MAXIMIZING OIL RECOVERY EFFICIENCY AND SEQUESTRATION OF COFuture OilFuture Oil SEQUESTRATION OF CO2WITH “GAME CHANGER” CO2-EOR TECHNOLOGY

Future OilRecoveryEfficiency60%+

Future OilRecoveryEfficiency60%+

Prepared by:Vello A. Kuuskraa, PresidentAdvanced Resources International

Today’s Oil RecoveryToday’s Oil Recovery Advanced Resources InternationalRecoveryEfficiency33%RecoveryEfficiency33%

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SPE DISTINGUISHED LECTURER SERIESis funded principally

through a grant of the

SPE FOUNDATIONThe Society gratefully acknowledges

those companies that support the programby allowing their professionalsby allowing their professionals

to participate as Lecturers.

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And special thanks to The American Institute of Mining, Metallurgical,

and Petroleum Engineers (AIME) for their contribution to the program.

BACKGROUNDBACKGROUND

1. Status and Outlook for CO2-EOR2. “Game Changer” CO2-EOR Technologyg 2 gy

• Increasing Oil Recovery Efficiency• Expanding CO2 Storage Capacityp g 2 g p y

3. “Early Application” of CO2-EOR4 Summary4. Summary

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U.S. CO2-EOR ACTIVITY

Number of CO2-EOR ProjectsNatural CO2 SourceIndustrial CO2 Source

82

2

CO2 PipelineProposed CO2 PipelineCommercial CO2-EOR Fields

Dakota CoalGasification

Plant

Antrim GasLaBarge

Gas Plant

Enid FertilizerPlantMcElmo Dome

9 3

Antrim GasPlant

Currently, 82 CO2-EOR projects provide 237,000 B/D of production

2 11

JAF01994.CDR

Val VerdeGas Plants

Plant

JacksonDome

Sheep MountainBravo Dome 6

6

57

productionAffordable natural CO2 launched CO2-EOR activity in the 1980’sGas Plants 6Federal tax credits (Sec.43) and state severance tax relief still encourage CO2-EOR

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GROWTH OF CO2-EOR PRODUCTION IN THE U.S.2

250,000y)

JAF2006016.XLS

200,000

barr

els/

day

Gulf Coast/OtherMid-ContinentRocky MountainsPermian Basin

150,000

Rec

over

y (b

50,000

100,000

ance

d O

il R

01986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Enha

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Source: Oil and Gas Journal, 2002. Year

LARGE VOLUMES OF DOMESTIC OIL REMAIN “STRANDED” AFTER PRIMARY/SECONDARY OIL RECOVERY

Original Oil In-Place: 582 B Barrels*“St d d” Oil I Pl 390 B B l *“Stranded” Oil In-Place: 390 B Barrels*

Future Challenge390 Billion Barrels

Cumulative ProductionCumulative Production172 Billion Barrels

Proved Reserves20 Billion Barrels

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*All domestic basins except the Appalachian Basin.Source: Advanced Resources Int’l. (2005)

OUTLOOK FOR CO2-EOR

Recently completed “basin studies” of applying “state-of-the-art” CO2-EOR in the U.S. indicate: 2

• Nearly 89 billion barrels of technically recoverable resource,

• From 4 to 47 billion barrels of economically• From 4 to 47 billion barrels of economically recoverable resource.

Results are based on applying streamline i i l ti t 1 581 l il ireservoir simulation to 1,581 large oil reservoirs

(two thirds of U.S. oil production).

Available on the U.S. DOE web site. http://www.fe.doe.gov/programs/oilgas/eor/Ten_Basin-Oriented_CO2-EOR_Assessments.html

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ECONOMICALLY RECOVERABLE RESOURCES FROM CO2-EORRESOURCES FROM CO2 EOR

“TraditionalCO2-EOR Technology” “State of the Art” CO2-EOR Technology

tiona

l, ab

le Oi

l

40

50

Improved EconomicImproved Economic

46.8

Barre

ls of

Add

itca

lly R

ecov

era

30

Improved Economic Improved Economic ConditionsConditionsCurrent Economic ConditionsCurrent Economic Conditions

24.1

Billio

n B

Econ

omi

3 8

20

10

High Cost CO2/Mod. Oil Price/

Hi h Ri k

High Cost CO2/Mod. Oil Price/

L Ri k

Low Cost CO2/Higher Oil Price

Low Risk

3.8

0

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High Risk Low Risk Low Risk

Assumptions: • CO2 Costs ($/Mcf): High = 5% oil price; Low = 2% oil price.• Oil Price ($/Barrel): Moderate = $30; High = $40.

“NEXT GENERATION” CO2-EOR TECHNOLOGYNEXT GENERATION CO2 EOR TECHNOLOGY

Gravity-stable laboratory core floods can recover essentially y y yall of the residual oil. Reservoir modeling and selected field tests also show that high oil recovery efficiencies are possible with innovative applications of CO2-EOR.

Process designs that improve CO2 contact with the reservoir can facilitate high oil recovery efficiencies.

So far except for a handful of cases the actual performanceSo far, except for a handful of cases, the actual performance of CO2-EOR has been less than optimum:

• Geologically complex reservoir settings• Lack of “real time” information on performance• Limited process control capacity

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LIMITATIONS OF PAST PERFORMANCE

Because of high CO2 costs and lack of information and process control, the great majority of past-CO2 floods have used insufficient volumes of CO2.

Means (San Andres) @ 2:1 WAG Ratio1.0

0.9

Injected CO2 vs Oil RecoverySweep Efficiency in Miscible Flooding

insufficient volumes of CO2.

25

0.8

0.7

0.6

0 5 VEffic

ienc

y, E

A 20

15

cove

ry -

% O

OIP

0.8 HCPV

0.6 HCPV

0.5

0.4

0.3

0.2

5.0

2.0

3.0

1.0

V pD

1.5

0.6

Swee

p E V

at B.T. vs. M

pD

10

5ntal

Ter

tiary

Rec 0.4 HCPV

0.2 HCPV

Note: VpD is displaceable fluid pore volumes of CO2 injected.

0.1

00.20 0.5 1 2 105 5020 200100 1000500

0.10.2

Mobility Ratio, M

0403020 50100

Years

Incr

eme

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Source: Claridge, E.L., “Prediction of Recovery in Unstable Miscible Displacement”, SPE (April 1972).

Source: SPE 24928 (1992)

LIMITATIONS OF PAST PERFORMANCE

In many CO2 floods, the injected CO achieved only

Oil and Water

injected CO2 achieved only limited contact with the reservoir:

Vi fi iWater

• Viscous fingering • Gravity override

Addition of viscosity Oil and Water

Waterflood(High Mobility Ratio)

enhancers could help improve the mobility ratio and reservoir contact.

Oil and Water

PolymerIn Water

Water

Viscosity Enhanced Flood(Improved Mobility Ratio)

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Source: Adapted by Advanced Resources Int’l from “Enhanced Oil Recovery”, D.W. Green and G. P. Willhite, SPE, 1998.

REVIEW OF PAST PERFORMANCERelative Location of the Water Front

A major barrier is the inability to target the injected CO to reservoir478 D

368 DaysLayer 1 (High Sor, Low k)

Layer 2 (Low Sor, High k)Water

Relative Location of the Water Front

injected CO2 to reservoir strata with high residual oil saturation.

0 100 200 300

1839 Days(Channeling in Layer 2)

478 Days(Breakthrough)

The figures show: • Higher oil

saturation/lower

0 100 200 300Distance, ft

Source: Adapted by Advanced Resources Int’l from “Enhanced Oil Recovery”, D.W. Green and G. P. Willhite, SPE, 1998.

Well 27-6 Injection Profilepermeability portion of the reservoir is inefficiently swept;

Dept

h

6,350Well 27-6 Injection Profile

(Before) (After)

• CO2 channeling can be mitigated with well workover.

0 20 40 60 80 1006,900

D

0 20 40 60 80 100

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0 20 40 60 80 1006,900

% Injected Before0 20 40 60 80 100

% Injected AfterSource: “SACROC Unit CO2 Flood: Multidisciplinary Team Improves Reservoir Management and Decreases Operating Costs”, J.T. Hawkins, et al., SPE Reservoir Engineering, August 1996.

ARE HIGHER OIL RECOVERY EFFICIENCIES ACHIEVABLE?ACHIEVABLE?

Example Carbonate Field Oil Recovery Efficiencies

80%S lt C k

Jayy

Fact

or

Salt Creek

Means

Rec

over

y

Time

2003 Recovery

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Source: Three ExxonMobil Oil Fields, SPE 88770 (2004)

Time

“GAME CHANGER” CO -EOR TECHNOLOGYGAME CHANGER CO2-EOR TECHNOLOGY

The DOE report, “Evaluating the Potential for “Game Changer”

R i f f t CO EOR fl d

g gImprovements in Oil Recovery Efficiency from CO2-Enhanced Oil Recovery”:

• Reviews performance of past CO2-EOR floods.

• Sets forth theoretically and scientifically possible advances in technology for CO2-EOR.

• Examines how much “game changer” CO2-EOR technology would increase oil recovery and CO2storage capacity. storage capacity.

Available on the U.S. DOE web site. http://www.fe.doe.gov/programs/oilgas/publications/eor_co2/G Ch D t df

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2/Game_Changer_Document.pdf

“GAME CHANGER” CO2-EOR TECHNOLOGY (Cont’d)GAME CHANGER CO2 EOR TECHNOLOGY (Cont d)

• Innovative Flood Design and Well Placementg• Viscosity and Miscibility Enhancement• Increased Volume of CO2 Injection2 j• Flood Performance Diagnostics and Control

– Inter-disciplinary technical teamsp y– 4-D seismic – Instrumented observation wellsInstrumented observation wells– Zone-by-zone performance information

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ACHIEVING 60+% OIL RECOVERY EFFICIENCY WITH “GAME CHANGER” CO2-EOR TECHNOLOGY2

Original Oil In Place: 309 Billion Barrels(Six U.S. Basins/Areas)

Cumulative Production92 Billion Barrels

Remaining Oil In-Place121 Billion Barrels

92 Billion Barrels

Proved Reserves12 Billion Barrels

“Game Changer” CO2-EOR84 Billion Barrels

“St t f th A t” CO EOR

JAF02584.PPT16 Source: Advanced Resources International, 2005

“State-of-the-Art” CO2-EOR41 Billion Barrels

INTEGRATING CO2-EOR AND CO2 STORAGE

Expanding CO2 Storage Capacity: A Case Study. Large Gulf C t il i ith 340 illi b l (OOIP) i th iCoast oil reservoir with 340 million barrels (OOIP) in the main pay zone.

Another 100 million barrels (OIP) in the underlying 130 feet of residual oil zone and an underlying saline reservoir 195 feet thick.

• Main Pay Zone:– Depth - - 14,000 feet – Net Pay - - 325 feet

Initial Pressure 6 620 psi– Oil Gravity - - 33oAPI

– Porosity - - 29%

• Primary/Secondary Oil Recovery: 153 million barrels (45% of OOIP)

– Initial Pressure - - 6,620 psi– Miscibility Pressure - - 3,250 psi

Theoretical CO2 storage capacity: 2,710 Bcf (143 million tonnes)

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INTEGRATING CO2-EOR AND CO2 STORAGE (Cont’d)

State-of-the-Art. Vertical wells; 1 HCPV of CO2 (purchased and

INTEGRATING CO2 EOR AND CO2 STORAGE (Cont d)

State of the Art. Vertical wells; 1 HCPV of CO2 (purchased and recycled CO2); @ 1:1 WAG.

Alternative Design.

• Gravity-stable CO2 injection with horizontal production wells.

• Targeting main pay zone, plus residual oil zone and underlying saline reservoirunderlying saline reservoir.

• Injecting continuous CO2 (no water); continuing to inject CO2after completion of oil recovery.

• Instituting rigorous diagnostic and monitoring.

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INTEGRATING CO2-EOR AND CO2 STORAGE (Cont’d)

CO2 SourceCO2 SourceOil to MarketOil to Market Production WellProduction Well

CO2Injection

CO2Injection

COCOCO2Recycled

CO2Recycled

Swept AreaSwept Area

Current Water Oil Contact

Current Water Oil Contact

Original Water

Original Water

Stage #1Stage #1

Stage #2Stage #2Unswept AreaUnswept Area

Oil BankOil Bank

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WaterOil Contact

WaterOil Contact Stage #3Stage #3TZ/ROZTZ/ROZ

Saline ReservoirSaline Reservoir

INTEGRATING CO2-EOR AND CO2 STORAGE (Cont’d)

With alternative CO2 storage and EOR design, much more CO2 can be stored and more oil becomes potentially recoverable.p y

The additional oil produced is “GREEN OIL”.

“State of the Art” “Next Generation”(millions) (millions)

CO2 Storage (tonnes) 19 109St C it Utili ti 13% 76%Storage Capacity Utilization 13% 76%Oil Recovery (barrels) 64 180% Carbon Neutral (“Green Oil”) 80% 160%

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Weyburn Enhanced Oil Recovery Project(An Operating Project Maximizing Oil Recovery and CO2 Storage)

• Largest CO2 EOR project in Canada:– OOIP 1.4 Bbbls

155 Mbbls incremental– 155 Mbbls incremental

• Outstanding EOR response • World’s largest geological CO2

sequestration projectq p j– 2.4 MMt/year (current)– 7 MMt to date– 23 MMt with EOR

55 MMt ith EOR/ t ti

Regina

WeyburnCanada

– 55 MMt with EOR/sequestrationWeyburn

Saskatchewan ManitobaCanadaUSA

USA

Beulah

North DakotaMontana

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CO2Beulah

“EARLY APPLICATION” OF CO2-EOR

Improving Revenues and Profits: A Case Study. Large, 2.4 billi b l (OOIP) P i B i il ibillion barrels (OOIP) Permian Basin oil reservoir.

• Depth - - 5,200

Gravity 33o API

• Net Pay - - 141 ft.

Initial Pressure 1 850 psi• Gravity - - 33o API

• Porosity - - 12%

• Initial Pressure - - 1,850 psi

• Miscibility Pressure - - 1,500 psi

First produced using traditional sequence - - primary, then secondary and finally CO2-EOR.

Next produced with “early application” CO2-EOR design - - primary,Next produced with early application CO2 EOR design primary, then CO2-EOR (skipping the waterflood).

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“EARLY APPLICATION” OF CO2-EOR (Cont’d)EARLY APPLICATION OF CO2-EOR (Cont d)

The economic value of this oil reservoir (after primary ( p yrecovery) is much higher under “early application” of CO2-EOR.

T diti l S “E l A li ti ”Traditional Sequence(After Primary Recovery)

“Early Application”(After Primary Recovery)

(Million) (Million)

Gross Revenues (NPV @ 10%) $9,300 $19,000

Oil Recovery (Barrels/Years) 1,060 (53 yrs) 1,040 (28 yrs)

Water Production (Barrels) 3,900 1,500

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“EARLY APPLICATION” OF CO2-EOR (Cont’d)EARLY APPLICATION OF CO2 EOR (Cont d)

Traditional Sequence “Early Application”q y pp

60%

70%

OIP) 61% 60%

70%

OIP) 60%

30%

40%

50%

Reco

very

(%OO

39%CO2-EOR

30%

40%

50%

Reco

very

(%OO

CO2-EOR

42%

10%

20%

30%

Oil R

17%14%

Primary Recovery

Secondary Recovery

10%

20%

30%

Oil R

17%14%

Primary Recovery

CO2 EOR

0%4520 73

Years of Operation

0%20 48

Years of Operation

y y

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SUMMARY1 CO enhanced oil recovery while still an1. CO2 enhanced oil recovery, while still an

emerging industry, has the potential to add significant volumes of future oil supply, in the U.S. and worldwide.

2. Thirty years of experience shows that CO2-EOR is a technically sophisticated and challenging process, but one that can be successful if “managed and controlled”, not just “operated”.

3. “Game Changer” CO2-EOR technologies, incorporating scientifically possible but not yet f ll d l d d ld i ifi tlfully developed advances, could significantly increase oil recovery efficiency.

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SUMMARY (Cont’d)

4 “Early application” of CO EOR technology can4. Early application of CO2-EOR technology can significantly increase the economic value of the remaining oil resource.

5 Wide-scale application of CO -EOR is constrained by5. Wide-scale application of CO2-EOR is constrained by lack of sufficient “EOR-Ready” CO2 supplies. A mutually beneficial link exists between CO2-EOR and new industrial sources of CO2.

6. Under a “carbon constrained world”, productively using industrial CO2 emissions for CO2-EOR will become a winning strategy.

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Offi L tiOffice Locations

Washington, DC4501 Fairfax Drive Suite 9104501 Fairfax Drive, Suite 910Arlington, VA 22203Phone: (703) 528-8420Fax: (703) 528-0439

Houston, TX11490 Westheimer Rd, Suite 520Houston, TX 77077Phone: (281) 558-9200Fax: (281) 558-9202AdvancedAdvanced

Resources Resources InternationalInternational

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InternationalInternationalwww.advwww.adv--res.comres.com