An exclusive look inside Surmont 2, the largest SAGD phase ever built

Right now, more than 2,000 people are on site about 60 kilometres southeast of Fort McMurray, Alta., building the largest single phase of a steam assisted gravity drainage (SAGD) project ever constructed. The stream of logos on the trucks, trailers, temporary structures and other equipment around the various workfaces reads like a who’s who of the oilsands supply chain. They’re all reporting to the engineering, procurement and construction management contractor, Bantrel Co., and ultimately to the owners—ConocoPhillips Canada and its partner, Total E&P Canada Ltd. This is Surmont 2.

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For Craig Dotson, Surmont 2’s field facilities project director, there are similarities between building this massive oilsands project and building oil production installations on Alaska’s North Slope, where he spent 29 years on the ground for ConocoPhillips before coming to Surmont. This includes the company’s Alpine operations, which ConocoPhillips says is one of the largest onshore oilfields discovered in North America in the last 20 years. When the production facility was first built in the 1990s, its capacity was 80,000 barrels per day. That has since been expanded to 120,000 barrels per day. That was a basin-opening, long-term project with some tricky logistics, and Dotson sees Surmont 2 in a similar light.

“Surmont 2 will be a flagship in the company,” Dotson says, adding it is comparable in size and impact to ConocoPhillips’ current work on liquefied natural gas plants in Australia.

At 109,000 barrels per day, Surmont 2 far surpasses in size the largest SAGD phase built before it—the 72,000-barrel-per-day Long Lake installation commissioned by Nexen Inc. in 2008. Once complete, this second phase at Surmont will increase total production capacity to 136,000 barrels per day, integrating the operating phase into a single Surmont. The work is well underway, but peak construction is still ahead.

“100,000 barrels per day comes off the tongue really quickly,” Dotson says, but adds with a smile, “Megaprojects create their own weather.”

Right now ConocoPhillips, Bantrel and their subcontractors are gearing up for winter, as well as full-tilt construction in 2013.

“We’re ramping up. 2013 is going to be our big year,” Dotson says. “What we’re doing right now is setting up our shop for 2013, so we’re getting our contractors, we’re developing the relationships, we’re getting all the bugs worked out. We’re staffing up the craft, we’re starting to get the progress and productivity up so that we can really make hay in 2013.”

Dotson says the group is ready for the challenge.

“Big projects are hard to get going, there’s no question. The work is to make sure we have the right people, the right focus and the right attitude, and I feel comfortable that by the end of the year coming into 2013, we’re going to be ready to go. We’ll be done with the engineering by the end of this year, so a lot of the activities in the module fab yards will be winding down by the end of the year. A lot of the material and equipment will be delivered by the end of the year, so the whole focus and effort is going to be here at site.”

Dotson says the biggest challenge on a megaproject such as this one is to understand how supply-chain or construction hiccups impact the entire operation and how to mitigate that.

“When something happens, and things happen on these projects, the real challenge is to identify them early enough and intercept the impact to the project. I always tell people that bad news early is good news,” he explains, adding, “But on the same side, if you stay focused on those things that are happening that are negative, you miss all the opportunities to talk about the positive things, so you have to balance that out.”

Right now facility construction is being coordinated with drilling, which he says is heavy into civil work for well pads and setting well pad modules. As they move closer into 2014, the operations staff will begin to be integrated into the project. The goal, according to Alistair Cartwright, ConocoPhillips’ competency assurance coordinator, oilsands operations, is to have all operations staff in place a year before first steam. That means hiring nearly 400 new employees in a relatively short period of time.

Recognizing its significant recruitment needs, the company recently launched a campaign that includes a dedicated website, billboards, guerilla marketing, washroom advertising and airport signage including beverage coasters and luggage turnstiles in Calgary, Edmonton and Halifax. The campaign took nearly two and a half years of planning.

“I don’t think it can ever be too early [to do the hiring], but the fear is being too late,” Cartwright says. He explains that ConocoPhillips is advertising various features of working at Surmont, including the opportunity for advancement, focus on safety, a 14-on 14-off shift, a residence referred to as the project’s “crowning jewel,” a fly-in fly-out rotator package and commitment to environmental stewardship.

So far, he says, the campaign has been successful.

“Within the first week, we had something like 150 responses. The last time I checked, we had 500 applications to one position and so we’ve started acting on those and interviewing.”

As for future ownership of the project, there has been significant speculation and even direct claims in recent weeks of pending deals between Indian energy companies and ConocoPhillips that would involve oilsands assets in general and Surmont in particular. Maintaining the position ConocoPhillips has taken on the matter, director of oilsands communications Julie Baron told Oilsands Review that the company does not comment on market rumours or speculation.

It is true, however, that earlier this year ConocoPhillips initiated a process with Scotia Waterous to market up to 50 per cent of its working interest in a package of “producing, developing and emerging oilsands assets.” Surmont is one of these properties, perhaps making it all the more important that the project continues its steady execution.