Heavy Oil Challenges & Opportunities North Slope Alaska

Gordon Pospisil - BP Exploration (Alaska) Inc.January 6, 2011

Outline – “Heavy Oil - An Alaskan Sized Prize”

•

Where and What is Heavy Oil?

•

Current Alaska Development ChallengesSchrader Bluff / West Sak Formation

•

Future Development PotentialSchrader Bluff / West Sak Formation

Ugnu Formation

Global Heavy Oil Alaska is on the Map but…

Mexico

Canada

Argentina

VenezuelaTrinidad

Angola

China

IndiaSaudiArabia

Netherlands

UK

Egypt

Indonesia

Jordan

E. Europe

Oman

MadagascarAustralia

Brazil

Russia

EcuadorColombiaPeru

KuwaitTurkeyItaly

Nigeria

EgyptUSA

Lower48

~1 billion~10 billion~100 billion

>1 trillion

Barrels OOIP

Source: JPT, IEA ,Schlumberger OFS Marketing

Alaska

Alaska•Historical Focus on Light Oil•Arctic challenges•High costs

Canada•40 years of heavy oil development•Cradle of Heavy Oil Technologies•Open Data Environment

HO Workshop, SEG 2006

North Slope Heavy oil is a residual formed from light oil that has lost the small (light) molecules leaving the heavy ones. These form hydrocarbon compounds characterized by long, 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

Light End Molecules

What is Heavy Oil?

•

Viscosity is the resistance a material has to change in form….”internal friction.”

•

Viscosity reduction

Heat

Solvent

Dilution (Diluent)

Temperature/Viscosity Relationshipfor several oil samples

Visc

osity

Low

High

TemperatureLow

Hig

h

1

10

102

103

104

105

106

107

108Window putty

Caulk

Vegetable shortening

Peanut butter

Tomato ketchup

Molasses

Honey

Maple syrup

Corn oil

Water

Familiarsubstances

Viscosity(centipoise)Crude Oils

Light Oil

Viscous Oil

Heavy Oil

ExtraHeavy Oil

Tar,Bitumen

Viscosity – “resistance to flow”

Heavy Oil – Key Properties & Considerations

•

High Viscosity (Physical Property)

Flows very slowly: wells produce at lower rates than light oil wells

Developments require lots of wells

Waterflooding is less effective due to the viscosity contrast between heavy oil and water

Often produced with lots of sand

Thermal techniques (e.g. steam) may be required for recovery but energy balance and environmental foot print are factors

•

Lower Hydrogen Content (Chemical Property)

Heavy oil is depleted in hydrogen relative to light oil

Fewer refined products are derived from heavy oil

Heavy oil fetches a lower price on the market

Alaska Viscous & Heavy Oil Resource

Heavy oil resource overlies existing fields

Oil is present in multiple reservoir zones

Total: 24 – 33 Bbbls Oil in Place

Schrader Bluff / West Sak – ~12 Bbbls (14-22 API)

Ugnu – 12-18 Bbbls (8-14 API)

0 2 4 6 81Miles

4

PrudhoeBay

KuparukRiver

MilnePoint

Beaufort Sea

HeavyOil

North Slope Oil FieldsOil viscosity versus Depth

0

2,000

4,000

6,000

8,000

10,000

12,0000 1 10 100 1,000 10,000 100,000 1,000,000

Oil Viscosity (cp)

Dep

th (f

t) West Sak / Orion

Ugnu

Prudhoe

Kuparuk

Alaska Fluid Viscosity Alaska fluids range over a continuum of viscosities

Mostly Developed

Potential Future development

Starting to Develop

Light Oil(like water)

Viscous Oil(like syrup)

Development sequence

Heavy Oil(like honey)

Technical Challenge

“Expect the piloting to take longer and be more complex (painful) than you expect”

0

20000

40000

60000

80000

100000

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

KRUWest Sak

Pilots

MPUConoco

Development

100+ Million bbls cumulative production

Rat

e (b

opd)

2006

2007

2008

PILOT DEVELOPMENT

KRUWest Sak

KRUTabasco

PBUPolaris

MPUS-Pad

PBUOrion

>$500M spent during pilot phase

vertical wells & water-flood fractured vertical wells

horizontals multi-laterals

DEVELOPMENT & PILOTSPILOT

DEVELOPMENTDEVELOPMENT

MPUTract 14

KRUMPUPBU

MPUBP Pilots

Challenges:

•Geologically complicated

•Low productivity due to high viscosity

•Complex production and injection well designs

•Waterflood problems in soft rock formations

•Difficult separation of heavy oil & water

•Solids production and Handling

•Higher operating costs

• Cost: 2-4x conventional well

• Completion Length: Up to 25,000 ft of laterals

• Production Rates: Significantly improved

• Operability: Improved, but still solids, interventions and separation problems

• Completion Length: ~90’ of perforations, 600’ frac

• Production Rates: Marginal• Operability: Fair to Poor

TVDSS

Original DesignConventional

Current DesignMultilateral

600‘ frac

3000’ to 7000’ laterals

Evolution of Heavy Oil Producer Well Design

1.5 mile laterals

300+ ft of section

World class drilling technology has been developed for viscous oil

Drilling from Manhattan to the Statue of Liberty

Heavy Oil Leads to Challenging Well Designs

OA

OBa

OBb

OBc

OBd

OBe

S-213A

S-213AL1-01

TD - 12,054‘ MDLength - 6057’

Total Footage Drilled: 31,564' MDTotal High-Angle Footage: 27,540' MDTotal Slotted Liner Run: ' MDTotal Net Pay: 16,755' MD

TD - 12,100‘ MDLength - 5980’

TD - 12,043‘ MDLength - 4442’

TD - 12,160‘ MDLength - 5751’

TD - 12,190‘ MDLength - 5310’

Heavy Oil production requires facility upgrades Schrader/West Sak

Fill has consistency of Turnagain mud

Production Heater

Solids Disposal

Density Profilers

Sand Jets

Slug Catcher Inlet

Tank Modifications

Equipment installed to remove and dispose of solids

TVDSS

Reservoir Development Strategy

Drilling & Completion

Facilities & OperationsTechnology & LearningsHeavy Oil development requires a collaborative “circle of learning”

Miscible gas

Nort

PrudhoeBay

Kuparuk

MilnePoint

PS

Heavy Oil Production Technology: A Circle of Learning for the Schrader Bluff / West Sak zones

Ugnu Heavy Oil Challenges

“Geology is king and the reservoir dictates the recovery method.”

•

Understand the resource properties and distribution

•

Understand the recovery methods and cutoffs

Challenges:

•100 times thicker than Schrader/West Sak oil

Shallower, colder

•NO production to date

•New technologies needed: geoscience, wells, facilities, and transportation.

•Pilot testing needed to prove commerciality

Heavy Oil Recovery Spectrum

Less than 10% Recovery

Low teens

30 to 50%

99%

Displacement

Solvents

Water Flood

Polymer Flood

0 0.8 1.6 2.4 3.20.4Miles

4

Ugnu M80 Cold Flow Composite ‘Cold’ Flow Risk Map

Risk is driven by oil quality in the west and oil presence in the east

Denotes pilot location

Low risk Moderate riskHigh risk

Viscosity > 10,000 cp

3,800

3,700

3,600

3,500

TvdssFt.GR Res.

Ugn

u

Viscosity vs. RF

1

10

100

1000

10000

100000

1000000

0 10 20 30 40 50 60 70

RF (%)

Visc

osity

Primary WaterfloodPolymerfloodSteamfloodSAGDCSSchopsDusseault chops

• Ugnu viscosities are well above the current waterflood viscosity threshold• Viscosity is within the limits of primary, chops, polymer flood, and a number of steam

recovery methods

Sources: C&C Reservoirs, Dusseault et al., & Sproule

Analogs to Historical Recovery - Screening

Waterflood

Primary (Conv.)

CHOPS

Polymerflood

SteamfloodCSS

SAGD

COLD

THERMAL Ugnu

‘Cold’ Flow Recovery Methods

CHOPS (Cold Heavy Oil Production with Sand)• Deliberate initiation of sand influx into perforated well

• Sustained sand production propagates further into the reservoir (representing a multi-fold increase in reservoir contact)

• Sand produced along with oil, gas, and water

Horizontal Wells• Increase reservoir contact through drilling

• Relies heavily on solution gas drive

• Slotted liner limits sand production into wellbore

There vs. Here

Alaska Design•

Safety & environmental constraintsNo direct fired heaters in tanksNo venting of gasNo spillsOperate safely period

•

Unknown fluid properties and behavior •

First of its kind in Alaska

Canadian Design•

Single well tank battery•

Oil, water and solids trucked separately•

Gas burned or vented•

Direct fired heater•

20+ years experience

Milne Point S-Pad Heavy Oil Facility

Milne Point S-Pad Heavy Oil Pilot

Are the CHOPS and Horizontal depletion mechanisms viable and reliable with Alaska reservoirs and fluids ?

What is the well design and lift system that allows for sustainable and operable movement of a sand/oil/water/gas slurry?

What is the reliability and efficiency of high viscosity and high solids processing and transportation?

M80

UM

80L

M70

TUZC

MPS-37GR Res & So

**

*

*Prim

ary

Targ

ets

M80

UM

80L

M70

TUZC

MPS-37GR Res & So

**

*

*Prim

ary

Targ

ets

CHOPS

Horizontals

Structural Compartments & Associated Fluid Properties

Recovery Methods & Associated Well

Types

Reservoirs& Associated Fluid Properties

SUBSURFACE VARIABLES

SURFACE KIT KEY QUESTIONS

0

50

100

150

200

250

300

2009 2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 2064

MB

PD

Heavy Oil Potential – “Big Dreams”

FuturePresent

Extremely

HighHigh Risk & Uncertainty

Time Frame

VisionPlan Options

Primary

EOR

Thermal

Southern OptionS-Pad Pilot

Southern Option

S-Pad Pilot

Heavy Oil Value Chain Time dependency given viability/longevity of existing infrastructure is driver of pace

•

Heavy oil is a large Alaskan resource Shares footprint with North Slope Light Oil Field DevelopmentsComparable to Light Oil in total oil in place

•

Heavy Oil Reservoirs are challenging to produce on the North Slope!!!

•

Schrader / West Sak production required new technologies over the past 25 years; shows promise…but remains on the margin

geoscience, reservoir, wells, and facilities

•

Ugnu shows potential, but requires successful Pilots of next generation technologies

Key Messages