Heavy Oil Challenges & Opportunities North Slope Alaska Gordon Pospisil - BP Exploration (Alaska) Inc. January 6, 2011
Outline Heavy Oil - An Alaskan Sized Prize Where and What is Heavy Oil? Current Alaska Development Challenges Schrader Bluff / West Sak Formation Future Development Potential Schrader Bluff / West Sak Formation Ugnu Formation
Global Heavy Oil Alaska is on the Map but Alaska Historical Focus on Light Oil Arctic challenges High costs Alaska Canada Mexico USA Lower 48 Ecuador Colombia Peru Trinidad Venezuela Brazil Canada 40 years of heavy oil development Cradle of Heavy Oil Technologies Open Data Environment Netherlands Italy UK E. Europe Turkey Jordan Kuwait Egypt Egypt Nigeria Angola Saudi Arabia Russia Oman China India Indonesia Barrels OOIP ~1 billion ~10 billion ~100 billion >1 trillion Madagascar Australia Argentina Source: JPT, IEA,Schlumberger OFS Marketing HO Workshop, SEG 2006
What is Heavy Oil? Light End Molecules North Slope Heavy oil is a residual formed from light oil that has lost the small (light) molecules leaving the heavy ones. These form hydrocarbon compounds characterized by long, complex molecules. Most of the hydrogen is in the light ends so heavy oil is depleted in hydrogen. The long molecules of heavy oil impart high internal friction resulting in high viscosity. A heavy oil model in a Calgary museum
Viscosity resistance to flow Crude Oils Tar, Bitumen Extra Heavy Oil Viscosity (centipoise) 10 7 10 6 10 5 Familiar substances 10 8 Window putty Caulk Vegetable shortening Peanut butter Tomato ketchup Heavy Oil Viscous Oil 10 4 10 3 10 2 Molasses Honey Maple syrup Viscosity is the resistance a material has to change in form. internal friction. Viscosity reduction Heat Light Oil Solvent Dilution (Diluent) 10 1 Corn oil Water High Viscosity Low Temperature/Viscosity Relationship for several oil samples Low Temperature High
Heavy Oil Key Properties & Considerations High Viscosity (Physical Property) Flows very slowly: wells produce at lower rates than light oil wells Developments require lots of wells Waterflooding is less effective due to the viscosity contrast between heavy oil and water Often produced with lots of sand Thermal techniques (e.g. steam) may be required for recovery but energy balance and environmental foot print are factors Lower Hydrogen Content (Chemical Property) Heavy oil is depleted in hydrogen relative to light oil Fewer refined products are derived from heavy oil Heavy oil fetches a lower price on the market
Alaska Viscous & Heavy Oil Resource Heavy oil resource overlies existing fields Oil is present in multiple reservoir zones Total: 24 33 Bbbls Oil in Place Schrader Bluff / West Sak ~12 Bbbls (14-22 API) Ugnu 12-18 Bbbls (8-14 API) Milne Point Beaufort Sea 4 Kuparuk River Heavy Oil Prudhoe Bay 0 1 2 4 6 8 Miles
Alaska Fluid Viscosity Alaska fluids range over a continuum of viscosities North Slope Oil Fields Oil viscosity versus Depth 0 2,000 Mostly Developed Starting to Develop Potential Future development Depth (ft) 4,000 6,000 Kuparuk Development sequence West Sak / Orion Ugnu 8,000 Prudhoe 10,000 12,000 Light Oil (like water) Viscous Oil (like syrup) Heavy Oil (like honey) 0 1 10 100 1,000 10,000 100,000 1,000,000 Oil Viscosity (cp) Technical Challenge
Expect the piloting to take longer and be more complex (painful) than you expect 100000 100+ Million bbls cumulative production 80000 Challenges: Geologically complicated MPU S-Pad Rate (bopd) 60000 40000 Low productivity due to high viscosity Complex production and injection well designs Waterflood problems in soft rock formations Difficult separation of heavy oil & water Solids production and Handling Higher operating costs PBU Orion PBU KRU Polaris Tabasco MPU KRU Tract 14 West Sak 20000 0 1983 1984 KRU West Sak Pilots PILOT 1985 1986 vertical wells & water-flood 1987 1988 1989 1990 1991 1992 MPU Conoco Development MPU BP Pilots 1993 1994 1995 1996 PILOT DEVELOPMENT & PILOTS fractured vertical wells 1997 1998 1999 2000 2001 2002 2003 2004 2005 DEVELOPMENT DEVELOPMENT DEVELOPMENT horizontals multi-laterals 2006 2007 2008 KRU MPU PBU >$500M spent during pilot phase
Evolution of Heavy Oil Producer Well Design Original Design Conventional Current Design Multilateral TVDSS 600 frac Completion Length: ~90 of perforations, 600 frac Production Rates: Marginal Operability: Fair to Poor Cost: 2-4x conventional well 3000 to 7000 laterals Completion Length: Up to 25,000 ft of laterals Production Rates: Significantly improved Operability: Improved, but still solids, interventions and separation problems
Drilling from Manhattan to the Statue of Liberty World class drilling technology has been developed for viscous oil 1.5 mile laterals 300+ ft of section
Heavy Oil Leads to Challenging Well Designs TD - 12,054 MD Length - 6057 S-213AL1-01 OA OBa OBb OBc TD - 12,100 MD Length - 5980 TD - 12,043 MD Length - 4442 TD - 12,160 MD Length - 5751 S-213A OBd TD - 12,190 MD Length - 5310 OBe Total Footage Drilled: 31,564' MD Total High-Angle Footage: 27,540' MD Total Slotted Liner Run: ' MD Total Net Pay: 16,755' MD
Heavy Oil production requires facility upgrades Schrader/West Sak Production Heater Fill has consistency of Turnagain mud Tank Modifications Slug Catcher Inlet Solids Disposal Density Profilers Equipment installed to remove and dispose of solids Sand Jets
Heavy Oil Production Technology: A Circle of Learning for the Schrader Bluff / West Sak zones Technology & Learnings Heavy Oil development requires a collaborative circle of learning Milne Point Nort Facilities & Operations Drilling & Completion Kuparuk Prudhoe Bay PS Reservoir Development Strategy TVDSS Miscible gas
Ugnu Heavy Oil Challenges Geology is king and the reservoir dictates the recovery method. Understand the resource properties and distribution Understand the recovery methods and cutoffs Challenges: 100 times thicker than Schrader/West Sak oil Shallower, colder NO production to date New technologies needed: geoscience, wells, facilities, and transportation. Pilot testing needed to prove commerciality
Heavy Oil Recovery Spectrum Less than 10% Recovery Low teens Displacement Water Flood Polymer Flood Solvents 30 to 50% 99%
GR Tvdss Ft. Res. Ugnu M80 Cold Flow Composite Cold Flow Risk Map 3,500 3,600 Ugnu 43,800 3,700 Viscosity > 10,000 cp 0 0.40.8 1.6 2.4 3.2 Miles Risk is driven by oil quality in the west and oil presence in the east Low risk Moderate risk High risk Denotes pilot location
Analogs to Historical Recovery - Screening Viscosity vs. RF 1000000 SAGD 100000 Viscosity 10000 1000 100 10 CHOPS Primary CSS THERMAL Steamflood (Conv.) COLD Polymerflood Waterflood Ugnu Primary Waterflood Polymerflood Steamflood SAGD CSS chops Dusseault chops 1 0 10 20 30 40 50 60 70 RF (%) Sources: C&C Reservoirs, Dusseault et al., & Sproule Ugnu viscosities are well above the current waterflood viscosity threshold Viscosity is within the limits of primary, chops, polymer flood, and a number of steam recovery methods
Cold Flow Recovery Methods CHOPS (Cold Heavy Oil Production with Sand) Deliberate initiation of sand influx into perforated well Sustained sand production propagates further into the reservoir (representing a multi-fold increase in reservoir contact) Sand produced along with oil, gas, and water Horizontal Wells Increase reservoir contact through drilling Relies heavily on solution gas drive Slotted liner limits sand production into wellbore
There vs. Here Canadian Design Single well tank battery Oil, water and solids trucked separately Gas burned or vented Direct fired heater 20+ years experience Alaska Design Safety & environmental constraints No direct fired heaters in tanks No venting of gas No spills Operate safely period Unknown fluid properties and behavior First of its kind in Alaska
Milne Point S-Pad Heavy Oil Facility
Milne Point S-Pad Heavy Oil Pilot SURFACE KIT KEY QUESTIONS Are the CHOPS and Horizontal depletion mechanisms viable and reliable with Alaska reservoirs and fluids? What is the well design and lift system that allows for sustainable and operable movement of a sand/oil/water/gas slurry? What is the reliability and efficiency of high viscosity and high solids processing and transportation? SUBSURFACE VARIABLES Recovery Methods & Associated Well Types Structural Compartments & Associated Fluid Properties Reservoirs & Associated Fluid Properties GR MPS-37 Res & So CHOPS Horizontals Primary Targets * * * * M70 M80L M80U TUZC
Heavy Oil Potential Big Dreams S-Pad Pilot Southern Option Present High Plan Options Time Frame Risk & Uncertainty Vision Future Extremely High 300 250 MBPD 200 150 100 50 0 S-Pad Pilot Southern Option Primary Thermal 2009 2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 2064 EOR
Heavy Oil Value Chain Time dependency given viability/longevity of existing infrastructure is driver of pace
Key Messages Heavy oil is a large Alaskan resource Shares footprint with North Slope Light Oil Field Developments Comparable to Light Oil in total oil in place Heavy Oil Reservoirs are challenging to produce on the North Slope!!! Schrader / West Sak production required new technologies over the past 25 years; shows promise but remains on the margin geoscience, reservoir, wells, and facilities Ugnu shows potential, but requires successful Pilots of next generation technologies