Alberta regulator sets steam restriction at CNRL oil sands project

By Nia Williams

CALGARY, Alberta (Reuters) - The Alberta Energy Regulator said on Monday it is implementing additional requirements at Canadian Natural Resources Ltd's (Toronto:CNQ.TO - News) Primrose oil sands project after concluding excessive steaming caused a 6,648-barrel bitumen emulsion leak in 2013.

The requirements include permanent limits on the steam volumes the company is allowed to use to extract bitumen from underground reservoirs and a requirement that CNRL seek approval for each steaming cycle at its Primrose East site.

"The restrictions do amount to a permanent ongoing reduction in the intensity of the company's operations. The company will not be able to pursue its original operating strategy at Primrose," said Kirk Bailey, executive vice president of operations at the AER.

CNRL has been operating under steam restrictions at Primrose since the seepage was discovered.

Bitumen emulsion - a mixture of bitumen, sand and water - was discovered oozing to the surface at two locations at CNRL's Primrose project in northern Alberta in May 2013. Two more leaks were discovered over the next month, prompting the AER to impose restrictions on the site and launch an investigation.

In July 2013, company President Steve Laut said the project was producing about 10,000 barrels per day (bpd) less than previously expected as a result.

Bitumen seepage to the surface as a result of oil sands operations is not permitted under Alberta energy regulations. A number of animals died as a result of the leak, which continued for months, including birds, mammals and amphibians.

The investigation, described by Bailey as one of the most complicated ever undertaken by the AER, concluded the seepages were caused by excessive steam volumes along open conduits such as wellbores, natural fractures and faults and hydraulically-induced fractures.

CNRL said the regulator's report was consistent with its own findings at the 100,000-110,000 bpd project.

"Our enhanced operational practices and strategies - in place since July 2013 - includes modified steaming strategies, enhanced pressure monitoring and response strategies as well as remediation of wellbores to mitigate the risk of future seepages," the company said in a statement.

Cyclic steam simulation involves injecting high-pressure steam into an oil well to liquefy viscous bitumen so it can flow to the surface.

The AER said it looked at other producers using the same technology for oil sands extraction, such as Imperial Oil (Toronto:IMO.TO - News), and concluded those projects posed no risk of similar seepages.

(Reporting by Nia Williams; editing by Chris Reese, Andrew Hay and G Crosse)