MBDCI

Introduction to Heavy Oil in the World and in Canada

The Heavy Oil Resource

Maurice B. Dusseault

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The Oil Source of the Future

Heavy and viscous oils may become the major world oil source by 2060 New technologies from Canada have led the way in helping access this challenging resource

The Heavy Oil Resource

SAGD IGI CHOPS HCS PPT And, others are emerging

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API Definitions
API is a measure of the oil density!
API
Conventional Oil

Density g/cm Condensate 0,780 0,802 0,825 Lightoil 0,876 0,934 Heavyoil 1,000 1,076

50 45 40 30 20

~11.3API

The Heavy Oil Resource

Non-conventional Oil

10 0

Extraheavyoil (<10000 mPa.s) Tarsand /Bitumen (>10000 mPa.s)

API: American Petroleum Institute

Different countries, organizations use different HO definitions

API gravity = (141.5/SG at 60F) - 131.5

The Heavy Oil Resource

World Oil Consumption - Mb/day

The Last 40 Years

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Future of Conventional Oil

1998 predictions:
Demand +1.5-2%/yr Convl oil production peaks in ~2008-12 (?) Middle East >40%, 50% by ~2020

Conventional Oil Prediction in Red Total Need Prediction in Blue Dots Q- Bb/yr 31 Bb/yr

20

The Heavy Oil Resource

Cheap oil era may have now ended Heavy oil value

2008 1978
Campbell and Laherrre March Sci Am, 1998, p78

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What is the Energy Issue?

People are consuming more energy Countries want to develop (China, India), increasing energy demand significantly Developed countries are slowly consuming more and more energy, but
Energy intensity is decreasing (good!) Population growth is stabilizing (good!) Traditional pollution is abating (good!)

The Heavy Oil Resource

This leaves CO2 as the remaining challenge, but a very important one!

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Changes in Energy Sources

1800

Direct Wood, Wind, Water, Animals

Scenarios to 2050 - Shell International (2001)

Steam Engine - Coal (1830 - 1900)

1850

Electric Dynamo - Coal (1900 -1940)

1900

Internal Combustion Engine Oil - (1910 1970) Nuclear (1960 - 1990) CCGT Natural Gas (1990 - ?)

The Heavy Oil Resource

1950

2000 Fuel Cell Hydrogen? Direct Electricity Solar?

Is a nuclear energy future the most likely?

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Energy Utilization Efficiency

Unit Energy Input per $ of Gross National Product 1.0 2008 All countries are following similar trends

0.5
The Heavy Oil Resource

Clearly, we are using energy much more efficiently on a GDP basis. For oil, it is even better (down to 0.43-0.44 compared with 1970) 1970 2000 2030

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World Population Growth

World Population - billions 10 ~9 billion x July 2010 ~6.86 109

Peak in about 2050 (?)

6 billion 5
The Heavy Oil Resource

1950

2000

2050

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Selected Countries Oil Intensity

kg oil per real $ GDP)

The Heavy Oil Resource

Source www.iea.org

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2009 Consumers - ~85.2 MMb/d

Rank 1 2 3 4 5 6 7
The Heavy Oil Resource

Country United States China Japan India Russian Federation Germany Brazil Canada South Korea Mexico France United Kingdom

2009 Oil Consumption 20.7 million barrels/day 7.9 MMb/d 5.0 MMb/d 2.7 MMb/d 2.7 MMb/d 2.5 MMb/d 2.4 MMb/d 2.4 MMb/d 2.3 MMb/d 2.1 MMb/d 2.0 MMb/d 1.8 MMb/d
modified!

8 9 10 11 12

http://www.photius.com/rankings/economy/oil_consumption_2009_1.html

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Example of Energy Consumption

The Heavy Oil Resource

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Lets Look at the US

The Heavy Oil Resource

US is the largest energy consumer US consumes ~25% of world oil, 2nd largest per capita (Canada is #1 per capita) US is the dominant economic force (30% of world GDP) US population is increasing, but Europes is now declining slowly US GDP growth rate is less than developing countries ~3.2% vs. ~7-10% for India, China

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Per Capita Energy use - USA

The Heavy Oil Resource

Increasing efficiency

Source: EIAhttp://www.eia.doe.gov/oiaf/aeo/pdf/trend_2.pdf Annual Energy Outlook 2010

For the USA

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The Heavy Oil Resource

Source: EIA Annual Energy Outlook 2010

For the USA

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Comparison to World

COAL

HYDRO

NUCLEAR

NATURAL GAS
The Heavy Oil Resource

OIL BP Report June 2009

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The Heavy Oil Resource

Source: EIA Annual Energy Outlook 2008

For the USA

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The Heavy Oil Resource

Source: EIA Annual Energy Outlook 2008

For the USA

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Comments on USA Projections

A roughly stable situation predicted for oil:

Despite population growth & GDP growth

The future role of nuclear power is likely underestimated

Nuclear is a carbon-free energy source Technology in 2010 is far more advanced than in 1979, 1986 (less risk, higher efficiency) Geological waste disposal has proven feasible

The Heavy Oil Resource

Coal growth predictions seem high So, predictions are fine, but they change (compare to EIA predictions made in 2000)

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US Imports (Crude + Products)

COUNTR MMBO Y D Canada 2.5 Mexico 1.4 Saudi 1.1 Venezuel 1.1 a Nigeria 1.0 Algeria 0.67 Angola 0.51 Iraq 0.49 Rest 4.10 ~20.6 MMBOD 13.7 % 17.7 11.2 10.8 9.9 8.3 4.9 3.7 3.6 29.9 100.1

The Heavy Oil Resource

2010
US consumes: US imports:

~13.7 MMBOD (crude + all products

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Sources of US Imports - 2010

COLOMBIA BRASIL IRAQ ANGOLA ALGERIA
The Heavy Oil Resource

CANADA

MEXICO RUSSIA

NIGERIA

SAUDI ARABIA

VENEZUELA

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China 1990-2010

The Heavy Oil Resource

2010: ~4 MMbod imports, ~3.8 MMbod production

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Future of Conventional Oil

1998 predictions:
Demand +1.5-2%/yr World production peaks in ~2010 (?) Middle East @30%, 50% by ~2015 (?)

Conventional Oil Prediction in Red Total Need Prediction in Blue Dots Q- Bb/yr ~31 Bb/yr

20 2008 1978

The Heavy Oil Resource

Cheap oil era may have ended Viscous oil value 9% of world prod.

Modified; red line from Campbell and Laherrre March Sci Am, 1998, p78

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Hubbert Curves Predictions

Production
Effect of increased price and new technologies

The Heavy Oil Resource

Time

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Predictions in 1990 (Chevron)

A typical prediction from 1987 data ACTUAL in 2010
80 70 60

Total Consumption
Conventional Ex. Heavy & Bitumen EOR

Million Barrels Per Day

50 40

Reserves
30 20 10 0 1900 1925 1950 1975

The Heavy Oil Resource

Undiscovered

Shale Oil
2000 2025 2050 2075 2100

Chevrons predictions in 1990 (all predictions are necessarily wrong)

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What Are Our Options?

The Heavy Oil Resource

We will first make up the difference by conservation + heavy oil and oil sands High price also affect demand (as in 2008-09) We can make oil from natural gas; trouble is, natural gas is a valuable fuel too! Also, $ We can convert wood, plants, coal We can go to a H2 or an ethanol economy ($) Carbon issues will impact our future technologies (carbon taxes, sequestration)
http://www.delphi.ca/apec/

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Critique of Predictions

The future role of heavy oil has been underestimated: this is beginning to change The emergence of new technologies in the last 20 years is not fully accounted for
Reserves will soon rise by >550 BB (heavy oil) e.g. USGS (2010) said 513 Bb for Venezuela Total reserves will rise by another 1000 BB Technology affects conventional oil as well

The Heavy Oil Resource

Nuclear is being slowly reborn Predictions based on history are useful, but to be used with some caution

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World and OPEC Production

World (total)

The Heavy Oil Resource

OPEC

EIA Web Site

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Sources of Conventional Oil

The Heavy Oil Resource

Russia, Saudi Arabia, and USA are the biggest producers The Middle East dominates the conventional oil export market, and will continue for the foreseeable future (25 years or more) EIA predictions for the future have been unrealistically high Total believes peak of ~95 MMb/y in 2020 (Note that this does not necessarily mean a total oil production peak!)

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BP 2009 Proven reserves

The Heavy Oil Resource

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BP 2009 Proven reserves

The Heavy Oil Resource

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Proved oil reserves at end 2005

www.bp.com

A better view!
Canadian VISCOUS OIL >320 Bb AERCB Venezuelan VISCOUS OIL >500 Bb (USGS)

The Heavy Oil Resource

North America 59.5

South and Central America 103.5

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Oil: Who Produces it?

The Heavy Oil Resource

Saudi 10.8 MMb/d Russia 9.8 USA 8.5 Iran 4.2 China 4.0 Canada (2008) 3.4 (rising) Mexico (2008) 3.2 (dropping) UAE 3.0 Kuwait 2.7 Venezuela2.6 Norway 2.5 Brazil 2.4

2008 EIA data

http://tonto.eia.doe.gov/country/index.cfm

Canada is now 6th However, growth in heavy oil and oil sands continues (Canada: ~5 MMb/d by 2020) Where will other growth come from? Conventional is flat I believe that growth will mainly come from technology oil: i.e. heavy oil, oil sands

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Future of Conventional Oil

Oil production, all types (C, H, XH) 2030
optimists prediction for conventional oil

The Heavy Oil Resource

20102012? probable
oil future conventional prediction

Time

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The Limits to Hydrocarbons

The Heavy Oil Resource

Conventional oil ~ 2% of natural HCs Heavy oil ~ 4-5% of total HCs Natural gas ~ 5-8% of HCs Coal + shale oil ~ >50% of non-gas HCs Methane hydrates may comprise 10-25%! We can synthesize oil from coal, wood, etc. We can make oil from elements (C + H)!

e.g.: H2 from electrolysis (solar power) C from various sources, then combine the two!

Example: Ethanol C2H5OH

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Density of ethanol: 0.789 Density of gasoline: 0.737 Energy density of ethanol: ~25 MJ/kg Energy density of gasoline: ~45 MJ/kg In the tank of your car:
ETHANOL gives GASOLINE gives

The Heavy Oil Resource

19.7 MJ/litre 33.2 MJ/litre

Pollution? About the same Gasoline: fossil fuel; Ethanol: plants

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How Much is There??

World Oil Resources (not necessarily reserves)
400 300

Conventional
<100 cP

Billion m 3

200 100 0

Heavy Oil
100-10000 cP

Bitumen
> 10,000 cP

The Heavy Oil Resource

D. Wightman (1997)

World viscous oil reserves are about 2.2-2.3 times as large as the conventional ( < 100 cP) reserves. > 75% of these reserves are in sandstones

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World Oil Endowment

Probably the total endowment is ~14 trillion barrels Venezuela, Russia & Canada together have ~40% of this
Conventional Oil Heavy Oil 15% 30% Extra Heavy and Bitumen 55% Oil shales not included

The Heavy Oil Resource

Saudi Arabia claims ~40 billion m3 (#1 in 2009) With New Heavy Oil Technologies, Canada has >35 billion m3 of reserves (#2 now, #1 in the future?) Venezuela and Russia will go up in rank soon

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Oil Sands
Core from Venezuela

Weathered surface looks almost white

The Heavy Oil Resource

Oil sand slopes in Canada

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Will Oil Run Out?

Natural cheap conventional oil must run out But, oil from heavy oil deposits, shale, coal conversion depends on $ + technology
At $45/BBL, much heavy oil is profitable At $80/BBL, oil from coal (SASOL), gas? At $90/BBL, major shale oil projects? At $120/BBL, wood conversion is possible! At some price, gasoline from chemistry (C+H)

The Heavy Oil Resource

Oil is thus infinite, depending on price

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World Reserves: Todays View

300 250 billion barrels 200 150 100 50 0
Ira q da la si a R us iA C an a Ve n M ex ic o ia ez ue ra b

The Heavy Oil Resource

Sa ud

These are in a sense sanctioned recoverable reserves

Sources: Oil and Gas Journal Dec 2002, AEUB

Alberta

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Reserves Data Summary 2008

These are the currently widely accepted figures
Country Reserves 109 bbl 109 m3 Saudi Arabia 267 42.4 Canada 179 28.5 Iran 138 21.9 Iraq 115 18.3 Kuwait 104 16.5 Venezuela 99 15.7 United Arab Emirates 98 15.6
The Heavy Oil Resource

Production Reserve life 106 bbl/d 103 m3/d years 10.2 1,620 72 3.3 520 149 4.0 640 95 2.1 330 150 2.6 410 110 2.7 430 88 2.9 460 93 9.9 1.7 2.4 1.4 7.5 3.9 1,570 270 380 220 1,190 620 17 66 41 59 8 11

Russia Libya Nigeria Kazakhstan United States China

60 41 36 30 21 16

9.5 6.5 5.7 4.8 3.3 2.5

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Albertas View of Oil Reserves

350

Billions of barrels recoverable reserves

300 250 200 150 100 50 0

- Based on a less rigid view of recoverable reserves and technology potential

350 300 250

EIA financial institutions

~2003 data

200 150 100 50 0

The Heavy Oil Resource

a A. d da i na C na ud Ca Sa Ca SE

n ra I

a a si el us zu R ne Ve

SA U

xi c e M

Source EIA + AEUB

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Canadas Viscous Oil

The Heavy Oil Resource

This is a conservative estimate

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Alberta Reserves
These are considered technically recoverable reserves

The Heavy Oil Resource

Athabasca 237.1 Bb

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World Reserves: Tomorrows View

350 300 250

billion barrels
The Heavy Oil Resource

200 150 100 50 0

Venezuela

Canada

Russia

S Arabia

Iraq

US

Highly conservative estimates

(US for comparison only)

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What is the Ultimate Recovery?

The TOTAL (OOIP) reserves are:

Venezuela ~ 1.65 1012 bbl (Faja + Maracaibo) Canada ~ 2 1012 bbl (WCSB) Russia ~1.8-2 1012 bbl (but large uncertainty) Other countries have smaller amounts

The Heavy Oil Resource

With new, emerging and future technologies for heavy oil, in Canada
Pessimists Expected Eventually

15-20% recovery (existing methods) 30% recovery (evolving methods) >40%? recovery (future methods?)

There are significant HO & XHO reserves in carbonates in ME 1 Tb, 0.5 Tb in Canada, etc.

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4 3

~2006

The Heavy Oil Resource

http://pubs.usgs.gov/of/2007/1084/

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Viscous Oil Reserves - USGS

These are Ultimate OOIP Values (projected) South America (with Venezuela) 3.1 Tb

(Venezuela alone 1.65 Tb)

The Heavy Oil Resource

Canada http://pubs.usgs.gov/of/2007/1084/ Russia Middle East United States (with Alaska) Rest of World

2.0 2.0 1.0 0.8 0.6

Tb Tb Tb Tb Tb

These figures do not reflect reservoir quality. Venezuela likely has the largest technically recoverable reserves ~0.5 Tb

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Viscous Oil in the World

Such numbers are approximate only, but Viscous Oil amount greatly exceeds Conventional Oil amount
~2.2 the amount of Conventional Oil

The Heavy Oil Resource

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Heavy Oil - Global View

Cradle of new technologies: Mining, SAGD, VAPEX, THAI Arctic conditions
Alaska Canada UK Netherlands Italy USA Lower 48 Mexico Trinidad Russia

SAGD

Barrels OOIP ~1 billion ~10 billion ~100 billion >1 trillion

Steam flood

E. Europe Turkey Jordan Kuwait Egypt Saudi Arabia Egypt Oman

China India

The Heavy Oil Resource

Offshore challenge

Venezuela Ecuador Colombia Peru Brazil

Nigeria

Offshore challenge Steam flood

Angola

Indonesia Madagascar Australia

Argentina

Cold production

Offshore challenge

Source: JPT, IEA ,Schlumberger OFS Marketing

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Vast Heavy Oil Deposits

The Heavy Oil Resource

Source: Head Jones & Larter 2003, Nature

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What is Left?

~13.5-14.5 Tb of liquid HC (not counting gas, shale oil, methane hydrates)

~4.6 Tb conventional, ~9.7 Tb heavy (<22API)

1.15 Tb conventional oil produced to 2010,

1 Tb of conventional oil reserves remaining 0.5-0.6 Tb from future new technology

The Heavy Oil Resource

1.0 Tb heavy oil certain (current technology)

Another 1.0 Tb very likely Another 1.5 Tb from future new technology?

~2.0 Tb current technology, 4-5 Tb ultimate

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Optimists vs. Pessimists

The Heavy Oil Resource

Optimists use USGS data (but history has shown that these data are pretty good!) Pessimists fail to account for the new emerging technologies that will help slow down the decline rate However, the conventional oil production peak may be imminent (2009-2012?) Demand will have to be met by higher prices and heavy oil Lets study some data

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Viscous Oil Production - 2010

Canad a ~1.8 MMb/d

2009 data
Russ ia ~0.35 MMb/d China

Alaska

~0.4 MMb/d ~0.35 MMb/d

The Heavy Oil Resource Legen d SD/SF/SAGD/CSS/CHOPS
Columbia SF/SD Ecuador Peru Mining/SAGD/VAPEX/THAITM
Cold Production CHOPS SAGD Cyclic Steam Stimulation Others/not enough information

USA

Mexico

Venezu ~1.0 MMb/d ela

Trinida d

UK Kazakhsta Netherlands Eastern Europe n Italy Turkey Iraq Syria Kuwait Libya Iran India Egypt Saudi Arabia Nigeri a Angola

~0.3 MMb/d

~0.25 MMb/d
Argentina

Brazil

~0.25 MMb/d
Madagasca r Australia

Oman

~0.25 MMb/d Indonesia

Iran

Courtesy Satinder Chopra

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Oil is NOT Like Gold!

The Heavy Oil Resource

Fixed gold amount in the earths crust Richest mines are always exploited first Cant create gold Gold is stored as well as used (i.e. a buffer against high prices) Gold cannot be destroyed (in principle, always recyclable)

Only fossil HC is a fixed quantity Politics often dictate differently (e.g. USA) Oil can be created With minor exceptions all produced oil is consumed, no storage Oil is destroyed when used, and cannot be recovered in any way

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USA Refinery Feedstock Evolution

33 1.5 1.4
API Gravity

32

API gravity

Sulfur

1.3
% Sulfur

1.2 1.1 1.0 0.9

The Heavy Oil Resource

31

Feedstocks are getting heavier

30
84 86 88 90 92 94 96 98 00 02 04

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Why Focus on Canada?

The Heavy Oil Resource

Huge heavy oil reserves The recent new technologies have been largely developed in Canada Conventional oil is depleting in a highly explored, mature basin Canada is the first country to go through:
A peak in oil (conventional) production A trough in production Now, the old peak exceeded by new heavy oil

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Western Canadian Oil Mix

The Heavy Oil Resource

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Alberta Predictions in 2009

The Heavy Oil Resource

All bitumen

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2009 Bitumen Production Forecast

The Heavy Oil Resource

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Alberta, All Liquid Products

The Heavy Oil Resource

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Bitumen - 2009

The Heavy Oil Resource

Alberta ERCB, 2010 report

He a

SAGD production is increasing fast! These figures do not include heavy oil south of line Some Cold Lake region production is from CHOPS +heavy oil from Saskatchewan

Oil sands region

In situ Mined

vy

Oi lB

elt

The Heavy Oil Resource

Oil Sands OPEX

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2000-2010 Oil Prices (Canada)

The Heavy Oil Resource

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Viscous and Conventional Oils

100%
Profit margin Royalties and taxes Upgrading & transportation OPEX
The Heavy Oil Resource

100%

This chart is not intended to reflect a specific case. It is a generalized statement of the cost drivers differences between viscous and conventional oils

CAPEX Exploration Conventional petroleum Heavy, XH petroleum

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Light/Heavy Differential Price

Source: NEB Website http://www.neb.gc.ca/clf-nsi/rnrgynfmtn/prcng/crdlndptrlmprdcts/cndnmrkt-eng.html

Light oil price

The Heavy Oil Resource

Heavy oil price

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Production Technologies
Alberta
HCS, CHOPS
Athabasca Peace River oilsands oilsands

Saskatchewan
Mining SAGD
Cold Lake oilsands

CHOPS CP

Wabiskaw deposits
The Heavy Oil Resource

CSS, HCS SAGD CHOPS

Saskatoon

Edmonton Lloydminster

Calgary

Heavy Oil Belt

Regina

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Opening New Markets for Bitumen

The Heavy Oil Resource

Husky Energy Lloydminster Upgrader ~80,000 b/d (2006), being expanded (2007)

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The Heavy Oil Resource

Upgrading HO is an important issue affecting production

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Conclusions

The Heavy Oil Resource

Conventional oil will soon peak Good for heavy oil, IOR, profits Remarkable technology advances recently We must try to consolidate & perfect them The future for viscous oil looks genuinely promising at present If we dont develop viscous oils now, we may never H2 cycle, replacement, CO2 issues, etc.