In low oil-price environments, it is customary to cut expenses, reduce staff, and postpone most, if not all, capital investments. While this strategy may be financially sound in the short term, it is ineffective in the long run, particularly for companies with the need to sustain production levels or to replace reserves through drilling, production or reservoir projects. Heavy oil projects are usually more challenging, as production costs are higher and the oil price is even lower. This presentation addresses the dilemma of controlling cost and at the same time sustaining production and increasing recovery. A balance can be struck by focusing on the quality of decisions, such as when and where to invest, and ensuring that projects are delivered on- budget, a common issue in the E&P industry. The central idea in this presentation is that, in the most complex and financially challenging case of Enhanced Oil Recovery (EOR) projects, the combination of quality decision making and the implementation of “fit-for-purpose” technology offers the most promising middle-point. By providing eight examples of innovative technologies to help reduce uncertainty, cost and time for delivering commercial EOR oil, and three successful case studies, the audience will gain confidence in the proposition that it is perfectly viable to double recoveries for many of our fields in the next 15 years, even in the current price scenario. Finally, EOR is a business, and as such it needs to compete favorably with other businesses in a company’s E&P portfolio - challenging in low oil price environments. The lecture will close by presenting a strategy, illustrated with an example, on how to divert from the traditional engineering approach in favor of a managerial decision approach, that will help engineers to justify viable recovery projects.

1. Society of Petroleum Engineers
Distinguished Lecturer Program
www.spe.org/dl
1
Jose G. Flores, Ph.D.
Developments in Heavy-Oil EOR
for the Era of Low Oil Pricing

2. Outline
● Heavy-oil EOR in a low-price environment
● Proposed strategy
● What can EOR achieve?
● How to do it?
● Business decisions
● Conclusions and Forward plan
2

3. 0
20
40
60
80
100
120
140
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Oil price “prediction”
3
Source: Data EIA (WTI at Cushing, OK)
US$/Barrel

4. ■Population increase
■Energy demand increase
■Mature fields dominate
■Heavy oil abundance
■ Low recovery factors
■ Low production costs
■ EOR is challenging
■Oil price: volatile
■Low pricing: cut cost
4
Oil industry facts / paradigms
Global
Specific
Market

5. Global heavy oil ~10MM bopd
5
Source: NA

6. Heavy oil
6
Source: OGJ (2004)

7. Heavy oil
Oil sands
BitumenHeavy oil
Extra heavy oil7

8. 8
Heavy oil
● May be movable at reservoir conditions
● Low oil rates
● Higher lifting costs / lower oil pricing
● Low RF’s (~5% or lower)
● EOR (thermal) increases Qo and RF’s

9. At the end of the day, the question is:
● How to increase the RF’s (to continue
producing heavy oil,) economically ?
9

10. Our objective for the next 15 years:
DOUBLE the traditional RF’s
Traditional Recovery Factors are
evidently… low
10

11. The principles of EOR
have been known for 60+ years
Source: SPE 84908 Stosur et al. (2003) and SPE 143287 Al-Mutairi et al. (2011)
11
Primary Recovery
Secondary Recovery
Tertiary Recovery
Natural flow Artificial lift
Waterflooding Pressure maintenance
Thermal ChemicalGas injection Other
Steam
Hot water
Combustion
CO2
Hydrocarbon
Nitrogen/Flue
Alkali
Surfactant
Polymer
Microbial
Acoustic
Electromagnetic
IOR
EOR
Oil recovery
Generally <30%
30-50%
>50% and up to 80%

12. EOR cost vs. benefits
0
10
20
30
40
50
60
70
80
0 10 20 30 40 50 60 70 80
Recovery Factor (%)
IncrementalCostperbbl
Water and gas flood, WAG
Surfactant
Thermal
Polymer
CO2 Injection
12
Source: adapted from Schlumberger Oilfield Review (Jan. 1992)

13. If EOR can help double our RF’s …
… why only 3% of the global production
come from EOR?
13
Source: Thomas (2007)
Question:

14. 1. Complex
2. Costly
3. Long times involved
4. There are (always) easier alternatives
14
Answer:
Because EOR is:

15. The “wrong” think to do is to stop projects
The “right” thing to do is to get better at:
● Making sure when and where make your
investments
● Results need to meet budgets
15
In the era of low-oil pricing:

16. How much room for
improvement?
A lot…
In a recent study of large E&P projects…
● the expected result was not achieved
80% of the time
● 30% were over budget or late
● 60+% had production issues
Reference: SPE 181246 (2015)
16

17. “Today, if a megaproject comes in at 25% over
budget and one year behind schedule… it is
considered a success”
“… do not blame the geology, the technology or
the environment”
“Urge to focus on human factors to correct this
trend”
Mr. Fuad Al-Azman, GM Area Projects, Saudi Aramco at 2016 SPE ATCE,
Dubai, UAE
17
Source: spe.org

18. 1. Are we solving the right problem?
2. Do we have a good set of alternatives?
3. Are we using the best possible data?, experts?
4. Quality of analyses?
5. How is uncertainty managed?, volatility?
6. Is everybody prepared to commit?
18
Decision Quality elements
Reference: adapted from SPE 181246 (2015)

19. 1. Answers to complex problems
2. Control costs
3. Reduce time to achieve results
4. Make timely managerial decisions
5. Quality delivery of projects
19
Proposed strategy

20. The EOR workflow… a
classic engineering approach
Screening
Lab
Simulation
Pilot
Full field
Expansion
Risk
Time and Benefit
20
Source: adapted from Schlumberger

21. The “time” issue
21
Source: adapted from PEMEX “Enhanced Oil Recovery Strategy”, Panel on Mature Fields and Enhanced Oil
Recovery (11 November, 2010)
Reservoir
studies, lab
and pilot
design
Pilot test
Field-scale
implementation
Construction Implementation
2 years 2 to 4 years 2 to 3 years Project
duration
First EOR
barrel5-9 years under best practices

22. Experience shows:
The worst news for an EOR project are:
1. The oil bank never arrives at the producer
2. The EOR agent arrives intact on “day 2”
22

23. Is it possible to hit “big time”?
Ex.: Duri field, Indonesia
● World largest steamflooding
operation(*)
● Producers: 4000, Injectors: 1600
● Primary: 65,000 BOPD (7% RF)
● Pattern size 5 to 15 Acre
23
Source: map Oilfield Review (Autumn 2002); (*) SPE 150516 Sutadiwiria and Azwar (2011)

24. 24
Is it possible to hit “big time”?
Ex.: Duri field, Indonesia
MBOPD
Source: Chevron
Thermal EOR: 230,000 BOPD (70% RF in some areas)

25. Is steam injection indispensable?
Ex.: Pelican Lake field, Canada
25
Source: SPE 169715 Delamaide et al. (2014)
● First heavy oil polymer project
● Viscosities: 600 to 40,000+ cp
● Field plateau expected at 60,000 bopd
● EUR 18% (ref: Canadian Natural Resources)
● Cost of polymer injection: 13-17 USD/barrel
CAPEX plus 3-4 USD/barrel OPEX

26. Is steam injection indispensable?
Ex.: Pelican Lake field, Canada
26
Well 14-34
Well 15-34
Source: SPE 169715 Delamaide et al. (2014)
BOPDBOPD
WCWC

27. 27
How about “smart” pilots?
Ex.: Samaria Neogene, Mexico
Source: M. Arteaga, Ingeniería Petrolera (Aug. 2013)
● Oil viscosity: 1,000-5,000 cp at Tr
● Avg. production (cold): 70-280 bopd
● Pilot objective: evaluate, short time, low cost
● CSS pilot (7 wells) started Dec. 2009
● 1st cycle (Dec. 2010): 900,000 BO
● Avg. production (thermal): 1,000-1,700 bopd

28. 28
How about “smart” pilots?
Ex.: Samaria Neogene, Mexico
Source: M. Arteaga, Ingeniería Petrolera (Aug. 2013)
CumproductionNp(bls)
OilrateQo(bls/d)
Well Samaria 948
CumproductionNp(bls)
OilrateQo(bls/d)
Well Samaria 901

29. 29
EOR technologies
1. Screening
Source: Petroleum Solutions
Processes

30. Time: reduce screening time from 4 months to 1 week
30
EOR technologies
1. Screening
Source: Schlumberger

31. 31
EOR technologies
2. Simulation
■ EOR modelling is challenging:
– Much higher resolution is required
oGeologcial understanding
oInsufficient data
– Results lacking confidence (?)
■ Coding EOR mechanisms can be complex

32. Log K
Alkaline
Surfactant
Polymer
32
EOR technologies
2. Simulation
Complexity: improve the quality of predictions

33. 33
EOR technologies
3. Microfluidics (lab-on-a-chip)
■ Sampling heavy oils is challenging:
– Low mobility
– Sand, water (emulsions),
asphaltenes
■ Lab analysis / characterization also difficult:
– Non-equilibrium behavior due to foaminess
Therefore,… very limited PVT data available

34. 34
EOR technologies
3. Microfluidics (lab-on-a-chip)
Cost: facilitate obtaining crucial information
■ Flow of very small volumes of
fluid through capillary tubes
■Higher efficiency, faster, more
precise and safer
Source: lower photo University of Hull

35. 35
EOR technologies
4. Digital Rock
■ Pilots are necessary but take time
– Agent selection
– Design and construction
– Coupling agent-reservoir-operation
– Pilot results and
model calibration
Source: photo BP

36. 3D Micro-CT Displacement Recovery
analysis
■ Numerical approximation to simulate multiple displacement
scenarios at the pore scale
Core
36
EOR technologies
4. Digital Rock
Complexity: answers to a complex problem

37. 37
Source: SPE129069 Arora et al. (2010), SPE136767 Cherukupalli et al. (2010)
EOR technologies
5. MicroPilot
Time: reduce pilot time

38. 38
Cold Warm
Source: BP Frontiers December 2007
EOR technologies
6. Smart fluids
Complexity: address a complex (conformance) issue

39. 39
EOR technologies
7. Downhole steam generator
Cost: increase process efficiency
Source: right-hand-side photo Precision Combustion

40. Base Dt=4 months
Source: SPE120558 Al Ali et al. (2009)
40
EOR technologies
8. Tracking injection fronts
Complexity: answers to a complex problem

41. EOR implementation
Base case: classic engineering
1 2 73 4 5 6 8 9 10
Base case: 5 major fields
■Lab
■EOR pilot design-construction-operation
■Full-field design and construction
■Commercial project operation
First EOR production
■Reservoir studies
9 years for first EOR oil not (generally) acceptable
41
Years

42. o Commercial pilots (10+ patterns)
o Avoid long maturity or modest projects
o Move in parallel
o Studies in all fields with EOR potential
o Strategic alignment
o Take controlled risks
o Use the learning curve
o Move faster in analog fields
Timely business decisions
Achieve 10-20 commercial EOR
projects (in XYZ oil co.) in 3-4
years
42

43. EOR Implementation
Revised case : managerial approach
1 2 73 4 5 6 8 9 1010 pilots in second order fields
■Commercial EOR pilots
■Full-field design and construction
■Commercial project operation
■Reservoir and lab studies
3-4 years for commercial EOR production
43
Years
Major fields
■Lab studies
■Full-field design and construction
■Commercial project operation
■Reservoir studies

44. In conclusion
● Heavy oil EOR is always challenging, but
(always) feasible
● Answers to EOR “downsides”:
– Complexity technology
– Cost maximize value of the $ spent
– Time timely business decisions
44

45. In conclusion (cont…)
● Do NOT stop your projects. Get better at
when and where investing, ensuring that
results meet budgets and forecasts.
● Perfect alignment of project owner, partners
and contractors, e.g., “human factors”, to
eliminate delays and cost overruns
● Focus on data and engineering to precisely
set expectations
45

46. So now, what?
■ Screening
■ Data, data, data
■ Reservoir models
■ Smart pilots
■ Think business
■ Master the technique
■ Reduce risk, cost, time
■ Compete internally
■ ExpandExperts:
Intermediates:
46
Starters:

47. A final piece of advice
Experience shows that the worst news…
1. The oil bank never arrives at the producer
2. The EOR agent arrives intact on “day 2”
The answer:
Improve your reservoir
understanding …
1 10
47

48. Thank you!
48

49. Society of Petroleum Engineers
Distinguished Lecturer Program
www.spe.org/dl 49
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