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Steam-Assisted Gravity Drainage, abbreviated SAGD and pronounced "sag-dee," is an in situ oil recovery technique used to extract heavy crude oil and bitumen from deep oil sand deposits that cannot be mined at the surface. The process uses two horizontal wells drilled parallel to each other, one above the other. Steam injected through the upper well heats the surrounding bitumen, reducing its viscosity enough that it flows by gravity down into the lower production well, where it is pumped to the surface.
Think of SAGD like using a heating element to melt frozen honey in a jar: the heat makes the thick substance fluid enough to pour through the drain at the bottom.
The two horizontal wells in a SAGD installation are drilled to depths typically ranging from 100 to 600 meters and run parallel for 500 to 1,000 meters or more through the oil-bearing formation. The steam injection well sits approximately five meters above the production well. Steam is continuously injected at high pressure into the upper well. A steam chamber forms around the injection well and expands outward and downward through the reservoir. Heat melts the surrounding bitumen, and a mixture of oil and condensed water drains by gravity into the lower production well, where pumps bring it to the surface.
SAGD was developed in Canada by Dr. Roger Butler of Imperial Oil in collaboration with the Alberta Oil Sands Technology and Research Authority during the 1970s and 1980s. The technology made economically viable the development of deep oil sands reserves that surface mining operations could not reach.
The Athabasca oil sands region of Alberta, Canada, contains approximately 168 billion barrels of economically recoverable bitumen. Roughly 80% of that resource, representing approximately 135 billion barrels, lies too deep for surface mining. SAGD is the primary in situ recovery method capable of accessing these deep deposits.
The National Energy Board of Canada estimated SAGD becomes economically viable at oil prices of roughly $30 to $35 per barrel. Most SAGD operations require water treatment and steam generation infrastructure, and the energy intensity of producing steam from natural gas is a significant operating cost and environmental consideration.
SAGD has a substantially smaller surface footprint than open-pit oil sands mining because it does not require excavation of the overlying terrain. However, it is energy intensive. Generating the steam requires burning natural gas, which produces greenhouse gas emissions. Steam-to-oil ratios, which measure how many barrels of water-equivalent steam are needed to produce one barrel of oil, are a key efficiency metric. Lower steam-to-oil ratios indicate more efficient operations and lower emissions per barrel.
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