate, and distribute electromagnetic heat in the oil sands formation. This technology reduces the energy required and potentially eliminates the need for water during in situ recovery of bitumen by using radio waves to heat the oil sands electronically. We believe this has the potential to be a next-generation extraction technique. Similar to the well-publicized shale plays, technology has opened up previously inaccessible resources. In situ technology is evolving and is only at a starting point.
Laricina has partnered extensively with the University of Calgary as part of our fundamental approach to research and innovation. The technology for drillable oil sands was initially established by Dr. Butler at the U of C in the 1980s. He is the father of SAGD.
We're pushing this further. Laricina chairs a consortium of 16 companies doing fundamental research on solvent-enhanced recovery and adding a natural part of oil, the light hydrocarbons, to steam. For example, propane and butane, which we use for cooking or heating, as well as the light condensate that we use for fuel, can be returned into the reservoirs they came from to enhance recovery.
Nearly 30 years ago, Alberta was the leading enhanced-recovery jurisdiction in conventional oil pools, using propane and other light hydrocarbons in these reservoirs. We are continuing this innovation leadership in drillable oil sands. Laricina’s focus has been to sponsor research and scholarships. Notwithstanding our size, we have invested or committed nearly a million dollars to the University of Calgary. In each of the last three summers, we have employed more than 15 co-op and summer engineering students, or approximately 10% of our staff complement.
In Wabasca, where are operations are located, we play a positive role in the community, providing opportunities for local businesses and contributing to community well-being through donations, staff time, volunteerism, the recording of traditional values and land use, and employment. This has been our commitment since we began operations in the area in 2006. In 2008, we established our local office, which has been staffed from the community. When field operations commenced—