The Awl Bidness Larry W Lake Petroleum and

The Awl Bidness Larry W. Lake Petroleum and Geosystems Engineering The University of Texas

The Oil Business Larry W. Lake Petroleum and Geosystems Engineering The University of Texas Upstream Downstream • • • Exploration Production Refining Transportation Marketing

A Brief Quiz… 1. What is the usual unit for a quantity of crude oil? 2. What is the usual unit for a quantity of natural gas? 3. How much crude oil goes into making gasoline? 4. How much of your gasoline bill pays for the crude oil?

A Brief Quiz (cont. )… 5. When was oil first discovered in commercial quantities? 6. Name a transportation fuel that is not hydrocarbon based. 7. What is the largest reservoir in the U. S. ? In the world? 8. When will we run out of oil?

Exploration… Gas cap Seal or trap Oil column Water column or aquifer Source rock

Seismic

Onshore Seismic…

Offshore Seismic…

Offshore Receiver Spreads…

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] Productivity Index, PI (P – Pwf) Driving Force

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] (P – Pwf) Oil Rate - make as large as possible Goal of everything we do

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] (P – Pwf) Constants - Live with them

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] (P – Pwf) Natural logarithm - makes a large number small For example, ln(1000) = 6. 9

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] (P – Pwf) Permeability - basic property of rocks • Make large • God provides or doesn't • Fracturing

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] (P – Pwf) Well pressure • Make small • Lift with gas • Pump (reduce fluid level)

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] Average reservoir pressure • Make large • Reinject produced gas • Inject water (waterflood) (P – Pwf)

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] (P – Pwf) Penetrated thickness • Make large • God provides, etc. • Reperforating • Horizontal wells

Horizontal Wells….

Aggie Drilling Engineer From A. D. Hill

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] (P – Pwf) Oil relative permeability • Make large • Large oil content • Inject chemicals, CO 2

Schematic of solvent flood Fig. 7 -1 Drawing by Joe Lindley, U. S. Department of Energy, Bartlesville, OK

Typical Micellar-Polymer Flood. . . Gradual change to water Fig. 9 -1 Polymer Surfactant Low salinity Additives Co-surfactant Low calcium Usually 0. 5 PV Co-solvent Polymer Oil (sometimes) Usually 0. 1 PV

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] (P – Pwf) Oil viscosity • Make small • Inject heat (steam) • Burn a little oil

Process variations… Steam soak Steam Cold Oil Steam Shut in Cold Oil Inject (2 -30 days) Steam Cold oil Hot Water Oil + Water Cold Oil Cold oil Soak (5 -30 days) Driving the Oil. . . Steam Drive Water Hot Water Cold Oil Produce (1 -6 months) Oil + Water Cold Oil

More variations. . . Using horizontal wells (SAGD) Burning the Oil

In-Situ Conversion Process (ICP) What is it? • Enhancement of natural maturation of kerogen by slow heating • Results in: • thermal cracking • in-situ hydrogenation • high sweep vapor phase production • high API oil • N, S, O content vary with resource • Average temperature limited to boiling point of diesel, i. e. essentially no bottoms How is it done? • Electric resistance or, potentially, gas heaters • Underground conductive heat transport Current target resources: • Oil Shale • Heavy Oil / Tar Sands • Coal High Value Products Light Processing Producer Heater Overburden High Temperature Causes Long, Horizontal Fractures ¢ Per sp ve ecti w Vie • Naphtha • Jet • Diesel • Nat. Gas • Hydrogen • Chem. Feed • Heat

Next Research Phase 2 Step Process (at least) to Commercial Freezewall Test • Football field sized test on 10 acres • • • near existing research Test robustness of freezewall barrier Active construction/production from late ’ 05 – early ’ 07 Reclamation 2010

Ice Wall on Surface

Production… qo = mo 4 pkhkro 4 A ln g. CArw 2 [ ( )+ 2 s ] Well damage (skin factor) • Make small • Fracture well • Inject acid (P – Pwf)

Results of Quiz… 1. What is the usual unit for a quantity of crude oil? • • • 1 barrel = 1 bbl = 42 U. S. gallons 1+6 zeros = 1 MMbbl 1+9 zeros = 1 Bbbl 1 metric ton = 7. 5 barrels Giant field: 100 MMbbl = 0. 1 Bbbl

Results of Quiz… 2. What is the usual unit for a quantity of natural gas? • • 1000 standard cubic feet = 1 MCF+6 zeros = 1 BCF 1 MCF+9 zeros = 1 TCF Roughly: 6 MCF gas = 1 Bbl crude

Cost of gas= 0. 405 $/Ccf

Results of Quiz… 3. How much crude oil goes into making gasoline? Work Achieved 39 % Transportation Petroleum Waste = 83 % Non-Fuel Industrial 23 % 15 % Waste = 20 % Natural Gas Residential/ Commercial Coal Nuclear Hydro Other Work Achieved Waste = 25 % Work Achieved Electricity Generation & Transmission Waste = 68 % • Crude oil = transportation Source: LLNL/DOE

Results of the Quiz… 4. How much of your gasoline bill pays for the crude oil? (American Petroleum Institute, Sept. 2008)

Results of Quiz… 5. When was oil first discovered in commercial quantities? Texas • • • Drake’s Folly … 1859 Corsicana … 1894 Spindletop … 1901 Big Lake (Permian) … 1923 East Texas … 1928

Results of Quiz… 6. Name a transportation fuel that is not hydrocarbon based. • Wind • Solar • Hydrogen (fuel cells) • Coal • Muscles

Results of Quiz… 7. What is the largest reservoir in the U. S. ? Prudhoe Bay, Alaska – 20+ Bbbls in place In the world? Ghawar, Saudi Arabia – 300+ Bbbls

Results of Quiz… 8. When will we run out of oil? 2005 70 2037 2047 USGS Est. of Ultimate Rec Billion Barrels per Year 60 50 Probability UR B-Bbls Low (95%) 2, 248 Mean (Expected Value) 3, 003 High (5%) 3, 896 2% Growth 2037 2026 Decline R/P = 10 40 30 20 History Mean Low (95%) High (5%) 10 0 1900 1925 1950 2005 EIA- DOE Estimates, 1900 --2125 Campbell-Laherrere World Oil Production Estimates, 1930 -2050 1975 2000 2025 2050 2075 2100 2125

When will we run out of oil? U. S. Production, Hubbert vs. Actual Undulating Plateau vs. Peak Oil From Jackson (JPT, 2007)

Major Points… • Hydrocarbons found in porous rocks • Crude oil = transportation • Crude oil is about 70% of gasoline price • Hydrocarbons essential to current way of life • World has a 30+ year supply; delivery rate a question

Hydrocarbons and Prosperity…

For More Information… • U. S. Energy Information Administration • American Petroleum Institute • International Energy Agency • California Division of Oil and Gas • Early Texas Oil (Rundell) • www. factsonfuel. org/gasoline • Larry_Lake@mail. utexas. edu

Chemical EOR Processes. . . Process Typical Recovery (%) Typical Agent Utilization Polymer 5 1/3 -1/2 lb polymer/ bbl oil produced Micellar/ polymer 15 15 -25 lb surfactant bbl oil produced Alkaline/ polymer 5 35 -45 lb chemical bbl oil produced

US CO 2 Emissions by Sector and Fuels 2000 Millions of metric tons per year carbon equivalent 700 600 500 Natural Gas Petroleum Coal 400 300 200 100 0 Residential Commercial Industrial Transportation Electric Generation Source: U. S. EPA Inventory of Greenhouse Gas Emissions, April 2002

Solvent EOR Processes. . . Process Ult. Recovery % OOIP Utilization Miscible 10 -15 10 MCF/bbl Immiscible 5 -10 10 MCF/bbl

Results of Quiz… 4. How much of your Expense gasoline bill pays Production for the crude oil? Producer profit 1$ change in crude price causes 2. 5¢ change in gasoline price Refining Marketing Transportation Retailer Refining etc. profit US taxes Ave. state taxes www. factsonfuel. org/gasoline Total ¢ per gallon 15 -60 53 -58 13 5 15 6 10 19 23 159

Thermal Recovery Processes. . . Process Ult. Recovery % OOIP Utilization Steam (drive and soak) 50 -65 0. 5 bbl /bbl equivalent Combustion 10 -15 10 MCF air/bbl SAGD Various EM ? ? Like steam

Undulating Plateau vs. Peak Oil From Jackson (JPT, 2007)