Oil & Gas Recovery Thomas McKeown Franklin Hamilton LLC
Methods of Recovery <ul><li>Oil extraction and recovery </li></ul><ul><li>Primary Recovery </li></ul><ul><li>Secondary Recovery </li></ul><ul><li>EOR- Enhanced Oil Recovery- Terciary </li></ul>
Primary Recovery <ul><li>Drilling- The oil well is created by drilling a hole into the earth with an oil rig . A steel pipe (casing) is placed in the hole, to provide structural integrity to the newly drilled wellbore. Holes are then made in the base of the well to enable oil to pass into the bore. Finally a collection of valves called a " Christmas Tree " is fitted to the top, the valves regulating pressures and controlling flows. </li></ul><ul><li>Grounds for Primary Recovery </li></ul><ul><li>If the underground pressure in the oil reservoir is sufficient, then this pressure will force the oil to the surface. Gaseous fuels, natural gas or water are usually present, which also supply needed underground pressure. In this situation, it is sufficient to place a complex arrangement of valves (the Christmas tree ) on the well head to connect the well to a pipeline network for storage and processing. </li></ul><ul><li>Usually, about 20% of the oil in a reservoir can be extracted using primary recovery methods. </li></ul>
Secondary Recovery <ul><li>Secondary or enhanced oil recovery (EOR) methods are needed because only a small fraction of the oil in a reservoir can be produced by primary means (the reservoir's natural drives). </li></ul><ul><li>Initial recovery ranges from only about 5 per cent (Lloydminster-area heavy oils) up to about 20 per cent (better quality oils like those produced in the province's southwest and southeast). These methods must, naturally, also be both economic and effective, or companies may not bother trying to coax more oil from the reservoir. </li></ul><ul><li>Over the lifetime of the well the pressure will fall, and at some point there will be insufficient underground pressure to force the oil to the surface. If economical, as often is, the remaining oil in the well is extracted using secondary oil recovery methods (see: energy balance and net energy gain ) . </li></ul><ul><li>Secondary oil recovery uses various techniques to aid in recovering oil from depleted or low-pressure reservoirs. Sometimes pumps, such as beam pumps and electrical submersible pumps (ESPs), are used to bring the oil to the surface. Other secondary recovery techniques increase the reservoir's pressure by water injection , natural gas reinjection and gas lift , which injects air , carbon dioxide or some other gas into the reservoir. </li></ul><ul><li>Together, primary and secondary recovery generally allow 25% to 35% of the reservoir's oil to be recovered. </li></ul>
Examples of Secondary Recovery <ul><li>Water Flooding : Water flooding is utilized primarily as a secondary recovery technique, where the primary drive mechanism used to produce the oil (dissolved gas) is depleted. Water is recovered from the water table and injected into the reservoir, displacing the oil towards the target production wells. Because of the limited amount of dissolved gas remaining in solution, pumps are used to bring the oil to surface. </li></ul><ul><li>Sand Frac (beam pump, electrical submersible pump): Sand Fracs are used where porosity development or permeability is low (the formation is tight). This treatment is done under high pressure, the formation is fractured, and a sand/gel mixture is pumped into the fractures. Once the fractures are allowed to settle, trapping the sand, the well is produced with a significant increase in production, because the pathways towards the well-bore have been opened up. Almost like changing a single lane highway into a six lane highway </li></ul>
Tertiary Recovery <ul><li>Tertiary oil recovery reduces the oil's viscosity to increase oil production. </li></ul><ul><li>Thermally enhanced oil recovery methods (TEOR) are tertiary recovery techniques that heat the oil and make it easier to extract. Steam injection is the most common form of TEOR, and is often done with a: </li></ul><ul><li>1) cogeneration plant . In this type of cogeneration plant, a gas turbine is used to generate electricity and the waste heat is used to produce steam, which is then injected into the reservoir. This form of recovery is used extensively to increase oil production in the San Joaquin Valley , which has very heavy oil, yet accounts for 10% of the United States' oil production. [ citation needed ] </li></ul><ul><li>2) In-situ burning is another form of TEOR, but instead of steam, some of the oil is burned to heat the surrounding oil. Occasionally, detergents are also used to decrease oil viscosity as a tertiary oil recovery method. </li></ul><ul><li>3) carbon dioxide flooding . </li></ul><ul><li>Tertiary recovery allows another 5% to 15% of the reservoir's oil to be recovered. </li></ul><ul><li>Tertiary recovery begins when secondary oil recovery isn't enough to continue adequate production, but only when the oil can still be extracted profitably . This depends on the cost of the extraction method and the current price of crude oil . When prices are high, previously unprofitable wells are brought back into production and when they are low, production is curtailed. </li></ul>
Viscosity <ul><li>Viscosity is a measure of the resistance of a fluid which is being deformed by either shear stress or extensional stress . </li></ul><ul><li>In general terms it is the resistance of a liquid to flow, or its "thickness". Viscosity describes a fluid's internal resistance to flow and may be thought of as a measure of fluid friction . </li></ul><ul><li>Example: water is "thin", having a lower viscosity, while vegetable oil is "thick" having a higher viscosity. All real fluids (except superfluids ) have some resistance to stress , but a fluid which has no resistance to shear stress is known as an ideal fluid or inviscid fluid . For example, a high viscosity magma will create a tall volcano , because it cannot spread fast enough; low viscosity lava will create a shield volcano, which is large and wide.  The study of viscosity is known as rheology . </li></ul>
Other Terciary Recovery Methods <ul><li>Cyclic Steam Stimulation </li></ul><ul><li>This method, also known as the Huff and Puff method, consists of 3 stages: </li></ul><ul><li>1)injection, </li></ul><ul><li>2)soaking </li></ul><ul><li>3) production . </li></ul><ul><li>Steam is first injected into a well for a certain amount of time to heat the oil in the surrounding reservoir to a temperature at which it flows. After it is decided enough steam has been injected, the steam is usually left to "soak" for some time after (typically not more than a few days). Then oil is produced out of the same well, at first by natural flow (since the steam injection will have increased the reservoir pressure) and then by artificial lift . Production will decrease as the oil cools down, and once production reaches an economically determined level the steps are repeated again. </li></ul><ul><li>The process can be quite effective, especially in the first few cycles. However, it is typically only able to recover approximately 20% of the Original Oil in Place (OOIP), compared to steam flooding which has been reported to recover over 50% of OOIP. It is quite common for wells to be produced in the cyclic steam manner for a few cycles before being put on a steam flooding regime with other wells. </li></ul><ul><li>The mechanism was accidentally discovered by Shell while it was doing a steam flood in Venezuela and one of its steam injectors blew out and ended up producing oil at much higher rates than a conventional production well in a similar environment. </li></ul>
Steam Flooding <ul><li>Steam Flooding </li></ul><ul><li>In a steam flood, sometimes known as a steam drive, some wells are used as steam injection wells and other wells are used for oil production. Two mechanisms are at work to improve the amount of oil recovered. The first is to heat the oil to higher temperatures and to thereby decrease its viscosity so that it more easily flows through the formation toward the producing wells. A second mechanism is the physical displacement employing in a manner similar to water flooding , in which oil is meant to be pushed to the production wells. While more steam is needed for this method than for the cyclic method, it is typically more effective at recovering a larger portion of the oil. </li></ul><ul><li>A form of steam flooding that has become popular in the Alberta tar sands is steam assisted gravity drainage (SAGD), in which two horizontal wells are drilled, one a few meters above the other, and steam is injected into the upper one. The intent is to reduce the viscosity of the bitumen to the point where gravity will pull it down into the producing well. </li></ul>
EOR Projects <ul><li>Examples of current EOR projects </li></ul><ul><li>In Canada, a CO 2 -EOR project has been established by EnCana at the Weyburn Oil Field in southern Saskatchewan . The project is expected to inject a net 18 million ton CO 2 and recover an additional 130 million barrels (21,000,000 m 3 ) of oil, extending the life of the oil field by 25 years  . When combusted, this extra volume of oil will produce nearly 60 million ton CO 2 , so in this case carbon capture and storage in combination with EOR leads to more CO 2 emissions than without injection of CO 2 [ citation needed ] . Since CO 2 injection began in late 2000, the EOR project has performed largely as predicted. Currently, some 1600 m3 (10,063 barrels) per day of incremental oil is being produced from the field. </li></ul><ul><li>[ edit ] Potential for EOR in United States </li></ul><ul><li>In United States, the Department of Energy (DOE) has estimated that full use of 'next generation' CO 2 -EOR in United States could generate an additional 240 billion barrels (3.8×10 10 m 3 ) of recoverable oil resources. Developing this potential would depend on the availability of commercial CO 2 in large volumes, which could be made possible by widespread use of carbon capture and storage . For comparison, the total undeveloped US domestic oil resources still in the ground total more than 1 trillion barrels (1.6×10 11 m 3 ), most of it remaining unrecoverable. The DOE estimates that if the EOR potential were to be fully realised, State and local treasuries would gain $280 billion in revenues from future royalties , severance taxes, and state income taxes on oil production, aside from other economic benefits. For the climate , the CO 2 released from the combustion of 240 billion barrels (3.8×10 10 m 3 ) of oil would be on the order of 100 billion tonnes of CO 2 , equivalent to four times the annual global CO 2 emissions. [ citation needed ] </li></ul>
O&G Sell-side Script <ul><li>1) 1031 Like-Kind Exchange - assure to branch to this option. </li></ul><ul><li>2) No Transition : If not interested use </li></ul><ul><li>- “ Is it because of the price of oil being low?” </li></ul><ul><li>- “Do you have anything for lease? Do you have an expiring lease?” </li></ul><ul><li>- “ Would you consider acquiring some properties?” </li></ul><ul><li>- “We are working with an International E&P that has not been as adversely effected by the credit crunch, would you like to hear what they would have to say?” </li></ul><ul><li>3) Possible conversation drivers for buy/sell-side : </li></ul><ul><li>- Oil prices will not return for a while- shift to green investments </li></ul><ul><li>- Investor’s in Turn-around projects </li></ul><ul><li>- Discuss EOR methods, water flooding, fracing, and overhead costs. </li></ul>
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