role of heavy oil in the peaking...

Berry Petroleum Company, National Academies Workshop, October 20 – 21, 2005 1

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Role of Heavy Oil in the Peaking Debate:How Much?How Fast?How Best?

Robert F. HeinemannBerry Petroleum Company


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Can Supply Keep Up With Demand?

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

100

80

60

40

20

0

New fields

outside M.E.

Global production, MMbopd

IOR

Middle-East fields

Existing fields

outside Middle-

East

2005 Petroleum Consumption: 84 MMbopd

120

Source: EIA 2002


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The Challenge of Producing 100MM bbl/d

Source: EIA 2002

Production from existing fields

0

20,000

40,000

60,000

80,000

100,000

2004 2008 2012 2016

About 45-50 MM bbl/day needed from new fields outside the ME or from

technology by 2015

Global production, Mbopd

Production from existing sources


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Three Categories of Heavy Oil

10

10,000

10,000,000

0 5 10 15 20 25

II. Extra Heavy OilSome mobility depending on

reservoir conditions

I. Tar Sands and BitumenImmobile at reservoir conditions

Alb

erta

Orinoco

San Joaquin

Duri

N. SlopeIII. Medium Heavy OilMobile at reservoir conditions

Dow

nhol

eV

isco

sity

(cP

)

API Density at Reservoir Temperature


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Estimated 5.9 Trillion Barrels in Place

3.3 Trillion of Heavy Oils

2.6 Trillion of Natural Bitumen

Source: USGS – Fact Sheet 70-03, Meyer & Attanasi

II. & III. Heavy -W.Hemisphere,

2,315

II. & III. Heavy -E.Hemisphere,

1,025

I. Bitumen -W.Hemisphere,

1,650

I. Bitumen -E.Hemisphere,

920


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Where is Heavy Oil Located?

Source: Ivanhoe Energy, http://www.ivanhoe-energy.com/i/pdf/2005-06_IE_Background.pdf; June 2005 and USGS – Fact Sheet 70-03, Meyer & Attanasi

266/<1

35/531

7/43

78/-

5/<113/34

30/43

Recoverable heavy (BBO)/Recoverable Bitumen (BBO)


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Comparing Heavy and Light Recoverables

690

125210

262

525

225

0

200

400

600

800

1,000

Light Oil Bitumen Heavy Oil

Canada

Saudi Arabia

Venezuela

952

650

435

Rec

over

able

Res

ourc

e, M

Mbb

l

Source: USGS – Fact Sheet 70-03, Meyer & Attanasi, Oil and Gas Journal

690

125210

262

525

225

0

200

400

600

800

1,000

Light Oil Bitumen Heavy Oil

952

650

435


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The Largest Quantifiable Unconventional Oil Fields –2.5 to 3.6 Trillion Barrels of Oil in Place

Athabasca:Tar Sands & Bitumen

(µ > 10,000 cPo)Oil in place: 1,300 Gb

(EUB Estimates)

ATHABASCA

Orinoco:Extra Heavy Oils(µ < 10,000 cPo)

Oil in place: 1,200 Gb(PdVSA Estimates)


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Current Heavy Oil Production Is <4% of World’s Total

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1995 1997 1999 2001 2003 2005

Canada

United States

Venezuela

Other

World’s Heavy Oil Production (<20 API)

Pro

duct

ion,

MB

OP

D

Source: Various professional, company, and institutional organizations


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Technology Drives Heavy Oil Recovery

Ultimate Recovery = OOIP x Areal Sweep x Vertical Sweep x Process Efficiency

Heavy oil extraction would be expected to utilize:

• A significant number of wells to increase sweep efficiency

• Techniques which maximize contact between the reservoir and the wellbore

• Injection of energy to overcome lack of fluid mobility and expansion in-situ


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Yesterday’s unconventional resource is today’s conventional resource …

Source: Schlumberger Oilfield Review, 2002


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Cyclic Steam Injection: Efficiency vs Effectiveness

HeatZone

HeatZone

Viscous(Thick)

Oil

Viscous(Thick)

Oil

Viscous(Thick)

Oil

Condensed Steam(Hot Water)

Heated ZoneCondensed Steam

and Thinned Oil

DepletedOil Sand

Injection Soak Production

Injected Steam

Condensed Steam(Hot Water)

Area Heated byConvection From

Hot Water

ProducedFluids

From SteamGenerator

~7000 bbl 3-7 days 6 months

• Most widely used

• Low cost

$5/bbl

• Limited recovery

15-20%• Steam/heat containment


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Cold Heavy Oil Production with Sand (CHOPS)

Primary production in unconsolidated sandstones using progressive cavity pumps. The benefits are:

• Good heavy oil well productivity (>100 bopd)

• Low capital & low operating costs ($2-6/bbl)

• Widely used in the Canadian heavy oil belt

The limitations of the technology are:

• Relatively low recoveries (5-10%)

• Not applicable to bitumens

• Unsuitable for reservoirs with an active aquifer

• sand disposal issues

Sour

ce: T

otal

, CU

PCIC

, Fra

ncoi

s, H

eavy

Oil

Res

earc

h Le

ader


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Venezuela Production Methods

The major projects are all based cold production using complex multi- laterals.

• Low costs well with high productivity (2000 bopd) and gradual decline.

• Excellent reservoirs can be high-graded

• Little application to deeper, thin beds that comprise 50% of the resource



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Steam flooding

In steam flooding, the injected steamrises and spreads to producing wells. As breakthrough occurs, oil productionincreases via gravity drainage

Ideal situation

While recovery can be high (>50%), the method requires:

• Tight spacing for good sweep

• Reservoir surveillance to control steam costs

• Reservoir characterization to optimize performance More Realistic



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Steam Assisted Gravity Drainage (SAGD)

SAGD utilizes horizontal wells at the bottom of thick unconsolidated sandstones. Injected steam mobilizes the heavy oil that flows downward by gravity. The method:

• works well in heterogeneous reservoirs

• yields high local recoveries (60%)

• efficiently transfers the heat associated with the steam injection

• requires significant gas volumes Source: Total, CUPCIC, Francois, Heavy Oil Research Leader

• operationally more complex than cold techniques

• may eventually be combined with CHOPS


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California: Customizing Technology to the Reservoir

• California heavy reservoirs were bysettlers in the late 1800’s from seeps.

• Kern River, Belridge and Midway Sunset fields are giant heavy oil fields

• Production is from the Tulare and Monarch sands (Miocene and Pleistocene) such as those shown in the outcrop

• Reservoirs are characterized by high permeability, steeply dipping beds with siltstone barriers



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Berry’s Integrated Approach at Midway Sunset

• Reserves: 69.3 MMBOE, 12,300 BOPD

• Horizontal wells placed every 100 feet to maximize areal sweep

• Legacy vertical wells used for steam injection

• 15% of wells provide 60% of the production

Horizontal Wells:

– Red: Pre-2004

– Green: 2004 to present


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Medium Radius Horizontal

Development Well

Vertical Producers

Down Dip Well

Gravity Drainage Gives Superb Sweep and Recovery

Recovery can be expected

to be60-75%.


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Comparison of Resource Opportunities

Canada Venezuela Midway Sunset

Diatomite

Density 12-18oAPI <10oAPI 13oAPI 15oAPI

Depth 1500-2200 ft 1500-2000 ft 1300 ft 1400 ft

Porosity 25-30% 30-35% 30% 65%

Permeability 1-4 D 2-15 D 1-5 D 500 µD

Thickness 15-100 ft 20-80 ft 50-500 ft 200-400 ft

Temperature 70-100o F 120-150o F 90o F 75o F

Viscosity 500-10000 cP 1000-5000 cP 10000 cP 10000 cP

kh/µmDft/cP

14-140 40-1000 50-250 0.01- 0.10

Source: “Comparing Venezuelan and Canadian Heavy Oil and Tar Sands,” Dussealt, Canadian Int’l Petroleum Conf., 2001; Berry Petroleum Company proprietary data


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…. today’s unconventional resource is tomorrow’s conventional resource.

Full Field Development:3-hundred 1.5 acre seven spot patterns

Electron microscopic picture of a diatom

“Over 200 MMBO OIP On Berry Owned Property”


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Requirements for Sustained Resource Development

• Crude demand increased prices to levels needed to sustain development of unconventional heavy oil

• As heavy production has increased, the differential between light sweet crude and heavy has increased.

• Additional heavy oil refining capacity is needed as the production slate becomes heavier and will bring differentials back to historical levels.

• Adequate natural gas supply is necessary for EOR, transportation, and refining

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Jan-96Jan-97

Jan-98Jan-99

Jan-00Jan-01

Jan-02Jan-03

Jan-04Jan-05

Clo

sing

Pric

e, $

/bbl

WTI NYMEX MWSS Posting Differential

$14.83

$10.75


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Heavy Oil Is Only a Partial Solution

Heavy oil production could double in the next 10 years to 6-7 MMBOPD…….

0

1000

2000

3000

4000

5000

6000

7000

1995 2000 2005 2010 2015

Heavy Production, MBOPD

Canada

U.S.

Venezuela

0

20,000

40,000

60,000

80,000

100,000

2005 2010 2015

Global Production, MBOPD

…..and will fill 10-15% of the gap as world demand moves to 100 MMBOPD.

Production from existing fields

Heavy oil

Production from new sources

Source: Various professional, company, and institutional organizations


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Role of Heavy Oil: Why Not More, Faster, Cheaper?

Enormous accumulations of heavy oil are well known with little

geologic risk. However,

• Light oil production is more profitable

• Current heavy oil technology is limited to the “best” reservoirs

• Today, the industry is resource constrained – capital, people,

equipment and “know-how”

• Political situation in Venezuela is uncertain

• Longer-term, price volatility discourages sustained investment

role of heavy oil in the peaking...

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