2012GEOSCIENCE ASSIGNMENT

CLASS B

WORLD OIL AND GAS RESERVES: FUTURE SUPPLY AND pROSPECTSA brief summary of the dynamics that are shaping current oil and gas production as well as a peep in

to the future of the energy resources.

EXECUTIVE SUMMARY

Oil and gas are the resources that fuel modern civilization. Both oil and gas were formed

millions of years ago as a result of decomposition of organic matter in the earth’s sub surface.

Page | 0

The fact that oil and gas reserves are only stored in locations that fulfill some basic geological

features makes their exploration and production limited to only certain regions of the world. The

proven reserves of oil and natural gas are currently estimated at about 1.5 trillion barrels and 196

trillion cubic meters respectively. The Middle East alone sits on top of about 54% of the

currently proven reserves. With oil consumption currently estimated at about 88 million barrels

per day (mbpd), there are legitimate concerns that future supply of both oil and gas could be in

jeopardy due to decline in average size of modern oil field discoveries and rapid depletion of

existing reservoirs. This has led experts in the industry to debate the imminence of “oil peaking”

and gradual decline afterwards. To manage the negative consequences of shortfall in future oil

and gas supplies, various mitigation options are being proposed. These include; conservation in

energy use, development of renewable sources of energy; improved oil recovery techniques; oil

exploration in the arctic region; and exploration of unconventional sources such as tar sands,

heavy oil, gas shale, etc.

Page | 1

Contents

EXECUTIVE SUMMARY.................................................................................................................................1

1.0 INTRODUCTION...............................................................................................................................3

2.0 WORLD OIL AND GAS RESERVES............................................................................................................4

2.1 WORLD OIL AND GAS BASINS............................................................................................................4

2.2 RESERVES ESTIMATES........................................................................................................................7

Proved Reserves..................................................................................................................................8

Probable Reserves...............................................................................................................................8

Possible Reserves.................................................................................................................................8

3.0 FUTURE SUPPLY AND PROSPECTS..........................................................................................................9

3.1 PEAK OIL..........................................................................................................................................11

Factors That Could Impact Oil Peaking..............................................................................................13

3.2 MITIGATION OPTIONS.....................................................................................................................14

Exploring unconventional sources.....................................................................................................14

Drilling in the Arctic...........................................................................................................................19

Improved Oil Recovery (IOR).............................................................................................................20

4.0 CONCLUSION.......................................................................................................................................22

Bibliography...............................................................................................................................................23

Page | 2

1.0 INTRODUCTION

The purposeful production of oil that started about 150 years ago has led to a tremendous

improvement in global civilization. Today, oil could arguably be described as the lifeline of

modern civilization. Oil and gas are the main sources of energy for bulk of world’s transportation

system – automobiles, trucks, airplanes, etc. A significant amount of global electricity supply is

also produced from oil and gas. Aside meeting energy needs, oil and gas also serve as the

primary feedstock for the manufacture of many chemicals that are essential to modern life.

Geologists have studied and identified the basic geological features that make up a good oil and

gas reservoir – source rocks, reservoir rocks, seals and traps. The occurrence of these geological

features exists only in some locations around the world, and hence oil and gas reserves are

unevenly distributed around the globe. The regions that hold bulk of the proven oil and gas

reserves in the world are the Middle East, Latin America, Africa and Eastern Europe/Eurasia.

The Organization of Petroleum Exporting Countries (OPEC) estimates the world proven Oil and

Natural Gas reserves at about 1.5 trillion barrels and 196 trillion standard cubic meter of gas

respectively. The Middle East alone accounts for about 54% of the resources.

Although the current proven oil and gas reserves appear to be huge, the rate of consumption of

these resources is growing at increasingly fast rates. The challenge becomes even more when the

declining average size of modern oil discoveries and the rate of depletion in conventional oil

fields are considered. It is against this backdrop that the proponents of “Peak Oil” argue that

peaking in oil production and subsequent decline is imminent in the future. It is however not

clear when this peaking will occur.

Mitigating options are, therefore, not only important but necessary in order to guard against

catastrophic unforeseen circumstances that could occur in the future due to oil shortage. Possible

areas that are currently generating interest include conservation in energy use; improved oil

recovery; exploration of unconventional sources (oil shale, tar sands, etc); development of

renewable sources of energy and oil exploration in the arctic region.

Page | 3

This short report aims to give a summary of the current world view about global oil and gas

reserves as well as future supply and prospects.

Page | 4

2.0 WORLD OIL AND GAS RESERVES

Both crude oil and natural gas were formed millions of years ago as a result of the decomposition

of organic matter trapped in sediments and subjected to high temperature and pressures the

within the subsurface of the earth. The basic geological features that make up a good reservoir

are: (i) Oil and Gas source rocks (ii) Reservoir rocks (iii) Seals and, (iv) Traps. Oil exploration

activities over the years have helped in mapping out oil and gas locations around the world. It

has been observed that these two important resources are unevenly distributed in the world. Most

of the regions with potential reserves are located around the former USSR, Middle East, North

Africa, Asia Pacific and some other areas around the world.

The Organization of Petroleum Exporting Countries (OPEC) estimates the world proven Oil and

Natural Gas reserves at about 1.5 trillion barrels and 196 trillion standard cubic meter of gas

respectively.

This section of the report provides briefs about the world oil and gas basins as well as reserves

estimates.

2.1 WORLD OIL AND GAS BASINS

There are about 570 petroleum basins as well as 560 large and significant oil and gas fields.

There are 1 trillion tons of discoverable oil in about 100 million km² of sedimentary rocks on

earth (70% on continental masses and the rest under the ocean).

According to Guoyo Li, scientific analysis of the trends of the global oil industry shows the

following:

84%-88% of conventional and non-conventional oil resources remain unexplored and

undeveloped

Of all the explored reserves, only about 30% of original oil in place has been developed.

Generally oil and gas basins are classified by their sedimentary cover, plate tectonic settings,

stress history, geometry and subsistence characteristics. The classification based on geometry

describes basins as symmetrical, assymetrical , platformal and triangular.

Page | 5

Concentrations of reserves within particular age ranges reflect development of two major

categories of basins: (1) marine platform basins, which were dominant in the Devonian, Jurassic,

and Cretaceous periods, and (2) rapidly subsiding basins, which were dominant in the late

Tertiary and probably during the Late Carboniferous.

Paleozoic reserves (North America and Europe) are related to stable-platform environments;

Mesozoic and Tertiary reserves are in the Mesogean (Tethyan) realm, passive margins, and the

western American mobile belts. The Mesogean realm contains 69% of the world oil and gas

reserves and reflects the history of repeated opening and closing of the Mesogea ocean that

resulted in several phases of basin development. Comparative isolation favored preservation of

organic matter. Hydrocarbon reserves generally decrease as the ages of the reservoir and source

rocks increase.

Hydrocarbons and the global basin classification system have important connections. After a

basin has been classified, its similarities or differences with other basins may be compared.

Prolific hydrocarbon basins are categorized, and the plays are compared to specific tectonic and

depositional events. Some plays are controlled by basin-initiating tectonic events, such as interior

fracture or interior sag, and the type of sedimentation inherent in each basin type. In more

complex poly-history basins, oil and gas plays are commonly associated with combinations of

various cycles, or by basin-modifying tectonics such as episodic wrenching, subsidence, fold

belts, and basin tilt. Interior fracture basins include some of the most prolific interior sag basins,

interior fracture basins, margin sag basins, margin sag-interior sag basins, wrench or shear basins

and trench-associated basins.

Major petroleum provinces or basins of the world include the following:

Asia: West Siberia, East Siberia, Karakum, South Caspian, Fergana, Junggar,Tarim, Songliao,

Persian Gulf, Central and South Sumatra

Africa: Suez, Sirte, Trias, Ciefara, Illiizi, Niger Delta, Tano

Europe: North sea, Drieper-Donets, Volga-Urals, Caspian

Oceania: Cooper, Bowen, Surat, Crippsland, Taranaki

North America: Alberta, Permian, Gulf of mexico

Latin America: Maracaibo, East Venezuela, Putomayo (Nakicenovic, 1998)

Page | 6

Figures 1 and 2 give the locations of global oil and natural gas endowments respectively.

Fig 1: Global crude oil endowment areas

Fig 2: Global Natural gas endowment areas

Page | 7

2.2 RESERVES ESTIMATES

The total estimated amount of oil in an oil reservoir, including both producible and non-

producible oil, is called oil in place. However, because of reservoir characteristics and limitations

in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and

it is only this producible fraction that is considered to be reserves. The ratio of producible oil

reserves to total oil in place for a given field is often referred to as the recovery factor. Recovery

factors vary greatly among oil fields. The recovery factor of any particular field may change over

time based on operating history and in response to changes in technology and economics. The

recovery factor may also rise over time if additional investment is made in enhanced oil recovery

techniques such as gas injection, surfactants injection, water-flooding, or microbial enhanced oil

recovery.

Ultimately Recoverable Reserves (URR) is an estimate of the total amount of oil that will ever be

recovered and produced. It is a subjective estimate in the face of only partial information. Whilst

some consider URR to be fixed by geology and the laws of physics, in practice estimates of URR

continue to be increased as knowledge grows, technology advances and economics change.

Economists often deny the validity of the concept of ultimately recoverable reserves as they

consider that the recoverability of resources depends upon changing and unpredictable

economics and evolving technologies.

The ultimately recoverable resource is typically broken down into three main categories:

cumulative production, discovered reserves and undiscovered resource.

Cumulative production is an estimate of all of the oil produced up to a given date.

Reserve figures are broken into two primary categories according to theoretical accuracy: proved

and unproved. Unproved reserves carry more uncertainty, and are further broken into "probable

reserves" and "possible reserves", the latter of which has a lower probability of being recovered.

Discovered reserves are an estimate of future cumulative production from known fields and are

typically defined in terms of a probability distribution. Discovered reserves are typically broken

down into proved, probable and possible reserves.

Page | 8

Proved Reserves

Although there is no single, commonly accepted technical definition of proved reserves, a

commonly used description is as follows: "the estimated quantities of oil which geological and

engineering data demonstrate with reasonable certainty to be recoverable in future years from

known reservoirs under current economic and operating conditions".

A probability cut-off of 90% is sometimes used to define proved reserves, i.e. the proved

reserves of a field are defined as having a better than 90% chance of being produced over the life

of the field. In this sense, proved reserves are a conservative estimate of future cumulative

production from a field.

Probable Reserves

After an oil exploration firm conducts a seismic survey of a piece of land, it obtains the proven

and probable reserves in that area. Probable reserves are those which have a 50% chance of

being present. For example if an oil company believes that there is decent chance of a successful

drilling operation, they would classify those reserves as "probable."

If a reserve is considered probable, only 50% of the expected recovery amount is factored into

the total reserve. Oil companies are often valued based on a PP (proven + probable) reserve ratio

basis. Probable reserves vary from possible reserves, which only have a 10% chance of full

extraction.

Probable reserves have been variously designated as 'indicated' or P50 reserves, the latter

referring to reserves which are estimated to have a better than 50% chance of being technically

and economically producible.

Possible Reserves

This is an estimate of the amount of oil or natural gas reserves that may be available for

extraction. Possible reserves have been designated as 'inferred' reserves, sometimes referred to as

P10 or P20 reserves – i.e. including reserves which, at present, cannot be regarded as 'probable',

but which are estimated to have a significant, but less than 50 per cent chance of being

technically and economically producible.

Page | 9

In general, a portion of a field's probable and possible reserves tend to get converted into proved

reserves over time as operating history reduces the uncertainty around remaining recoverable

reserves: an aspect of the phenomenon referred to as 'reserves growth'.

Like reserves, undiscovered resource is also defined typically in terms of a probability

distribution. Estimates of 'yet-to-find' resource are made based on a range of geological,

technological and economic factors.

The world proven crude oil and natural gas reserves by region are given in Table 1.

Table 1: World proven crude oil and natural gas reserves by region (2011 estimates)

Region Oil Reserve Estimates (million

barrels)

Natural Gas Reserve

Estimates (billion

standard cubic meter)

North America 25,582 9,900

Latin America 340,782 7,903

Eastern Europe and Eurasia 126,994 7,903

Western Europe 12,648 4,817

Middle East 796,845 79,575

Africa 128,578 14,715

Asia and Pacific 50,097 16,394

Total (World) 1,481,526 196,163

3.0 FUTURE SUPPLY AND PROSPECTS

In recent years, there has been extensive interest about the determinants of future world oil and

gas supply. Some experts argue that due to declining average size of modern oil discoveries and

the rate of depletion in conventional oil fields, the growth rate in oil use could overtake available

conventional resources in the future. These concerns seem to be further strengthened by current

high oil prices and the low level of spare oil-production capacity worldwide. Other professionals

on the other hand suggest that advances in oil exploration and drilling technology would expand

Page | 10

potential frontier resources and greatly reduce the costs of exploiting them. They argue that these

technologies could be used in areas that are newly reopened to the international industry, such as

the former Soviet Union, China, and the Persian Gulf, to provide potentially higher supplies.

Political, social, and economic factors also play a critical role. The question is not just whether

there will be enough oil under the ground but whether the political, social, and economic

environment in oil-producing regions will facilitate or hinder the development of this oil wealth

(Baker, 2000).

Future world recoverable reserves are the sum of the oil remaining in existing reservoirs plus the

reserves to be added by future oil discoveries. Future oil production will be the sum of

production from older reservoirs in decline, newer reservoirs from which production is

increasing, and yet-to-be discovered reservoirs.

Owing to high oil prices, oil companies have conducted extensive exploration over that period,

but their results have been disappointing. If this trend continues, there is little reason to expect

that exploration success will dramatically improve in the future. This situation is evident in

Figure 1, which shows the difference between annual world oil reserves additions and annual

consumption. It could be inferred from the figure that the world is gradually moving from a long

period in which reserves additions were much greater than consumption, to an era in which

annual additions are falling increasingly short of annual consumption. This is one of the most

obvious trends that suggest the world is indeed approaching an inevitable peaking of

conventional oil production (Hirsch, Bezdek, & Wendling, 2005).

Page | 11

Figure 3: Net Difference between Annual World Oil Reserves Additions and Annual

Consumption

3.1 PEAK OIL

Geologists point out that oil is a finite resource in the earth’s crust, and at some future date,

world oil production will reach a maximum -- a peak – after which production will decline. This

is a direct deduction from what happens to individual oil reservoirs. Normally, output from oil

reservoirs rises after discovery, reaches a peak and then starts to decline. Oil reservoirs have

lifetimes typically measured in decades, and peak production often occurs roughly a decade or so

after discovery. It is important to recognize that oil production peaking is not “running out.”

Peaking is a reservoir’s maximum oil production rate, which typically occurs after roughly half

of the recoverable oil in a reservoir has been produced. In many ways, what is likely to happen

on a world scale is similar to what happens to individual reservoirs, because world production is

the sum total of production from many different reservoirs (Hirsch, Bezdek, & Wendling, 2005).

Since the beginning of the modern oil era in the mid 1800s, there have been speculations about

peaking world oil production. Initially, predictions of peaking were mainly based on guesswork

due to little knowledge of petroleum geology. Over time, geological understanding improved

significantly and guessing gave way to more informed projections, although the knowledge base

is fraught with numerous uncertainties even today. Past predictions typically fixed peaking in the

Page | 12

succeeding 10-20 year period. Most such predictions were wrong, which does not however

negate that peaking will someday occur. Obviously, it cannot be concluded with certainty if

recent forecasts are wrong until predicted dates of peaking pass without incident.

Several experts predict that peaking of the world production of conventional oil could occur in

the relatively near future. Such projections are however fraught with uncertainties largely

because of poor data, political and institutional self interest, and other complicating factors. The

implication is that no one knows with certainty when world oil production will reach a peak, but

geologists have no doubt that such a period will occur. Table 2 shows some of the predictions

made regarding world oil production peaking.

Table 2: Predictions of World Oil Production Peaking

Projected Date Source of Projection

2006 – 2007 Bakhitari

2007 – 2009 Simmons

After 2007 Skrebowski

Before 2009 Deffeyes

Before 2010 Goodstein

Around 2010 Campbell

After 2010 World Energy Council

2010 – 2020 Laherrere

2016 EIA (nominal)

After 2020 CERA

2025 or later Shell

No visible peak Lynch

Source: (Hirsch, Bezdek, & Wendling, 2005)

Page | 13

Factors That Could Impact Oil Peaking

A number of factors could have considerable effect in either alleviating or exacerbating the

problem of world oil peaking (Hirsch, Bezdek, & Wendling, 2005).

Factors that could impact positively on the Problem of Oil Peaking

1. World oil reserves are much larger than publicly stated.

2. A number of new super-giant oil fields are found and brought into production well

before oil peaking might otherwise have occurred.

3. High world oil prices over a sustained period induce higher energy efficiency.

4. The developed nations (such as the US and Western Europe) and highly populated

countries such as India and China decide to implement efficient fuel utilization standards

well before world oil peaking.

5. A slowdown in both world economic and population growth rates leading to lesser oil

demand in the future than currently anticipated.

6. Oil prices stay at a high enough level on a sustained basis so that industry begins

exploring alternative fuels well before oil peaking.

7. Huge new reserves of natural gas are discovered, a portion of which is converted to

liquid fuels.

8. Some kind of scientific breakthrough comes into commercial use, mitigating oil demand

well before oil production peaks.

Factors that could impact negatively on the Problem of Oil Peaking

1. World reserves are much less than stated.

2. Political instability in major oil producing countries results in unexpected, sustained

world-scale oil shortages.

3. Large-scale, sustained Middle East political instability hinders oil production.

4. Demand of luxurious, larger, less fuel-efficient cars and SUVs increases.

Page | 14

3.2 MITIGATION OPTIONS

Global oil consumption is expected to rise by about 60% between now and 2020. Of all uses of

oil, transportation would be the fastest growing oil-consuming sector; and as a result, global

consumption of gasoline could double (The future of oil). Figure 3 also clearly shows that world

reserves additions are gradually being overwhelmed by consumption. It therefore becomes

necessary to consider and vigorously pursue the development of alternatives to conventional oil

and natural gas. Some of the options available to mitigate shortfall in future supply of

conventional oil and gas include:

i. Exploring unconventional sources such as shale oil, tar oil, heavy oil deposits, etc.

ii. Vigorous oil exploration in the arctic region, which was hitherto considered a difficult

terrain.

iii. Developing improved technologies for maximum recovery of existing fields.

Other possible options could include conservation in energy use as well as development of

alternative sources of energy such as renewable.

Exploring unconventional sources

a) Oil Shale

Oil shale is commonly defined as a fine-grained sedimentary rock containing organic matter that

yields substantial amounts of oil and combustible gas upon destructive distillation (Dyni, 2005).

Oil shale is an organic-rich fine-grained sedimentary rock containing significant amounts of

kerogen (a solid mixture of organic chemical compounds) from which technology can extract

liquid hydrocarbons (shale oil) and combustible oil shale gas.

Lithologically, oil shale covers a broad range of rocks from shale to marl and carbonates, which

forms a mixture of tightly bound organic and inorganic materials (Altun, Hicyilmaz, Hwang,

Suat Bagci, & Kok, 2006). Oil shale is characterized by a low calorific value and high ash and

mineral content (Brendow, 2003).

The general composition of oil shale is given in the Figure 4 (Altun, Hicyilmaz, Hwang, Suat

Bagci, & Kok, 2006).

Page | 15

Fig 4: Composition of oil shale

Just like in the case of conventional oil, oil shale resources are concentrated in a few countries.

However, while this is true geologically, economically it is not: due to the size of the

occurrences, even “small” deposits can be huge related to the energy needs of the country

concerned (Brendow, 2003). Table 3 gives oil shale reserves and production figures.

Page | 16

OIL SHALEBITUMENSKEROGEN Quartz Feldspar Clays (mainly illites and Chlorites) Carbonates (Calcite and Dolomites) Pyrite and Others

Insoluble in CS2

Contains V, U, Fe, Ni and MO

Table 1: Economic oil shale reserves and production as reported by World Energy Council

Region/Country Recovery

Method

Proven

Oil

Shale

Reserves

( x 106

tons)

Proved

recoverable

oil

potential

( x 106 tons)

Average

shale oil

yield

Kg

oil/ton

Estimated

Additional

Oil

Potential

( x 106

tons)

Shale Oil

Production

in 1999

( x 103

tons)

Africa/Morocco Surface 12300 500 50 – 64 5400 -

Africa/S. Africa In-Situ 73 10 -

N.America/USA Surface3340000

60000 –

8000057 62000 -

S.America/Brazil Surface 70 9646 195

Asia/Thailand In-Situ 18668 810 50 -

Asia/Turkey Surface 1640 269 56 -

Europe/Albania Surface 6 5 -

Europe/EstoniaSurface 590

167151

In-Situ 910 -

Europe/Ukraine In-Situ 2674 300 126 6200 -

Middle East/Israel Surface 15360 600 62 -

Middle East/Jordan Surface 40000 4000 100 20000 -

Oceania/Australia In-Situ 32400 1725 53 35260 5

b) Oil Sands/ Tar Sands

Oil sands, tar sands or, more technically, bituminous sands, are a type of unconventional

petroleum deposit.The oil sands are loose sand or partially consolidated sandstone containing

naturally occurring mixtures of sand, clay, and water, saturated with a dense and extremely

viscous form of petroleum technically referred to as bitumen (or colloquially tar due to its similar

appearance, odour and colour). Oil produced from bitumen sands is often referred to as

unconventional oil or crude bitumen, to distinguish it from liquid hydrocarbons produced from

traditional oil wells (Centre for Energy, 2002).

Page | 17

Canada has the largest reserves of tar oil in the world with about 70.8% (176.8 Billion Barrels)

of the reserves. Other countries with large reserves of tar oil are Kazakhstan and Russia (Attanasi

& Meyer, 2010).

Most of the oil sands in Canada are located in three major deposits in Alberta. These are:

The Athabasca-Wabiskaw oil sands of north northeastern Alberta

The Cold Lake deposits of east northeastern Alberta

The Peace River deposits of northwestern Alberta

In Kazakhstan, the oil sand deposits are located in the North Caspian basin. In Russia, the

deposits are located in:

Tunguska Basin

Volga-Urals Basin

Timan-Pechora Basin

Tar sands are mined and processed to generate oil similar to oil pumped from conventional oil

wells, but extracting oil from tar sands is more complex than conventional oil recovery. Oil

sands recovery processes include extraction and separation systems to separate the bitumen from

the clay, sand, and water that make up the tar sands. Bitumen also requires additional upgrading

before it can be refined. Because it is so viscous (thick), it also requires dilution with lighter

hydrocarbons to make it transportable by pipelines (About Tar Sand).

c) Heavy Oil and natural Bitumen

Among the different unconventional sources, heavy crude oil and natural bitumen are perhaps

the most readily available to supplement short- and long-term needs. Heavy oil is asphaltic and

contains asphaltenes and resins. It is "heavy" (dense and viscous) due to the high ratio

of aromatics and naphthenes to paraffins (linear alkanes) and high amounts of NSO's

(nitrogen, sulfur, oxygen and heavy metals). It also has a higher percentage of compounds with

over 60 carbon atoms and hence a high boiling point and molecular weight. Heavy oil is, by

definition, oil with API gravity between 10°API and 20°API inclusive and a viscosity greater

than 100 cP. Natural Bitumen is oil whose API gravity is less than 10° and whose viscosity is

commonly greater than 10,000 cP.

Page | 18

Heavy oil has long been exploited as a source of refinery feedstock, but has commanded lower

prices because of its lower quality relative to conventional oil. The abundance of unconventional

oil is a great factor that can mitigate the dwindling conventional oil reserves. The greatest

challenge however, is the method of producing unconventional oil due to its physical and

chemical properties.

World over, heavy oil and natural bitumen are found in large deposits in different basins of the

world and in different geographical locations. The total resources of heavy oil in known

accumulations are 3,396 billion barrels of original oil in place, of which 30 billion barrels are

included as prospective additional oil. The total natural bitumen resource in known

accumulations amounts to 5,505 billion barrels of oil originally in place, which includes 993

billion barrels as prospective additional oil. This resource is distributed in 192 basins containing

heavy oil and 89 basins with natural bitumen. Large quantities of heavy crudes have been

discovered in the Americas including Canada, Venezuela and California. The largest reserves of

heavy crude oil in the world are located north of the Orinoco river in Venezuela, the same

amount as the conventional oil reserves of Saudi Arabia, but 30 or more countries are known to

have reserves.

Today, heavy oil belt extraction use similar production technologies as in situ oil sands:

Primary Recovery

Cold heavy oil production with sand (CHOPS). Both sand and oil are recovered with

progressing cavity pumps. Recovery factors range from 3 to as high as 12 percent using this

technology.

Horizontal well technologies – typically applied to areas of the heavy oil belt with lighter

gravity crudes, similar recoveries to CHOPS.

Secondary recovery

Water and polymer flooding are used in lower viscosity reservoirs.

Thermal (CSS – Cyclic Steam Simulation and steam drive) – CSS followed by steam drive

has been used since the early 1980’s.

Page | 19

New methods promise to unlock more of the oil in place and extend the world’s heavy oil

production for many more decades. These new methods are now being piloted either as primary

production methods or as a follow-up process after primary:

Hybrid Steam solvent processes and solvent only processes – Adding solvent to the steam

injection or solvent alone increases recovery and reduces energy use. A number of projects

are being piloted in the region, including a project that injects solvent only.

In situ Combustion – this process combusts the heavy oil in the reservoir, mobilizing the oil;

effectively combusting about 10 percent the oil to produce the rest. It is possible that

combustion could be used in the thinner reservoirs prevalent in the heavy oil region.

Drilling in the Arctic

The Arctic is a polar region located at the northern-most part of the Earth. The Arctic consists of

the Arctic Ocean and parts of Canada, Russia, Denmark (Greenland), Norway, the United States

(Alaska), Sweden, Finland, and Iceland. The Arctic region consists of a vast, ice-covered ocean,

surrounded by treeless permafrost. The area can be defined as north of the Arctic Circle (66°

33'N), the approximate limit of the midnight sun and the polar night (Arctic, 2009).

The United States Geological Survey estimates that 22 percent of the world's oil and natural gas

could be located beneath the Arctic (United States Congress, 2010).

There are 19 geological basins making up the Arctic region (Figure 5). Some of these basins

have experienced oil and gas exploration, most notably the Alaska North Slope where oil was

first produced in 1968 from Prudhoe Bay. However, only half the basins - such as the Beaufort

Sea and the West Barents Sea - have been explored.

A 2008 United States Geological Survey estimates that areas north of the Arctic Circle have 90

billion barrels of undiscovered, technically recoverable oil (and 44 billion barrels of natural gas

liquids) in 25 geologically defined areas thought to have potential for petroleum. This represents

13% of the undiscovered oil in the world. Of the estimated totals, more than half of the

undiscovered oil resources are estimated to occur in just three geologic provinces - Arctic

Alaska, the Amerasia Basin, and the East Greenland Rift Basins (United States Geological

Survey, 2008).

Page | 20

Fig 5: United States Geological Survey Hydrocarbon Map of the Arctic Region

Among the greatest uncertainties in future energy supply and a subject of considerable

environmental concern is the amount of oil and gas yet to be found in the Arctic. The exploration

of the Arctic for petroleum is more technically challenging than for any other environment.

However, with increases in technology and continuing high oil prices the region is now receiving

the interest of the petroleum industry.

Several companies, especially shell are drilling successfully in the arctic. Indeed, Shell

announced the completion of its 2012 drilling season in the Arctic in October 2012.

Improved Oil Recovery (IOR)

IOR comprises the various methods used to increase oil production and to expand the volume of

recoverable oil from the reservoir. The several options available include horizontal drilling,

advanced reservoir characterization, enhanced oil recovery (EOR), and a variety of other

methods that can increase the flow and recovery of liquid hydrocarbons.

Page | 21

Enhance Oil Recovery (EOR), also known as tertiary recovery, provides a viable opportunity to

increase production from existing reservoirs. EOR usually comes after both primary and

secondary recovery options have been exhausted. In primary production, oil flows naturally to

the surface due to high pressure in the sub surface. This occurs during the early stages of oil

production. Further production leads to decrease in the sub surface structure, which prompts the

use of secondary recovery in order to sustain the flow of oil. In secondary recovery, water is

injected into the reservoir to force additional oil to the surface.

EOR has been practiced since the 1950s in various conventional oil reservoirs, particularly in the

United States. The process that likely has the largest worldwide potential is miscible flooding

wherein carbon dioxide (CO2), nitrogen or light hydrocarbons are injected into oil reservoirs

where they act as solvents to move residual oil.

Page | 22

4.0 CONCLUSION

1. Oil and gas reserves are preferentially located in some regions of the world, with the

Middle East holding the most significant part.

2. Reserve figures are broken into two primary categories according to theoretical accuracy:

proved and unproved. The proven reserve implies the estimated quantities of oil which

geological and engineering data demonstrate with reasonable certainty to be recoverable

in future years from known reservoirs under current economic and operating conditions

3. Hundreds of petroleum basins around the world store proven reserves of about 1.5 trillion

barrels and 196 trillion cubic meters of crude oil and natural gas respectively.

4. Oil and gas basins are generally classified by their sedimentary cover, plate tectonic

settings, stress history, geometry and subsistence characteristics.

5. There are legitimate concerns that oil shortage is imminent due to declining oil

discoveries and rapid depletion of reservoirs on one hand and the ever increasing growth

in consumption of oil and gas resources on the other hand.

6. Geologists are of the opinion that oil production will reach a maximum, from whence it

will begin to decline. There are however, divergent views about the timing of this

peaking in oil production.

7. Some of the options available to mitigate shortfall in future supply of conventional oil

and gas include; conservation in current energy use, exploration of unconventional

sources, oil and gas exploration in the arctic, improved technologies for maximum

recovery as well as development of alternative energy sources such as renewables.

Page | 23

Bibliography

1. About Tar Sand. (n.d.). Retrieved November 2012, 2012, from 2012 Oil Shale and Tar Sands Programmatic EIS: http://ostseis.anl.gov/guide/tarsands/index.cfm

2. Altun, N., Hicyilmaz, C., Hwang, J., Suat Bagci, A., & Kok, M. (2006). Oil Shales in the World and Turkey; Reserves, Current Situation and Future Prospects: A Review. Oil Shale , 211 - 227.

3. Arctic. (2009, May 2). Retrieved November 1, 2012, from Dictionary.com: http://dictionary.reference.com/browse/arctic

4. Attanasi, E. D., & Meyer, R. F. (2010). Natural Bitumen and Extra-Heavy Oil. Survey of Energy Resources , 123 - 140.

5. Baker, J. (2000, November 14). Running on Empty? Prospects for Future World Oil Supplies. Retrieved November 27, 2012, from Baker Institute Study: http://bakerinstitute.org

6. Brendow, K. (2003). Global Oil Shales Issues and Perspectives. Symposium on Oil Shale (pp. 81 - 92). Tallinn: Estonian Academy Publishers.

7. Centre for Energy. (2002). Oil Sands and Heavy Oil. Retrieved November 1, 2012, from Centre for Energy: http://www.centreforenergy.com/AboutEnergy/ONG/OilsandsHeavyOil/Overview.asp

8. Dyni, J. R. (2005). Geology and Resources of Some World Oil-Shale Deposits. Retrieved October 30, 2012, from Geology.com: http://geology.com/usgs/oil-shale/

9. Hirsch, R. L., Bezdek, R., & Wendling, R. (2005). Peaking of World Oil Production: Impacts, Mitigation and Risk Management.

10. The future of oil. (n.d.). Retrieved October 30, 2012, from Institute for the Analysis of Global Security: http://www.iags.org/futureofoil.html

11. United States Congress. (2010). Strategic Importance of the Arctic in US Policy. Hearing before a subcommittee of the Committee on Appropriations United States Senate One hundred Eleventh Congress First Session. Washington: United States Government Printing Office.

12. United States Geological Survey. (2008, July 27). 90 Billion Barrels of Oil and the 1,670 Trillion Cubic Feet of Natural Gas Assessed in the Arctic. Retrieved November 1, 2012, from United States Geological Survey: http://www.usgs.gov/newsroom/article.asp?ID=1980

Page | 24

Page | 25