STEAMFLOODING THE FUTURE November 2010 STEAMFLOODING THE FUTURE

STEAMFLOODING THE FUTURE November 2010

STEAMFLOODING THE FUTURE by Randall J. Davis

STEAMFLOODING THE FUTURE GLOBAL OIL DEMAND • Oil and gas market ripe for breakthrough enhanced oil recovery solution: – World oil consumption rate at 85 million barrels per day – 1/3 production increase over next 15 years to meet projected demands – Market stability requires $85 B annual investment to 2025 – Oil produced faster, less expensive and with less disturbance to environment from existing wells – EOR can prolong life of oil fields up to 30 years when employed on “proven” reserves Fig. 1. Global oil demand has grown from 70 million bpd to over 82 million bpd in the last ten years.

STEAMFLOODING THE FUTURE ACTUAL FACTS • Nearly two-thirds of the world’s energy comes from oil and natural gas. • Oil and natural gas account for “virtually all transportation fuel in the United States”, and civilized world. • The world has taken the availability of oil and natural gas for granted, and expects them to be affordable.

STEAMFLOODING THE FUTURE EXPLORATION & PRODUCTION • Despite the enormous profits being realized by the “major oil companies”, and an estimated $150 billion spent on oil exploration and development in 2009, most of the money went to: Production from known reserves rather that seeking new ones!

STEAMFLOODING THE FUTURE DEMANDS The dilemma: How to produce enough oil to meet growing demands?

STEAMFLOODING THE FUTURE FACTS • Oil can be produced faster, less expensive, with less disturbance to the environment from existing wells. • The aging fields and prospects for new sources of reserves, provides an opportunity for oil recovery through a method know as “Enhanced Oil Recovery”.

STEAMFLOODING THE FUTURE FACTS When we take in consideration: - Cost of implementation - Speed to recover oil from the ground - Permitting issues - Environmental risks - Exploration risks

STEAMFLOODING THE FUTURE The solution: Enhanced Oil Recovery is the means to meet demand!

STEAMFLOODING THE FUTURE ENHANCED OIL RECOVERY (EOR) • By definition, enhanced oil recovery is “The third stage of hydrocarbon production during which techniques that alter the original properties of the oil are used”. • In the case of Steam Flood, its purpose is to restore formation pressure and to improve oil displacement or fluid flow in the reservoir.

STEAMFLOODING THE FUTURE EOR TECHNIQUES • Primary recovery produces oil and gas using the natural pressure of the reservoir

STEAMFLOODING THE FUTURE EOR TECHNIQUES • Secondary recovery uses water flooding and gas re-injection

STEAMFLOODING THE FUTURE EOR TECHNIQUES • Tertiary recovery injects steam or other gases and liquids to stimulate oil flow

STEAMFLOODING THE FUTURE UNDERSTANDING EOR 20 -25% PRODUCTION RATES 15 -20% PRODUCTION RATES

STEAMFLOODING THE FUTURE UNDERSTANDING EOR • The thermal processes (steam injection) have the greatest certainty of success and potential applications in about 70% of enhanced oil recovery worldwide. • Thermal methods also provide the highest recoveries at the lowest costs

STEAMFLOODING THE FUTURE UNDERSTANDING EOR • The best application for Steamflooding is: – a well that is less than 5, 000 ft deep, – heavy oil with a viscosity less than 10, 000 centipoises, – and a soil permeability greater than 200 md.

STEAMFLOODING THE FUTURE UNDERSTANDING EOR • Enhanced Oil recovery techniques can prolong the life of an oil field by as much as 25 to 30 years.

STEAMFLOODING THE FUTURE EOR PROGRAMS A BOOM OF ENHANCED OIL RECOVERY PROGRAMS – Proven reserves – Hard to get oil – High demand – Tight supplies – Cost of finding new oil – Political problems – Environmental concerns

STEAMFLOODING THE FUTURE EOR PROGRAMS • Steamflooding is a proven enhanced oil recovery method, used by many of the major oil companies. • For example, Occidental Chemical Company maintains a very successful EOR program, producing approximately 350, 000 barrels of oil equivalent (BOE) per day from EOR operations.

STEAMFLOODING THE FUTURE GREATEST STEAMFLOOD OPERATIONS • Canada’s Tar Sands project in Alberta uses Steamflood systems for heavy oil production. • Oman is expanding its massive Steamflood operation. • Russia’s reserves in Siberia require Steamflood systems for increased production.

STEAMFLOODING THE FUTURE GREATEST STEAMFLOOD OPERATIONS • California represents the greatest operations with almost 20, 000 wells producing heavy oils. • Venezuela’s Lake Maracaibo employs Steamflood systems on all of their wells. • Indonesia’s Duri field has a large Steamflood operation.

STEAMFLOODING THE FUTURE PDVSA STEAM BARGE GENERATOR

STEAMFLOODING THE FUTURE CURRENT PRODUCTION COST STEAMFLOODING The Cost Effective Solution!

COST OF OIL PRODUCTION WITH STEAMFLOODING TECHNOLOGY Per Day Summary Table Conditions Revenue 300 wells@150 bpd @$75 per barrel of oil. Fuel generators 20@50 mmbtu/hr Expenses $3, 375, 000 (24 hrs/d@$6 -mmbtu) $144, 000 Water 20 units@4750 gph@$. 12 p/gallon treatment $273, 600 Electricity 20 units@180 kw@$0. 075 per kilowatt $6, 480 Operations – Maintenance - Insurance $6, 900 Total Expenses Net Revenue per day Assumptions • Recovery Rate: Increase of 50% • Steam to Oil Ratio: 1. 55 to 1 $430, 980 $2, 944, 020

STEAMFLOODING THE FUTURE CONCLUSION • With over 50% of oil still in place. • The proven track record of thermal enhanced oil to produce 15% to 20% of the original oil in place.

STEAMFLOODING THE FUTURE CONCLUSION • Enhanced Oil Recovery programs will help solve the complex energy problems of today. • Steam injection comprising approximately 70% of all tertiary recovery operations.

STEAMFLOODING THE FUTURE CONCLUSION • The applications for this method will flourish.

STEAMFLOODING THE FUTURE

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