An oil company located a area of oil sands and began an analysis of two possible extraction methods. The oil is heavy oil, making pumping difficult. The first method of extraction analyzed was Cold Heavy Oil Production with Sand (CHOPS). The system is relatively chepas but extracts only about 10% of the available oil. It also produces a lot of contaminated sand that must be disposed of. The second method is Steam Assisted Gravity Drainage (SAGD). SAGD requires two parallel wells, one above the other. Steam is pumped into the upper well. The steam heats the heavy oil, which drains into the lower well and is pumped out. This method extracts up to 80% of the oil but is very costly as it requires heating water to steam. No contaminated sand is produced, but oil-contaminated water is.
Evaluate the costs and benefits of each of these extraction methods and identify any other factors that could affect the decision of which method to use:
