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CHEMICAL EOR FIELD EXPERIENCE Oil Chem Technologies, Inc. CHEMICAL EOR FIELD EXPERIENCE Oil Chem Technologies, Inc. Sugar Land, TX USA www.oil-chem.com

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PRESENTATION OUTLINE Introduction to Oil Chem EOR past EOR - Oil Chem Technologies field experience to share EOR - future

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PRESENTATION OUTLINE Introduction EOR past EOR - Oil Chem Technologies field experience to share EOR - future

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WHY EOR?

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Oil Recovery Overview BAVIER; BASIC CONCEPTS OF EOR PROCESSES(1991)

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WHY CHEMICAL EOR?

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ECONOMICS FOR FIELD ASP PROJECTS Field W. Kiehl CambridgeDaqing Surfactant0.10%0.10%0.30% Alkali0.80%1.25%1.00% Polymer 1050 ppm 1425 ppm 1200 ppm Tot. Cost $375,000$2,518,000$1,009,000 Inc. ASP Oil 275,0001,143,000270,000 Cost/bbl$1.46$2.20$3.79

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ROLE OF SURFACTANTS Reduce interfacial tension Wettability alteration Polymer, CDG, BW, etc. can be used along with surfactants when mobility control is necessary

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SURFACE OR INTERFACIAL TENSIONS SYSTEMmN/m Water72 Pure Hydrocarbons ~ 40 Crude Oil ~ 30 - 40 Crude Oil/Water ~ 3 - 30 Crude Oil/Water/Surfactant < 0.01

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RELATIONSHIP BETWEEN CAPILLARY NUMBER AND OIL RECOVERY Nc = / cos Nc = Capillary Number = Darcy Velocity = Darcy Velocity = Viscosity = Interfacial Tension =wetting angle

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PRESENTATION OUTLINE Introduction EOR past EOR - Oil Chem Technologies field experience to share EOR - future

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LOUDON FLOOD - EXXON 1983 2.3% surfactant 96% of the connate salinity 0.3% pore volume 0.1% Xanthan gum 56 million pounds surfactant was injected in 9 months 68% ROIP

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ROBINSON MARATHON 1983 10% surfactant petroleum sulfonate 0.8% hexanol as co-surfactant 2.5% salt No polymer 0.1 pore volume 19 21% ROIP

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CHEMICAL EOR - PAST PROBLEMS Technical success but limited commercial success - Reasons?

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EOR BY CHEMICAL FLOOD Limited commercial success for the past two decades - Reasons? Sensitivity to oil price Limitations of chemicals High surfactant concentration Salinity optimization required Potential emulsion block

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However, Extensive lab evaluations and field pilot tests support the feasibility of chemical flooding New chemicals and processes open the door for new opportunities Recent field data using these new chemical and processes proves chemical flooding is an effective way to recover residual oil

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PRESENTATION OUTLINE Introduction EOR past EOR - Oil Chem Technologies field experience to share EOR - future

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CURRENT PROJECTS 21 Current projects 20MT to 400 MT Surfactant/mo 400 MT @ 0.1% = 28,000,000 bbl/mo injection California 50,000 MT surfactant/yr @ 0.2% =155,000,000 bbl/yr Build plant onsite

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CHINA EOR PROJECTS Heavy crude recovery Heavy crude recovery Low perm formation oil recovery Low perm formation oil recovery High temp. / high salinities High temp. / high salinities Effective, economical offshore EOR Effective, economical offshore EOR

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CHINA EOR PROJECTS INJECTED, ON-GOING & APPROVED PROJECTS SS B2080, SS B5050, SS B1688, ORS-46L, ORS-97HF, ORS-41HF

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1992-94: LAB EVALUATION 1992-94: LAB EVALUATION Over 100 Surfactants Were Tested Over 100 Surfactants Were Tested Including: Including: ORS-41 Petroleum Sulfonates Carboxylates Lignin Sulfonate/Petroleum Sulfonates Microbiological

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1995 - INITIAL FIELD 1995 - INITIAL FIELD EVALUATION EVALUATION Daqing No.4 Field - Oil Chem Technologies ORS-41 Technologies ORS-41 Daqing No.1 Field another US companys Petroleum Sulfonate

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1996-1998: ENLARGED FIELD EVALUATION ORS-41 was the ONLY surfactant chosen for enlarged field evaluation. More than 7000 MT of the ORS-41 was injected in several field blocks and this confirmed the viability of the ASP process ORS-41 was the ONLY surfactant chosen for enlarged field evaluation. More than 7000 MT of the ORS-41 was injected in several field blocks and this confirmed the viability of the ASP process SPE 36748, 57288, 71061, 71491, 71492

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DAQING CENTRAL WELL SPE 57288

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DAQING CENTRAL FIELD SPE 84896

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HEAVY OIL RECOVERY BY CREATING WATER EXTERNAL PSEUDO- EMULSION

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Control 0.1% SF-100 Surfactant HEAVY OIL PSEUDO-EMULSION

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Control 0.1% SF-100 Surfactant HEAVY OIL PSEUDO-EMULSION

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Control 0.1% SF-100 Surfactant HEAVY OIL PSEUDO-EMULSION Oil Viscosity < 200 cps Oil Viscosity = 6,700 cps

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LAB CORE FLOOD DATA Water flood Injection Volume, PV Oil Recovery, %

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LOW PERM INJECTIVITY ENHANCER Permeability: 0.1 10 md High water injection pressure makes water flood unfeasible FI series surfactants reduced injection pressure, increased injectivity Effectively increased the injectivity in several fields in China and USA

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CANADA EOR PROJECTS HEAVY CRUDE HEAVY CRUDE TAR SAND TAR SAND LOWER RESERVOIR TEMPERATURES LOWER RESERVOIR TEMPERATURES FRESH WATER SOURCES FRESH WATER SOURCES HIGH SALINITY RESERVOIRS HIGH SALINITY RESERVOIRS FRACTURED CARBONATE FORMATIONS FRACTURED CARBONATE FORMATIONS

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CANADA EOR PROJECTS INJECTED, ON-GOING & APPROVED PROJECTS SS B2080, SS B5050, SS B1688, ORS-46L, ORS-97HF, ORS-41HF Some field results will be published upon completion of projects

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NORTHERN CANADA SP PROJECT Heavy oil field, API = 12 -13 Under polymer flood Added 0.1% surfactant with polymer in November, 2006 ~ 3 months later, the water cut reduced from 97% to 58%

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UNITED STATES EOR PROJECTS FRESH WATER SOURCES FRESH WATER SOURCES HIGH SALINITY RESERVOIRS HIGH SALINITY RESERVOIRS FRACTURED CARBONATE FORMATIONS FRACTURED CARBONATE FORMATIONS LOW PERMEABILITY LOW PERMEABILITY

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UNITED STATES EOR PROJECTS INJECTED, ON-GOING & APPROVED PROJECTS ORS-41HF (2), ORS-62, ORS-97, ORS-46HF, ORS-162, SS-7593, SS B1688(2)

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SHO-VEL-TUM FIELD On production > 40 yrs, extensive water flood, produced 4 bbl/day ASP started on 2/98, using Na 2 CO 3 and ORS- 62 Total incremental oil > 10,444 bbl (22 bbls/day) in 1.3 years SPE 84904

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OIL SATURATION AFTER ASP INJECTION SPE 84904

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MELLOTT RANCH WYOMING ASP PROJECT 0.1% ORS-46HF, 1% NaOH, 1300 PPM polymer Recovered 989,000 bbl or 16.4 % OOIP between 2003 and 2005 Injection volume decreased 2,800,000 bbl due decreased water cut

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MELLOTT RANCH ASP PROJECT - ORS-46HF ASP WATER FLOOD SINCE 1966

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BIG SINKING, KENTUCKY Project Information Crude oil : 100 Million bbl Bottom Hole Temperature: 30 o C Depth: 1150 ft Thickness: 25 feet (7.32 meter) Permeability: 45 mD SPE 100004

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BIG SINKING, KENTUCKY Chemical injected: 0.8% NaOH + 0.1% ORS-162HF Problems overcome: IFT lowered from 23.6 to 0.001 mN/m Poor water injectivity High water cuts 220% increase in injectivity Large field trial scheduled to begin in 12/2007 SPE 89384

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BIG SINKING, KENTUCKY SPE 89384

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TANNER FIELD, WYOMING Project Information Crude oil : 21 o API Bottom Hole Temperature: 175 o F Depth: 8915 ft Thickness: 25 ft Porosity: 20% Permeability: 200 mD SPE 100004

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TANNER, WYOMING SPE 100004

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SOUTHEAST ASIA PROJECTS HEAVY CRUDE HEAVY CRUDE HIGH TEMPERATURES HIGH TEMPERATURES ENVIRONMENT CONCERNS ENVIRONMENT CONCERNS FRESH WATER SOURCE FRESH WATER SOURCE

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SOUTHEAST ASIA PROJECTS INJECTED, ON-GOING & APPROVED PROJECTS SS 6-72LV, SS 8020

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OFFSHORE ALKALINE SURFACTANT (AS) PROJECT SEA WATER IS SOFTENED ON THE PLATFORM SINGLE WELL TEST SUCCESSFULLY PERFORMED USING SS 6-72LV INJECTED WITH NAOH PILOT PROJECT WILL PROCEED

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SOUTH AMERICA PROJECTS VARIOUS RESERVOIR CONDITIONS VARIOUS RESERVOIR CONDITIONS MANY EOR CANDIDATE FIELDS MANY EOR CANDIDATE FIELDS OFFSHORE & INLAND OFFSHORE & INLAND ASPHALTENE REMOVAL / WELLBORE ASPHALTENE REMOVAL / WELLBORE DAMAGE REMOVAL DAMAGE REMOVAL IMPROVED GAS RECOVERY/REDUCED IMPROVED GAS RECOVERY/REDUCED WATER CUT WATER CUT

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SOUTH AMERICA PROJECTS INJECTED, ON-GOING & APPROVED PROJECTS ORS-57HF, ORS-41HF (2), SS-6046, SS GI-1416, SS B1688

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as

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PRESENTATION OUTLINE Introduction EOR past EOR - Oil Chem Technologies field experience to share EOR - future

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The future is bright Reasons? The future is bright Reasons? High oil prices Energy demand Diminishing reserves Past experience New technologies EOR BY CHEMICAL FLOOD

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New processes use less surfactant (up to 10 times less) 10 times less) Extensive lab evaluations support the feasibility of chemical flooding Field data proves chemical flooding is an effective way to recover residual oil Cost of chemicals have not increased in proportion to price of crude oil CHEMICAL EOR - THE FUTURE

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COST OF CHEMICALS 19802006 Polymer 1 $3-4/lb$1/lb Surfactant 2 $0.40-0.60/lb$0.60-1.2/lb Alkali 3 $0.12/lb$0.20-.040/lb Crude Oil $12/bbl$50-70/bbl Incr. Cost/bbl $8-15$0.50-$5 1 Some processes eliminate need for polymer 2 Surfactant concentration has been reduced by 10 3 Alkali has been reduced by 50% or in some cases is not needed at all not needed at all

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PROCESS CHOICES Surfactant Surfactant Polymer Alkaline Surfactant Alkaline Surfactant Polymer Smart Surfactant Pseudo-emulsion Chemical/Mechanical

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SCALING UP

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ENLARGED FIELD CHEMICAL FLOOD Raw Material Supply Source (local or import) Source (local or import) Availability (quantity, quality) Availability (quantity, quality) Alternative suppliers Alternative suppliers Storage Storage Manufacturing Location Foreign, domestic, on-site Foreign, domestic, on-site Shipping, tax, etc. Shipping, tax, etc. Storage and distribution Storage and distribution Flexibility Flexibility

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ENLARGED FIELD CHEMICAL FLOOD Capital Investment Up-front investmentUp-front investment Operational costOperational cost By-products By-products

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CHEMICAL EOR OPPORTUNITIES Conventional Oil Recover Factor