For those of you who are unfamiliar with it, I will give a very high-level overview of the in situ oil sands production process MEG uses in its operations, which is steam-assisted gravity drainage, or SAGD. In doing so, you'll quickly understand that our operations are inherently innovative.
In SAGD, horizontal well pairs consisting of a steam injection well and a production well are drilled into the bottom of the reservoir, which at MEG's Christina Lake Project in Alberta is 400 metres below surface. The injected steam heats up and liquefies the solid bitumen, which allows it to flow through the reservoir sands. The liquefied bitumen and condensed steam drain into the producer well by gravity, eventually creating a steam chamber. That's kind of referenced in step one of the diagram that you see.
The hot bitumen, water, and some associated natural gas are then lifted to the surface by downhole pumps and transported by pipeline to the central processing facility. Once at the central processing facility, the gas is separated from the bitumen-water emulsion and reused in operations. That's step two of the diagram.
A light oil, referred to as diluent, is then added to the bitumen-water emulsion to help separate the bitumen from the water, which is step three.
More diluent is subsequently added to the bitumen once it is separated from the water, creating a product called “dilbit”. The dilbit is transported to market via pipeline. The water is treated so that it can be reused to generate steam in both the conventional steam generators and the cogeneration facilities. These are steps four, five, and six.
The steam is injected back into the reservoir via the steam injection wells. A small amount of water, less than 10%, cannot be recycled and is disposed of in deep reservoirs. The makeup water used to replace the disposed volumes is also sourced from deep reservoirs and is non-potable.
As you can see, this is a high-tech business involving sophisticated technologies and the most efficient processes for drilling, reservoir extraction, production, oil treating, water treating, and steam generation.
On slide four, there are two things. The bars on the slide are MEG's production volumes over the last eight years, showing our progression from start-up of operations of our pilot in phase one, which was approximately 3,000 barrels of bitumen a day, up to current production rates of over 80,000 barrels per day in our expansion phases, phase 2 and phase 2B.
Overlaid on the production graph are two lines. The green line shows the industry average of greenhouse gas intensity in tonnes of CO2 equivalent per barrel, and the red line outlines MEG's performance of the same indicator. The graph points to the fact that by integrating cogeneration and proprietary clean technology innovations into our reservoir development, MEG has decreased its steam-oil ratio and has lowered its GHG intensity 30% below the in situ industry average.
Companies like MEG develop and deploy innovative technologies and processes to drive industrial productivity gains and efficiencies, thereby increasing our profitability and achieving superior environmental outcomes, driving further investment into innovation and improving the marketable energy products that bring prosperity to Canada.
I'll provide a quick overview of MEG's existing and emerging clean technology innovation in the hopes of giving you a sense of how to best incent further activity of this nature.
Cogeneration produces electricity and steam from natural gas to power our operations and provide reliable 24-7 base load power to the grid, lowering electricity prices and reducing intermittency. Cogeneration is highly efficient because the waste heat from generating electricity is captured and used to generate steam, maximizing the overall efficiency of natural gas usage at our facilities.
The next two proprietary technologies are implemented into the reservoir and are key to reducing MEG's steam-oil ratio.
Enhanced modified steam and gas push—eMSAGP for short—enables us to replace steam with non-condensable gas and uses infill wells to produce incremental bitumen, increasing resource recovery and reducing operational steam requirements.
The second reservoir technology we're developing is enhanced modified vapour extraction—eMVAPEX for short—a pilot technology that also utilizes infill wells to increase resource recovery and injects condensable gas to replace steam and dilute the bitumen in the reservoir, substantially reducing the amount of steam required for production.
The fourth technology that we're currently developing is HI-Q. MEG has developed and patented the partial upgrading technology that transforms the heavy oil into easily transportable product and eliminates the need for diluent. Compared to traditional upgrading, HI-Q produces 20% less greenhouse gas emissions, uses no water, and occupies less than a third of the land footprint of typical upgrading facilities.
Next is slide 6. Although MEG has demonstrated a successful track record of investing in the research, development, and deployment of innovative processes and technologies that improve operational efficiencies and environmental performance, we believe the Canadian innovation ecosystem could become more efficient. In keeping with the focus of this study, there are opportunities to de-risk these activities, both from a financial perspective and from the perspective of creating an environment of policy certainty.