SPE Distinguished Lecturer Program The SPE Distinguished Lecturer

SPE Distinguished Lecturer Program The SPE Distinguished Lecturer Program is funded principally through a grant from the SPE Foundation. The society gratefully acknowledges the companies that support this program by allowing their professionals to participate as lecturers. Special thanks to the American Institute of Mining, Metallurgical, and Petroleum Engineers (AIME) for its contribution to the program. Society of Petroleum Engineers Distinguished Lecturer Program www. spe. org/dl 1

Unlocking Ten Trillion Barrels of Global Oil Shale Resources - The State of the Industry Khosrow Biglarbigi INTEK, Incorporated Society of Petroleum Engineers Distinguished Lecturer Program www. spe. org/dl 2

Global Petroleum Liquid Demand Million Barrels Per Day 120 100 80 e s a e r c e s IIn a e % r 4 c 2 25% n 60 40 20 2008 2011 2016 2021 2026 2030 Year 3 Source: EIA, 2009

Global Petroleum Liquid Supply Million Barrels per Day 120 100 NGL 80 CTL Future Discoveries Oil Sands ? 60 Heavy Oil 40 GTL Shale EOR Bio Fuels Oil – Existing Fields 20 0 1990 2000 2010 Year Source: IEA, 2008 2020 2030 4

What is Oil Shale? Syn- Crude Naphtha Rock Kerogen Jet Fuel 700 - 800 °F Pyrolysis Diesel Nat. Gas Hydrogen Upgrade 5

10 Trillion Barrels of Shale Oil Worldwide Estonia Canada France Italy United States Morocco Russia Egypt Israel Jordan China Zaire Brazil Australia Countries With Oil Shale Deposits 6

Top Ten Countries (Barrels) China Estonia Australia Morocco Italy Brazil Jordan* Zaire Russia United States Source: USGS, 2005 * Jordan NRA, 2009 16 Billion 32 Billion 53 Billion 73 Billion 82 Billion 90 Billion 100 Billion 248 Billion 6, 000 Billion 7

America’s Oil Shale Most Concentrated Hydrocarbon Deposit 2 Trillion Barrels 6 Trillion Barrels 8 Source: US DOE, 2004

Substantial Areal Density 1000 Barrels Per Acre 1, 500 1, 250 Oil Shale 1, 300 1, 000 800 750 500 250 70 100 0 Wyoming USA Utah USA Colorado USA Alaska N. Slope Oil Canada Oil Sands 9 Source: Oil and Gas Journal, August 2004

The Mahogany Zone • The Most Prolific • Up to 1000 Ft Thick • Up to 75 Gal/Ton 10 Source: Redleaf Resources, 2008

Oil Shale Production Processes Surface Process Resource Mining Retort Upgrading Refinery Choke Point In-Situ Process Resource Drilling Heating Upgrading Refinery 11 Source: US DOE, 2004

Shell In-Situ Conversion Process Pilot Test (Colorado, USA) High Value Products Light Surface Processing PRODUCER HEATER OVERBURDEN 12 Source: US DOE, 2008

Other Examples of In-Situ Technology Pilot Tests (Colorado, USA) Chevron Process AMSO Process Producer Injector Fractures 13 Source: US DOE, 2008

Ecoshale In-Capsule Technology Pilot Test (Utah, USA) COOL GAS S HOT GA 14 Source: Redleaf Resources, 2008

Alberta Taciuk Processor (ATP) Pilot Test (Utah, USA) Combustion zone Retort Vapour tube 500°C Preheat tubes Cooling zone Oil shale feed 250°C 750°C 15 Source: US DOE, 2006

Gas Combustion Retort (GCR) • Brazil (4, 000 Bbl/d) • China (4, 000 Bbl/d) • Estonia (6, 000 Bbl/d) • Australia (Project Scale Up) 16 Source: US DOE, 2007

Energy Return on Investment (EROI) 12 10 EROI 8 EROI = Energyout - Energyin Oil Shale Energyin 10 7 7 6 4 Oil Sands 5 3 2 0 Oil Shale (In-Situ) Source: US DOE, 2007 Oil Shale (In-Situ, Non. Elec. ) Oil Shale (Surface) Oil Sands (In-Situ) 17

“Oil shale is a local asset under global constraints. ” Klaus Brendow, Senior Advisor World Energy Council June 9, 2009 18

Oil Shale Project Costs Item Unit Capital Cost $/BPD O&M Cost $/Bbl Range * 45 K-65 K 15 -25 * Barrel of Daily Capacity 19 Source: INTEK, Inc. , 2009

Canadian Oil Sands Operating Costs $40 $35 Dollar/ Barrel $35 $30 $25 $23 $20 $15 $10 $5 $0 2006 Source: Suncor, 2008 2007 Year 2008 20

$1, 000 per Bbl of Daily Capacity 140000 120 100 Canadian Oil Sands Capital Costs $3 Billion $11 Billion 100, 000 Bbl/D Project 80 60 40 20 0 Suncor Millennium 2001 Albian 2003 Syncrude Aurora 2 & UE 1 2006 Nexen – OPTI CNRL Horizon 2007 2008 Source: Canadian Association of Petroleum Producers, April 2008 Shell Muskeg & Scotford PCA/UTS Fort Hills 2010 2011 21

Causing Project Delays Shell CEO Says Higher Costs Limit Canadian Oil Sands Projects Oct 8, 2009 22

Needing Higher Prices Total Canada Chief Says Oilsands Need Pricier Oil Oct 4, 2009 23

Economic Price for Oil Shale Technology $80 2007 Dollars Per Bbl $70 $75 Rate of Return – 15% $60 $50 $40 $35 $30 $20 $10 $0 In-Capsule Source: INTEK, Inc. , 2008 True In-Situ Surface Mining Underground Mining 24

Oil Shale Environmental Impacts Air Quality Process Plant Use • CO 2 Enhanced Oil Recovery • Sequestration • Other Industrial Uses Capture and Clean Existing Technology HC Gas CO 2 SOx NOx Oil Shale Processing 25 Source: SPE #110590, 2007

Land Use Depends On The Process • 1 MMBbl/D Production for 40 Years – Surface: 30 Square Miles – In-Situ: 15 Square Miles • Example for 2. 5 MMBbl/D Industry: – 52 Square Miles Green River (USA) 2. 5 MMBbl/d 17, 000 Square Miles 52 Square Miles 26 Source: SPE #110590, 2007

Water Requirements • 1 -3 Barrels of Water per Barrel of Shale Oil • Challenges: – Water rights – Water availability – Water runoff – Ground water protection 27 Source: US DOE, 2007

Development Hurdles • Access to Land – 70% on Federal Land – No Commercial Leasing Program • RD & D • Environmental Permitting • Fiscal Regime 28

The Prize (USA Example) Total Resource 6 Trillion Barrels High Quality Resource 2 Trillion Barrels Technical Recovery 1 Trillion Barrels Reserves 600 – 750 Billion Bbls @ $50 - $65 / Bbl 29 Source: INTEK, Inc. , 2008

Projected Production Potential (Shale Oil in the U. S. ) Thousand Bbl/D 2, 500 Accelerated Scenario 2, 000 1, 500 1, 000 RD&D Measured Scenario Business as Usual Tax Incentives 500 Base 0 2005 2010 2015 2020 Year Source: US DOE, 2007 2025 2030 2035 30

Summary • Over 10 trillion barrels of in place resource • Conversion technologies are advancing rapidly • Estimated reserves of up to one trillion barrels worldwide • Oil Price is a key driver for its development • Requires concerted effort by the private sector, governments, and local communities 31

Appendix 32

Worldwide Oil Shale Activities Production 6, 000 Bbl/D 430 Mw Exploration 12 Companies USA Morocco RD&D 8 Pilot Tests 29 Companies Production 4, 000 Bbl/D Estonia Jordan China Commercial Scale-Up Brazil Production 4, 000 Bbl/D Australia 33 Source: INTEK, Inc. , 2008

Breakdown of Economic Price for Generic Surface Project Taxes 19% $60/Bbl Transfer Payments 14% Risk Premium 9% Operating Costs 38% Cost of Capital 19% Source: INTEK, Inc. , 2008 34

Cashflow of a Generic Oil Shale Project 1200 Cum. Discounted Cashflow (MM$) 1000 800 600 Before Tax Room for Government Action 400 200 0 -200 After Tax -400 -600 -800 -1000 5 Source: INTEK, Inc. , 2008 10 15 20 Year 25 30 35 40 35