Wac ncc091511 ascent,unconventional oil,northamerica

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Focuses on the technologies, prospects and impacts of Canada becoming the #1 source of U.S. oil imports, principally from the oil sands in Alberta. Also describes how the confluence of horizontal drilling and hydraulic fracturing in the U.S. provides access to previously uneconomic sources of oil and gas.

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Wac ncc091511 ascent,unconventional oil,northamerica

  1. 1. "The Ascent of Unconventional Oil in North America" World Affairs Council North County Chapter September 15, 2011
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  4. 4. United States Crude Oil Supply 4
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  7. 7. Canadian Oil SandsAthabasca region, Alberta 7
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  11. 11. Oil Sands Synopsis• Resource In-Place: est. 2.5 trillion barrels• Recovery Rate : est. 9-10% (current technology)• Reserves : est. 170 billion barrels• Production 2011 : est. 1.65 mbd• Production 2015 : est. 3 mbd• Production 2020 : est. 4-5 mbd• Production Cost : was upwards $75, nearing $50• For Canada – Reserves worth appx. $15 trillion – Impact est. $70b/yr over next 25 yrs – 5% of Canada GDP; O&G is 31% of Alberta GDP) 11
  12. 12. Oil Sands & Syncrude Data 12
  13. 13. Primary Production• Excavation• Conventional vs. “In-Situ” (for deeper; 80%) – Open-pit mining – SAGD : Steam Assisted Gravity Drainage – CHOPS: Cold Heavy Oil Production with Sand – CSS : Cyclic Steam Stimulation – VAPEX : Vapor Extraction Process (solvents) – THAI : Toe to Heel Air Injection (underground combustion front) 13
  14. 14. Condition, Separate, Refine• Layer water surrounds each sand particle; bitumen surrounds water…forms outer layer• Remove water, sand (hot water, solvents, etc.)• Catalytic purification – Demetallisation – Desulfurisation – Denitrogenation)• Upgrade to syncrude (hydrogenation) – 1.125mbpd capacity, 800,000bpd (2010)• Dilbit (Bitumen diluted w syncrude or condensate) 14
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  16. 16. Mm 16
  17. 17. Shell’s Muskeg River Mine & Plant 17
  18. 18. Shell’s Scotford Upgrader 18
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  21. 21. Alberta Clipper, Keystone & Keystone XL 21
  22. 22. Enbridge Northern Gateway 22
  23. 23. Cushing, Oklahoma 23
  24. 24. Kinder Morgan Proposal 24
  25. 25. Environmental Impacts• Concerns/failings: – Massive Carbon footprint – Encourages unsustainable energy model – Toxic metals/substances released downstream Athabasca River – Destruction of boreal forest – Failed land reclamation – Bird/duck die-offs on tailings ponds 25
  26. 26. A Landmark Study• The Royal Society of Canada – landmark peer-reviewed study issued Dec 15 2010• Regulatory Weakness – Ottawa: asleep at the switch – Alberta: has too many cooks in the room – Alberta: responsibilities and key data are split and juggled among two ministries, an arms-length regulator and an industry-led Regional Aquatics Monitoring Program – Alberta: environmental assessment process had "serious deficiencies in relation to international best practice.” – Alberta Environment and Sustainable Development, no longer participate in public hearings on oil sands. In other words decisions are being made "without the benefit of the public input from Albertas primary environmental regulators." – Industry & environmentalists stretching truth. 26
  27. 27. Globe and Mail: Report “Mythbusting”• Myth: Regulatory oversight is strong. – Report: Alberta hasnt “kept pace with rapid expansion” and has a confusing process prone to “political interference” and lacking scientific rigour. Ottawa isnt doing any better and needs “to show some leadership.”• Myth: The aboriginal community of Fort Chipewyan, which is downstream of oil sands development, has an elevated cancer rate. – Report: “There is no credible evidence to support the commonly repeated media accounts of excess cancer in Fort Chipewyan.”• Myth: Oil sands operations are draining the Athabasca River, and polluting whats left. – Report: Current extraction levels are sustainable and there is no “current threat to aquatic ecosystem viability.”• Myth: Land is being reclaimed, or returned to normal, after mining. – Report: The province is on the hook for unfunded reclamation liabilities and “no tailings pond has yet been completely reclaimed.”• Myth: The oil sands are an environmental catastrophe of international scale. – Report: The claim lacks any “credible quantitative evidence.” The James Bay hydro project has destroyed 15 times as much boreal forest as the oil sands; coal power is responsible for 17 per cent of Canadian carbon emissions, more than three times the oil sands total.• Myth: Environmentally, open-pit mining is the worst form of bitumen extraction. – Report: Open pit is messy, but “in situ,” or underground mining produces as much as 20 per cent more greenhouse gas. 27
  28. 28. Environmental Impact• “Well to tank”: some critics, calculating emissions from extraction through to refining say fuel sourced from the sands is up to three times more carbon-intensive than others consumed in America.• “Well to wheels”: counting emissions from cars’ exhaust pipes, tar sands are only 5-15% dirtier, says IHS CERA. Most CO2 comes from burning the petrol, not digging up the oil.• Just 5% of Canada’s CO2, about 0.1% of the world total, comes from the developments, says CAPP. People…should worry first about coal-fired electricity, whose emissions in America dwarf those from the tar sands.• Andrew Leach, of the Alberta School of Business, calculates that the tar sands create about C$500 of value-added per ton of CO2, against C$20-30 from coal-fired power stations.• Carbon capture plans – Scotford Upgrader (1m MT/yr) poor geology 28
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  31. 31. Horizontal Drilling & Hydraulic Fracturing• Slick-Water Frac (high velocity w anti-friction)• Propant (special sand – hard, round grains)• Microseismic array (observe real-time frac)• Multistage, openhole packer n sleeve systems, up to 40 stages• Rapid development & evolution of technology• Rapid increase in drilling rates; hi-power drills 31
  32. 32. Frac Rock• “Tight” Formations – Shale, Sands, etc – Low-Porosity & Low-Permiability• Soft rock/shale difficult to frac, want brittle• Rock properties can change thru trend• Current leading frac targets are focusing on the “source rocks” for traditional oil & gas deposits 32
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  38. 38. Measuring Reserves: Truth or Fiction• There is a distinction between proven reserves and oil that can be technically recoverable, the latter called “pie-in- the-sky estimates.”• Remember Art Berman and EUR• P90, P50, P10, TechR, EconR,Contingnt,Prospctv 38
  39. 39. The Bakken ‘Shale’ 39
  40. 40. Bakken/Three Forks• Bakken est. 169bbl in place, est. recover 2bbl• Three Forks est. 20bbl in place, est. 10% recover 2bbl• Hamm says at least 11bbl both• Daily production for ND in July reached 423,550 barrels. This is an increase of 40,000 barrels more per day compared to June• Daily Calif 540,000; Alaska 550,000; TX 1.410; will pass Calif this year, Alaska next• North Dakota output now 6% US output, up from less than 1% less than 3 yrs ago• Light, sweet crude: 38-42API, 0.2-0.5% sulfur; honey 40
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  43. 43. Bakken/Three Forks Geology 43
  44. 44. Bakken/Three Forks Geology• Located 11,500ft below surface• The middle member is the primary oil-producing member and predominantly composed of siltstones and sandstones but also has low porosity (1% - 15%) and permeability (0 - 20 millidarcies), particularly for a reservoir rock.• The Bakken is underlain by the Three Forks Formation, which has a maximum thickness of 250 feet in eastern McKenzie County. The Three Forks Formation consists of shales, dolostones, siltstones, sandstones, and minor occurrences of anhydrite.• First horizontal frac wells in middle Bakken drilled in 2000• Well completion times cut from 65 days in 2008 to about 25 days in 2011 44
  45. 45. Bakken Production Outlook 45
  46. 46. Williston-Bakken Output & Pipes 46
  47. 47. Bakken Crude Oil Transport 47
  48. 48. Other Liquid-Producing Shale Trends• Eagle Ford• Monterey (Calif)• Niobrara• Granite Wash• Tuscaloosa Marine Shale• Woodford• Utica• Marcellus• Barnett• Haynesville• Fayetteville 48
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  51. 51. Oil Shale in the Colorado Rockies• Retort method too expensive and massively destructive environmentally.• Exxon closes operations: – May 2,1982 Black Sunday• In-situ technologies are the future…if… 51
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