Saskatchewan is located in the geological area called the Western
Canadian Sedimentary Basin. This
area includes most of Western Canada, which produces the majority of Canada’s
oil and gas. Saskatchewan is
Canada’s 2nd largest oil producer accounting for 20% of Canada’s
oil production. Oil is
Saskatchewan’s 2nd largest export next to grain and this oil
production has almost doubled within the last 10 years.
There are approximately 320 oil and gas companies operating approximately 27,800 wells that are capable of producing oil in Saskatchewan. Direct and indirect employment associated with Saskatchewan’s Oil industry account for approximately 30,000 jobs per year. This oil production provides us with heat, transportation, manufactured goods and medicines.
About 20% of Saskatchewan’s production is used within the province. Approximately 60% of the oil production is exported to the United States with the remainder being sold to Eastern Canada and a small portion going to Alberta. It is believed that 80% of Saskatchewan’s oil has already been discovered but recovery techniques need to be improved in order to be able to produce it all.
The earth is made up of 3 kinds of rock – igneous, metamorphic and
sedimentary. Igneous and
metamorphic rocks are usually hard and dense, or non-porous.
Sedimentary rock is very porous (can hold fluids) and when it forms into
layers it becomes what is referred to as a sedimentary basin. Over millions of
years tiny plants and animals caught in this rock change into oil and natural
gas as the result of the heat and pressure caused by the build up of layer upon
layer of rock. When these layers of sedimentary rock containing oil and natural
gas are trapped between two layers of igneous or metamorphic rock they form a
reservoir or zone. In the
Lloydminster area there may be as many as five of these “zones” ranging from
depths of 150 to 500 meters deep.
The oil in the Lloydminster area is classified as “heavy oil”. Heavy oil has a higher density than light oil and it contains high amounts of asphalt and sulphur. The majority of the oil reserves in Saskatchewan are made up of heavy oil. This heavy oil is dark, thick and sticky (viscous) and it flows very slowly, if at all. Because of its thickness and the inability of this oil to flow easily only about 5 – 8% of it is recoverable by using conventional production methods. Once this oil is produced it must be “Upgraded”. Upgrading heavy oil means removing the contaminants such as sulphur, nitrogen, metals and adding hydrogen to improve the quality. The result is a synthetic crude much like conventional light crude that has a considerably higher selling price.