The document discusses the rise of unconventional oil production in North America from oil sands and tight oil plays. It provides an overview of Canadian oil sands reserves and production forecasts, describing the primary production and upgrading processes. It also summarizes the Bakken tight oil formation in North Dakota, including its geology and significant production growth. The document notes debates around environmental impacts and challenges of regulatory oversight for oil sands and the potential for other North American shale trends.

1. "The Ascent of Unconventional Oil in
North America"
World Affairs Council
North County Chapter
September 15, 2011

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4. United States Crude Oil Supply
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7. Canadian Oil Sands
Athabasca region, Alberta
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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)
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12. Oil Sands & Syncrude Data
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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)
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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)
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16. Mm
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17. Shell’s Muskeg River Mine & Plant
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18. Shell’s Scotford Upgrader
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21. Alberta Clipper, Keystone & Keystone XL
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22. Enbridge Northern Gateway
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23. Cushing, Oklahoma
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24. Kinder Morgan Proposal
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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
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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 Alberta's primary environmental regulators."
– Industry & environmentalists stretching truth.
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27. Globe and Mail: Report “Mythbusting”
• Myth: Regulatory oversight is strong.
– Report: Alberta hasn't “kept pace with rapid expansion” and has a confusing process prone to
“political interference” and lacking scientific rigour. Ottawa isn't 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 what's
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.
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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
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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
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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
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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
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39. The Bakken ‘Shale’
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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
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43. Bakken/Three Forks Geology
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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
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45. Bakken Production Outlook
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46. Williston-Bakken Output & Pipes
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47. Bakken Crude Oil Transport
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48. Other Liquid-Producing Shale Trends
• Eagle Ford
• Monterey (Calif)
• Niobrara
• Granite Wash
• Tuscaloosa Marine Shale
• Woodford
• Utica
• Marcellus
• Barnett
• Haynesville
• Fayetteville
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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…
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