Topics

ƒ Heavy Oil vs. Light Oil – the really big picture

ƒ Heavy Oil Properties
ƒ The Heavy Oil Resource on the Alaska North Slope
ƒ Marketing and Transport Issues
ƒ Heavy Oil Depletion Mechanisms
ƒ BP Alaska Milne S-Pad Pilot

Heavy Oil vs. Light Oil

► Legislative Brown bag

March 2011

1
Welcome

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HOT
 World Reserves

• Currently, 90% of production is

from conventional oil Conventional Heavy Oil
Oil - 30% 15%
• Heavy oil and bitumen are
growing rapidly
• Canada and Venezuela Extra Heavy
together have >35% of the and Bitumen
non-conventional oil reserves 55%

Source: MacGregor, 1996 and UNITAR, 1998

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3 HOT
 Global Heavy Oil

Canada
• 40 years of heavy oil development
Alaska • Focus of today’s heavy Oil Technologies
• Historical light oil focus
Russia Barrels OOIP
• Decades of heavy oil
experimentation but ~1 billion
continued focus on light oil ~10 billion
~100 billion
UK Russia
Canada >1 trillion
California Netherlands
E. Europe
• Cradle of Heavy Italy Turkey
Jordan Kuwait
Oil Technology USA
Lower China
Egypt
• In twilight period 48 Egypt India
Mexico
Saudi
Trinidad Arabia Oman
Venezuela Nigeria
Ecuador
Colombia Angola Indonesia
Peru Brazil

Venezuela Madagascar
Australia
• Conventional approach to
easiest Heavy Oil Argentina

• Business climate not inciting

innovation and
experimentation

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Source: JPT, IEA ,Schlumberger OFS Marketing
4 HOT
 Heavy Oil – Key Properties

• Viscosity (Physical Property)

ƒ Flows through a reservoir very slowly: wells produce at lower rates than
light oil wells
ƒ Heavy oil developments involve lots of wells
ƒ Waterflooding is not viable due to the viscosity contrast between heavy oil
and water
ƒ Thermal techniques (e.g. steam) can be effective in increasing recovery
but energy balance is an issue and conditions must be just right in the
reservoir
• Hydrogen Content (Chemical Property)
ƒ Heavy oil is depleted in hydrogen relative to light oil
ƒ Fewer refined products are derived from heavy oil
ƒ Heavy oil fetches a lower price on the market

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5 HOT
 API Gravity of some standard crudes

Gravity API Definition

• West Texas Intermediate 40

• Canadian Syn-crude
• Arab Light
• Alaska NS Crude
• Arab Heavy
• Alaska Viscous
• Alaska Heavy
• Water
• Venezuela (Orinoco )
• Canadian Lloydminster
Gravity ≠ Viscosity
33 Light The term “Heavy Oil” is a
reference to the high density
32 (API Gravity) of those oils.
The measurement that we care
29 most about today is viscosity
Medium since that is the property
which governs well
27 productivity. Viscosity is not
synonymous with Gravity.
16 to 24 There is a positive, but very
Heavy loose correlation between
8 to 14 gravity and viscosity that is
specific to a given oilfield - but
10 any quantitative transform
from API Gravity to Viscosity
is a rough approximation at
10 best and there are no
Extra Heavy transforms or rules of thumb
9 to 18 for oils in general.

• Canadian Athabasca 6 to 10

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6 HOT
 What is heavy oil?
Light End Molecules Heavy End Molecules

North Slope Heavy oil is a residue

formed from light oil that has lost the small
(light) molecules leaving the heavy ones.
These form hydrocarbon compounds
characterized by long, very 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

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7 HOT
 Oil vs. Bacteria

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8 HOT
 Viscosity
Viscosity Familiar
Crude Oils (centipoise) substances

Window putty
108
Tar, Caulk
107
Bitumen Vegetable shortening
106
Extra Peanut butter

Heavy Oil 105

Tomato ketchup

104 Molasses
Heavy Oil
Alaska

103 Honey

Viscous Oil 102 Maple syrup

10 Corn oil

Light Oil 1 Water

Temperature/Viscosity Relationship
for several oil samples
High

• Viscosity is the resistance a material

Viscosity

has to change in form. It is commonly

described as internal friction.
• Viscosity reduction
ƒ Heat Low
ƒ Dilution (Diluent)

High
Low

Temperature

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9 HOT
 Heavy Oil Export Options

• Change physical properties – Upgrade

• Add heat to TAPS

1st Epiphany:
• Dilute heavy oil with light oil
Heavy oil is linked
to light oil
by
Diluent

2nd Epiphany:

Given that linkage,

we need to
figure out heavy oil
NOW - not after
light oil

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10 HOT
 Alaska Fluid Viscosity
Alaska fluids range over a continuum of viscosities

North Slope Oil Fields

Oil viscosity versus Depth
0
Mostly Starting Potential
Developed to Develop Future development
2,000
ce
equen Ugnu
nt s
4,000 lop me
e
Dev
Depth (ft)

West Sak / Orion

6,000
Kuparuk

8,000
Prudhoe

10,000
Light Oil Viscous Oil Heavy Oil
(like water) (like syrup) (like honey)
12,000
0 1 10 100 1,000 10,000 100,000 1,000,000
Oil Viscosity (cp)

The term “Viscous Oil” is a home grown, Alaska term. You won’t find it defined in the literature or used outside of Alaska.
What we term Viscous Oil in Alaska is referred to as Heavy Oil in the industry.

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11 HOT
 Alaska Viscous and Heavy Oil

Milne Pt. Northstar Beaufort Sea

Pt. McIntyre
Niakuk
Endicott

Kuparuk
Liberty Pt. Thompson
Prudhoe
Bay Badami

Tarn

‘Light’ Oil Production

Meltwater
‘Viscous’ Oil Dev./Appraise
‘Heavy’ Oil Appraise

Undeveloped Oil
Undeveloped Gas

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12 HOT
 Ugnu Structure & Fluid Quality

A B

Temperature

0oC B

8 – 10 API
10 - 12 API
(20,000 – 1,000 cp)
11oC
12 - 14 API

27oC

Minimum Case GRV

Maximum Case GRV

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13 HOT
 Stratigraphic and Volumetric Distribution
Heavy oil is found in the shallowest reservoirs (Ugnu), light oil in the deepest

Alaska Heavy
Oil Type Log
GR Ft. Res.

1,000

Ugnu (Heavy)
900

800

700

600

Schrader Bluff (Viscous)

500

400

300

200

3rd Epiphany:
100

Wow – this could

be really big !

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14 HOT
 Heavy Oil Depletion Technology

4th Epiphany:

Other people
are making
this work !

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15 HOT
 Horizontal Wells & Motherbores
Vertical Wells
Minimal
reservoir
contact The horizontal well concept is to maximize contact with the reservoir.
Horizontal wells are operationally simple as they keep sand out, but
recovery factor is likely low and well density must be high to compensate

Motherbores - Many Horizontal laterals in one well

Horizontal Wells
Maximum
reservoir
contact

Piloting at S-Pad

HORIZONTAL PRODUCTION PROFILES

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16 HOT
 CHOPS Elements

• Unconsolidated rocks
• PCP Pump
• Surface Drive
• Heated Separation Tank
• Sand Disposal

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17 HOT
 SAGD (Steam Assisted Gravity Drainage)

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18 HOT
 Recovery Methods

Prudhoe
Milne Point

Kuparuk

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19 HOT
 North Slope Heavy Oil Accumulation
BP’s Milne Point Heavy Oil Pilot

COLD &/or
THERMAL

THERMAL
(>20,000 cP)?

COLD
(<20,000 cP)?

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20 HOT
 Heavy Oil Value Chain
Time dependency given viability/longevity of existing architecture is driver of pace

5th Epiphany:

Heavy oil is unlikely

ever to be more
economic than
light oil

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21 HOT
 Vision vs. Reality

Canadian Design Alaska Design

• Single well tank battery
• Oil, water and solids trucked separately
• Gas burned or vented
• Direct fired heater
• 20+ years experience
• Safety & environmental constraints
ƒ No direct fired heaters in tanks
ƒ No venting of gas
ƒ No spills
ƒ Operate safely over a multi-year period
• Unknown fluid properties and behavior
• First of its kind in Alaska

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22 HOT
 Pilot Location, S-Pad Milne Point Alaska

Milne
Point
Unit

Kuparuk
Unit

Prudhoe Bay
Unit

Separation Tanks Heavy Oil

Tie-Ins

Heavy Oil Wells

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23 HOT
 Milne Point S-Pad Heavy Oil Facility

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24 HOT
 New BP Heavy Oil Pilot Project, Milne Point Alaska

Flare
Process Module
Light Oil Well
Row

Separation Tanks Heavy Oil

Tie-Ins
Heater

Heavy Oil Wells

Electrical Control Module

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25 HOT
 Viscous and Heavy Oil Appraisal

Commercial
S-Pad Pilot Demonstration

Present Time Frame Future

High Technical & Commercial Challenge Very High

Plan Options Vision

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26 HOT
 Take Away Messages

• Heavy oil (including Viscous) is a world scale resource base that is

intrinsic to the BP Alaska strategy
• The time for heavy oil is now due to light oil linkage through diluent
and infrastructure
• Heavy oil is a different commodity than light oil with respect to
extraction techniques, technical challenges, understanding,
environmental challenges and market
• The technical viability of Alaska Heavy Oil is unknown, so
commercial outcome remains large range - must answer technical
viability question first
• BP’s Milne S-Pad pilot is a technology trial and its design and
appearance do not necessarily reflect what an ultimate development
will look like

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27 HOT