SPE DISTINGUISHED LECTURER SERIESis funded principally

through a grant of the

SPE FOUNDATIONThe Society gratefully acknowledges

those companies that support the programby allowing their professionals

to participate as Lecturers.

And special thanks to The American Institute of Mining, Metallurgical,and Petroleum Engineers (AIME) for their contribution to the program.

Unlocking the planet’s heavy oil and bitumen resources – A look at SAGDUnlocking the planet’s heavy oil and bitumen resources – A look at SAGD

Subodh Gupta

EnCana CorporationMarch, 2005

Subodh Gupta

EnCana CorporationMarch, 2005

Author wishes to express thanks for Encana’ssupport and encouragement in allowing to participate in the Distinguished Lecturer Program and in putting this presentation together

A Power Hungry World!A Power Hungry World!

0

1

2

3

4

5

6

7

8

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 20200

5

10

15

20

25

30

35

40

Population Energy Demand

History Projection

World PopulationWorld PopulationBillionsBillions

Energy DemandEnergy DemandTerraWattsTerraWatts

Source: UN Population Division, Energy Information Administration

Conventional Oil SupplyConventional Oil Supply

Predictions based on Hubbert’s theory suggest declining conventional oil supply

Much debate about exact time of the peak

Source: Duncan and Youngqist, Campbell and Laherrerre

2007

2015

Plenty of Fossil Fuel!Plenty of Fossil Fuel!

Source: H. H. Rogner, “An Assessment of World Hydrocarbon Resources,” Annual Review of Energy and Environment, 1997.

Total fossil fuel over 100 times the conventional oil

More unconventional oil than conventional

0

10

20

30

40

50

60

Oil

Use

d

Con

vent

iona

l Oil

Unc

onve

ntio

nal O

il

Con

vent

iona

l NG

Unc

onve

ntio

nal N

G

Coa

l

Met

hane

Hyd

rate

s

Trill

ion

Bar

rels

of O

il Eq

uiva

lent

Additional OccurrencesResourcesReservesUsed

0.812.163

17.17

3.086.14

45.78

137.5

Heavy oil / bitumen in place

trillion bbls

CanadaCanada 1.61.6Venezuela 1.2

FSU 0.2 - 2.5

Enormous PotentialEnormous Potential

Source: AEUB, CAPP, EIA, AOSTRA, UNITAR

Consequence of being unconventionalLight vs. Heavy

Consequence of being unconventionalLight vs. Heavy

More difficult to More difficult to recoverrecover

Requires more Requires more downstream downstream processingprocessing

The Downstream ChallengeThe Downstream Challenge

Upgrading process

Differential 5 – 10 $US/bbl

Gasoline

Distillates/Diesel

Resid

How to produce this stuffThe Upstream Challenge

How to produce this stuffThe Upstream Challenge

Source: based on DOE report 2050(draft)

Not easy to recoverIn situ viscosity– Canadian Oilsands: > 1e6 cP– Venezuelan Heavy oil: ~3-10e3 cP

Technology and economics constantly improving– Oilsands context

US

$/bb

l

Can

adia

n O

ilsan

dsV

enez

uela

n H

eavy

-oil

Mid

dle

Eas

tC

onve

ntio

nal

2468

1012

Cost of Production

Canadian Oil Sands: Recovery Technologies

Surface Mining

In Situ– CSS– SAGD

Calgary

Edmonton

FortMc Murray

Cold Lakedeposit32 billion m3

Athabascadeposit 213 billion m3

Alberta

Peace River deposit25 billion m3

Surface Mining

Calgary

Edmonton

FortMc Murray

Cold Lake

Athabasca

Alberta Three-Step Process– Mine Oilsands– Separate Oil from Sand

Washing with Hot Water

– Upgrade the Extracted Oil to Synthetic Crude

Surface Mining

Major projects– Current

Suncor’s mining operationsSyncrude’s mining operationsAthabasca Oil Sands Project

– UpcomingKearl Mine, Horizon, Northern Lights and Fort Hills

– Current Production Capacity ~650kbd – Announced projects to increase to >1million b/d in 10 years

Issues to consider– Economics is location (depth < 75m) dependent

Only 5 to 10% reserves suitable

– Scale of economy requires huge capital

Calgary

Edmonton

FortMc Murray

Cold Lake

Athabasca

Alberta

In Situ Processes

Cyclic Steam Stimulation

combustion

zone

steam

combustion

zone

combustion

zoneMajor projects/operators– Cold Lake - Imperial– Primrose – CNRL

Advantage– Lower surface disturbance– Less sensitive to shale barriers

Issues to consider– Recovery ~25-30%

oil + water

In Situ Processes

Steam Assisted Gravity Drainage (SAGD) In Situ Processes

Steam Assisted Gravity Drainage (SAGD)

Advantage– Lower surface disturbance– Lower SOR : 2.5 to 3.5– Economic recoveries ~ 65%– Modular capital requirements

SAGDCurrent and upcoming projects tell the storySAGDCurrent and upcoming projects tell the story

Current Major Projects– Foster Creek (Encana)– Christina Lake (Encana)– Mackay River (PetroCanada)– Firebag (Suncor)– Primrose/Wolflake (CNRL)– Hangingstone (JACOS)

Upcoming Projects– Joslyn Creek (Deer Creek)– Surmont (ConocoPhillips/TFE)– Long Lake (Nexen/OPTI)– Tucker Lake (Husky)– Sunrise (Husky)– Jackfish (Devon Energy)– Orion (BlackRock)

2004

100200300400500600

SAGD Production x1000 b/d

2007/2008

Source: based on DOB, Jan. 2005, ADOE

SAGDCurrent Issues?SAGDCurrent Issues?

Energy efficiency (GJ/bbl)– Heat is an expensive input

Water usage– Water recycle adds to the cost

Emissions

SAGD requires steam

steam = fuel and water

SAGD

It costs to heatSAGD

It costs to heat

Reduction in

Cost of Heat

Use cheaper fuelBitumen/Residue to substitute Gas

– Nexen/OPTI

Other talked-about alternatives– Heavyoil/Coke/Coal/Nuclear

Reduce heat requirementProcess Improvement

(Also reduces water requirement)– Low Pressure Operation– Use of Solvents

SAP ( SAGD + solvent ) Sub

-sur

face

Sur

face

Low Pressure SAGD Operation

Issues– artificial lift– role of solution gas

Effect of Pressure on SOR and Rate25m x 7D reservoir

0

1

2

3

100 1000 10000

pressure kPa abs.

CSO

R

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

rate

m3/

d/m

CSORrate m3/d/m

Source: Edmunds and Chhina, JCPT, Dec. 2001

Effect of Pressure on SOR and Rate25mx7D reservoir

Solvent Aided Process

WellInjectionSteam +Solvent

What role can solvents play? ..SAP

steam + solvent

condensed solvent + oil

+ water

S

o

mhgKSQ

ναφ

.......2 ∆

=

µα 1Q

Enhanced Gravity Drainage in SAP

Expected Production with Combining Solvent with SAGD

0

100

200

300

400

500

600

700

0 200 400 600 800 1000 1200 1400

time

oil r

ates

sagd oil ratesap oil rate

Expected SAP Benefits (example)SAGD SAP

SOR 2 1.4

Recovery 65% (as high as) 90%

Lower Capital Intensity

Lower Emissions

Less Water Usage

Possible In Situ Upgrading

Encana’s Senlac SAP Pilot 2001-2002

Senlac Thermal Facility – Phase C

To assess – Rate enhancement– Solvent retention– In situ upgrading

Alberta Saskatchewan

Calgary

EdmontonLloydminster

Senlac

Senlac SAP TestSenlac SAP Test

Senlac Pilot, 2001-2002Butane used as solventOil rate increase of over 50%Test cut short due to reservoir containment issue

SAP Pilot at Senlac - C1P Performance

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100

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300

400

500

600

Jun-

01

Jul-0

1

Aug

-01

Sep

-01

Oct

-01

Nov

-01

Dec

-01

Jan-

02

Feb-

02

Mar

-02

Apr

-02

May

-02

Jun-

02

date

oil r

ates

m3/

d

SAGD SAP

expected production with SAGD

daily average production

daily production

Senlac SAP TestSenlac SAP Test

Senlac Pilot, 2001-2002Butane used as solventOil rate increase of over 50%Test cut short due to reservoir containment issueapprox. upgrading: 10 API

– (over base level 12.70 API)

In Situ Deasphalting

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13

14

15

01-F

eb-0

2

23-M

ar-0

2

12-M

ay-0

2

01-J

ul-0

2

20-A

ug-0

2

date

C5-

inso

lubl

e as

phal

tene

s (w

/w%

), A

PI g

ravi

ty

C1 APIC1 asphaltenes

Senlac SAP TestSenlac SAP Test

Senlac Pilot, 2001-2002Butane used as solventOil rate increase of over 50%Test cut short due to reservoir containment issueapprox. upgrading: 10 API

– (over base level 12.70 API)Over 70% solvent recovery

Solvent Injection and Recovery

0

5000

10000

15000

20000

25000

15-N

ov-0

1

04-J

an-0

2

23-F

eb-0

2

14-A

pr-0

2

03-J

un-0

2

23-J

ul-0

2

11-S

ep-0

2

31-O

ct-0

2

20-D

ec-0

2

08-F

eb-0

3

30-M

ar-0

3

date

cum

ulat

ive

inje

cted

sol

vent

, m3

0

10

20

30

40

50

60

70

80

solv

ent r

ecov

ery

%

cum c4 inj m3

cumulative C4 % recovery

Encana’s Christina Lake SAP TestEncana’s Christina Lake SAP Test

Christina Lake SAP Pilot, 2004-2007Prove (Athabasca context)

– rate acceleration – solvent retention– In situ upgrading

Pilot started July 2004

Calgary

Edmonton

Christina Lake

Fort McMurray

Commercial Under development

SAGD and beyondSAGD and beyond

In situ Processes and Energy Efficiency

SAGD VAPEX,

Ene

rgy/

bbl

SAPIC

Solvent without steam - VAPEX

solvent vapor

condensed solvent + oil

Prospects– Minimal energy

requirement– No water recycle issue– Some downhole upgrading

Awaiting field scale demo

Several efforts to field test in oilsands:– Encana’s Foster Creek VAPEX Pilot– Consortium DOVAP– SunCor’s ETS

Commercial Under development

SAGD and beyondSAGD and beyond

In situ Processes and Energy Efficiency

SAGD VAPEX,

Ene

rgy/

bbl

SAPIC

SAGD

It costs to heatSAGD

It costs to heat

Reduction in

Cost of Heat

Use cheaper fuelBitumen/Residue to substitute Gas

– Nexen/OPTI

Other talked-about alternatives– Coke/Coal/Nuclear

Reduce heat requirementProcess Improvement

(Also reduces water requirement)– Low Pressure Operation– Use of Solvents

SAP ( SAGD + solvent ) Sub

-sur

face

Sur

face

Cheaper FuelS

ub-surfaceS

urface

Air SecondaryUpgrading

Fuel + H2

H2

Fuel

Product oil Primary Upgrading

ResidueGasification

SteamGeneration

Thermal Recovery

Cheaper FuelS

ub-surfaceS

urface

Air

Heat

Product oil Primary Upgrading

ResidueCombustion

SteamGeneration

Thermal Recovery

Sub-surface

Surface

Air

Heat

Product oil

Primary Upgrading

ResidueCombustion

SteamGeneration

Thermal Recovery

Everything in the Reservoir ?Imagine that!Everything in the Reservoir ?Imagine that!

The prized pursuit ..In Situ Combustion

Air/Oxygen/Water Oil/Gases

air/water zonecombustion zone

coke zonecondensation zone

mobile oil bank

In theory this is great!– minimal fuel requirement– high recoveries– no reservoir loss of pricier

substance

toe heel

The prized pursuit ..In Situ Combustion

Air/Oxygen/Water Oil/Gases

air/water zonecombustion zone

coke zonecondensation zone

mobile oil bank

In theory this is great!– minimal fuel requirement– high recoveries– no reservoir loss of pricier

substance

Petrobank’s Whitesands 3-wells Pilot

Location: South of Ft. McMurray

Time-frame: 2005-2008

Proponents expect a $6/bbl cost reduction

Source: based on Petrobank website information, Fort McMurray Today

Air/Oxygen/Water Oil/Gases

toe heel

To recap ..

World demand for energy in the near future will grow

Although the conventional oil supply is predicted to decrease, non-conventional economic oil sources are ready to step up and fill the gap

SAGD is emerging to be the technology of choice for the expanding exploitation of Oilsands of Alberta

Energy efficiency and economics of SAGD will significantly improve through steps such as SAP.

Dramatic improvement in recovery process are expected if VAPEX or In Situ Combustion prove successful

We live in exciting times to witness and be a part of a revolution in the Energy Technology!