-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
1/53
1
Albertas Oil Sands
Resources, Production
Growth,Products and Markets
Duke du Plessis. Senior Advisor
Alberta Economic Development
andAlberta Energy Research Institute
Calgary, Alberta , Canada
October 18, 2004
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
2/53
2
Snapshot of Albertas Energy Industry
Alberta has abundant energy resources and a vibrantenergy industry
Worlds 3rd largest natural gas producer
9th largest crude oil producer
Large investments in expanding oil sands production
Maintaining global competitiveness with newtechnologies
Secure and efficient access to markets
Planned pipeline expansions will provide increasedaccess to Asia
Attractive investment opportunities
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
3/53
3
Alberta - A major
Energy hub in NorthAmerica
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
4/53
EdmontonEdmonton
CalgaryCalgary
Peace RiverPeace RiverFortFort
McMurrayMcMurray
AthabascaAthabasca
Peace RiverPeace RiverWabascaWabasca
ColdColdLakeLake
SyncrudeSyncrude
Alberta, Canada
Oil Gas Bitumen Coal
Million m3 Million m3 Million m3 Mill tonnes
Remaining Reserve 291 1211 27,810 34,000Annual Production 43.5 140.7 100.23* 34
Remaining Life 7 9 580 1000
Resources Coal Bed Methane
>3,600 Million m3
Albertas Energy Resources
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
5/53
Proven World Reserves
0
50
100
150
200
250
300
billion
barrel
SaudiA
rabi
a
Cana
daIra
q
Ven
ezuela
Russia
Mexic
o
Alberta
Sources: Oil and Gas Journal Dec 2002, AEUB
5
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
6/53
The Oil Sands Resource
174 billion barrels of proven reserves174 bill ion barrels of proven reserves
500 years of supply available at currentof supply available at currentproduction rates (app.. 1 millionproduction rates (app.. 1 million bblsbbls/day)/day)
Production based on currentProduction based on current miningmining andandInIn--situsitu techniquestechniques
Marketed to Canadian and US refineriesMarketed to Canadian and US refineries
(primarily Midwest US)(primarily Midwest US)
$24 billion in investment$24 billion in investment 1996 to 20031996 to 20036
Th N t f th Oil S d R
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
7/53
7
The Nature of the Oil Sands Resource- Different technologies required for Mining and in Situ Areas -
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
8/53
8
Continuous Innovation Since the 1930s
From Oil SandsFrom Oil Sands To BitumenTo Bitumen To Synthetic crude oilTo Synthetic crude oil
N t f Alb t Bit
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
9/53
9
Nature of Alberta Bitumen
Bitumen Characterized by High Density
Substantial Residue Yield
High Viscosity
High Sulphur
for some, High TAN
Bitumen Must Be Blended or Upgraded to Access theMarket
Synthetic Crude Oil
Heavy Crude Oil Blend
Diluent-Bitumen (Dilbit)
SCO-Bitumen (Syn-bit)
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
10/53
10
0
100
200
300
400
500
600
700
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
(000 M3/D)
0
500
1000
1500
2000
2500
3000
3500
4000
(000 B/D)
Raw Bitumen
Pentanes Plus
Conventional Heavy
Athabasca Synthetic
Conventional Light
Potential
Western Canada Sedimentary Basin
Crude Oil Production Potential
$24 bill (Cdn) under construction or approved $60 bill additional announced
> 66% of Canadas production by 2020
Source: CAPP
Potential
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
11/53
Whos Playing the Game
- Mining Projects -
Not an all inclusive list
1980 2000 2006+
Suncor Suncor Suncor
Syncrude Syncrude Syncrude
Imperial
Albian/Shell
Synenco
CNRLFort Hills
11Source DOE
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
12/53
Not an all inclusive list
Whos Playing the Game
- Insitu Projects -1980 2000
Imperial Imperial Imperial Jacos
AEC Encana Deer Creek
Numerous CNRL CNRL OPTI/Nexen
Experimental Shell Shell BlackRock
Projects PanCdn Suncor ConocoPhillips
Numac PetroCanada Husky
Northstar Petrovera Total
Murphy Devon
2006+
12Source DOE
C i l E di
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
13/53
13
Capital Expenditures
0
1
2
3
4
5
6
7
8
1996 1997 1998 1999 2000 2001 2002 2003
C$billions
Actuals
Estimated
Since 2000 high capital
investment ($5.9bill/year) has exceededAlbertas engineering
and constructioncapacity resulting in costoverruns
Planned investments for
2004 2020 is $60 billion($3.3 billion/year)
Sustainable if properly
phased
1996-2003:Total Investment > $24 billion ($3.5 bill/year-Sustainable)Average: 2000-2003 = $5.9 bill/year (not sustainable- Cost overruns)
Planned investments for
2003-2020 > $60 billion
($3.5 bill/year)
Not sustainable
Sustainable
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
14/53
14
Oil Sands Capital Investment
0
2
4
6
8
10
12
14
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6
C$billions
Actuals
Estimated
Announced
Unsustainable
-Cost overruns-
Sustainable
1996-2003:Total Investment > $24 billion
Average for 2000-2003 = $5.9 bill/year
2003- 2020:Total Investment > $60 billion
Sustainable if phased over 17 years ($3.5 bill/year)
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
15/53
15
Technology Trends
Surface Mining Truck and shovel
Hydro-transport
In Situ Cyclic Steam Stimulation (CSS)
Cold Heavy Oil Production with Sand(CHOPS-Primary)
Steam Assisted Gravity Drainage (SAGD)
Vapor Extraction (VAPEX)
Upgrading & Value-Added Products Integration/Synergies with existing facilities
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
16/53
16
Innovation in Mining Technology
From Draglines to Shovel & Truck Operations
1970 2000
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
17/53
17
DraglineDraglineBucketwheelBucketwheel
ConveyorConveyor
DumpDumpPocketPocket
ConveyorConveyorHot WaterHot WaterExtractionExtraction
Warm SlurryWarm Slurry
ExtractionExtraction
Shovel/TruckShovel/TruckFeeder/CrusherFeeder/Crusher
CyclofeederCyclofeeder
PipelinePipeline
Surface Mining and Extraction
400 tonne Ore Trucks
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
18/53
18
400 tonne Ore Trucks
C l f d
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
19/53
19
Cyclofeeder
Sl H d t t
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
20/53
20
Slurry Hydrotransport
Primary Separation Vessel
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
21/53
21
Primary Separation Vessel
Technology advances over 20+ years have reduced mined
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
22/53
22
Technology advances over 20+ years have reduced minedoil sands production costs from > US$30 to < $10/barrel
Source: Syncrude Ltd.
Mining/Extraction/Upgrading
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
23/53
23
Mining/Extraction/Upgrading
Opportunities to Further Reduce Costs Replace coking with critical solvent deasphalting
Replace natural gas with coke or asphaltene gasification Reduce water use: recycling tailings consolidation
Continuous mining & extraction equipment
Improved froth treatment to produce a cleaner bitumen
for upgrading
Improved catalysts
C ti s D l t f I sitContinuous Development of In situ
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
24/53
24
Continuous Development of In situ
Technologies
Continuous Development of In situ
TechnologiesThermal Oil Sands Efficiency ImprovementThermal Oil Sands Efficiency ImprovementThermal Oil Sands Efficiency Improvement
8
4
2
Steam/Oil RatioSteam/Oil Ratio
1970 20202000
Carbon intensityCarbon intensity
19901980 2010
First cyclic steam pilotFirst cyclic steam pilot
First SAGD pilotFirst SAGD pilot
*Future potential could include VAPEX, thermal solvent, etc.
0
6
1960
Cyclic steamcommercial projects
SAGD commercialprojects
Futurepotential*
Maturing reservoirMaturing reservoir
Technology pilotsTechnology pilots
1960 1980 1990 2000 2010 2020
I Sit R T h l i
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
25/53
25
In Situ Recovery Technologies
Primary Recovery- Cold Heavy Oil Poductionwith Sand (CHOPS)
Thermal Recovery
Cyclic Steam Stimulation (CSS) Steam Assisted Gravity Drainage (SAGD)
Solvent-based recovery processes Vapour Recovery Extraction (VAPEX)
Hybrid thermal/solvent processes Steam Assisted Gas Push (SAGP)
Expanding Solvent SAGD (ES-SAGD)Steam
Low Pressure Solvent SAGD
Tapered Steam Solvent SAGD(TSS-SAGD)
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
26/53
26
Cyclic Steam Stimulation Process
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
27/53
27
Cyclic Steam Stimulation (CSS)
Current Technology
Developed by Imperial Oilin late 1950s
Steam Cycle:
Steam injection (4-6 weeks)
Soak (4-8 weeks)
Production (3-6 months
Recoveries 20-25% of
original bitumen in place
Current production >120,000 b/d
Successful at Cold Lake
Innovation
CSS less successful for Peace
River Not economical in Athabasca
deposits
CNRL Innovation: Increasesteam injection pressure tofracture pressure
Steam plus solvent process
being tested in a field pilot
In Situ Extraction of Deeper Bitumen Resources
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
28/53
28
Development of Steam Assisted Gravity Drainage (SAGD)
1980s 2000Underground Test Facility Horizontal wells drilled from surface
Steam Assisted Gravity Drainage (SAGD) Commercial
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
29/53
29
Steam Assisted Gravity Drainage (SAGD) Commercial
after 20 years and some 30 pilot projects
Technology IssuesRequires good vertical permeability
Sub-optimal steam-oil ratios
Natural gas for steam requirements
Water
Energy intensity GHG emissions
Only viable technologyfor 90% of bitumenresources in Athabasca
Significantly reducedland disturbance
Higher recovery thanCSS (up to 50%)
Lower steam-oil ratiosthan CSS
C ti i I ti VAPEX P
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
30/53
30
Advantages for:
thin reservoirs
bottom water reservoirs
Minimize water handling/disposal
Reduce greenhouse gas emissions
Low energy consumption
Continuing Innovation-VAPEX Process
Oil sandSolvent mix
Overburden
Underburden
Vapour Chamber
Oil sandSolvent mix
Overburden
Underburden
Vapour Chamber
Oil sand
Solvent mix
Overburden
Underburden
Upgraded Oil , Solvent, Gas
Vapour Chamber
Potential for in situ upgrading
Asphaltene Deposition
Diffusion,
Dispersion
Capillary
Mixing
Solubility
Oil
Drainage
Heavy
Oil
Vapour
Chamber
Swelling
Diffusion,
Dispersion
Capillary
Mixing
Solubility
Oil
Drainage
Heavy
Oil
Vapour
Chamber
Swelling
Continuing Innovation-VAPEX Process
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
31/53
31
Continuing Innovation-VAPEX Process Non-thermal:Uses hydrocarbon solvents instead of steam
Vaporized solvent injected into reservoir Reduces water use, energy and CO2 emissions
Solvent is recycled and recovered at the surface
Potential to recover up to 90% of solvent Produced bitumen has higher quality
Potential to reduce costs significantly
Challenges: Solvent recovery Field trials by DOVAP Industry Consortium since 2002
At least 5 years from commercial application
Devon
ChevronImperial
Gibson
PetroCanada
Total
SuncorCNRL
Nexen
JACOS
Continuing Innovation400Production Rates
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
32/53
32
Patented steam-solvent hybridprocess
Ongoing research at theAlberta Research Council
Oil rates 68% Energy & water use 45% Reduced GHG emissions
Field tests being conducted bySuncor, CNRL, EnCana,ConocoPhillips, PetroCanada
Continuing Innovation
Hybrid Thermal-Solvent
ProcessES-SAGD Process
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
E
nergyRequirements
(GJ/m3Oil) Steam Energy= 2.8 GJ/m
3steam
SAGD
ES-SAGD
0
50
100
150
200
250
300
350
A
verageOilRate(m3/d)
SAGD
ES-SAGD
45%
68%
Energy Requirements
New Thermal Solvent Reflux Process Concept
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
33/53
33
New Thermal Solvent Reflux Process Concept(being developed at the Alberta Research Council)
overburden
vapour
chamber Mobilizedoil
Injector
Refluxedsolvent
Heaters in wells
Oil sand
Producer
underburden
Heaters in injector and
producer wells vaporize
solvent in reservoirSolvent reflux mobilizes
oil
No external recycling &recovery of solvent
Faster start-up
Lower costsIndustry sponsored R&D
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
34/53
Current Production CostsCost per barrel ($ CDN, 2003)ProductionMethod
Crude
Type Operating Supply
Mining/Upgrading Synthetic 12 to 18 22 to 28
Mining/Extraction Bitumen 6 to 10 12 to 16
SAGD Bitumen 8 to 14 11 to 17
CSS Bitumen 8 to 14 13 to 19
CHOPS Bitumen 6 to 9 12 to 16
Cold Bitumen 4 to 7 10 to 14
Source: NEB 34
Bitumen Supply Cost
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
35/53
35
Bitumen Supply Cost
Typical Athabasca SAGD Project
0
2
4
6
8
10
12
14
B
itumenSu
pplyCost(US$/b@P
lant
Gate
Fuel
Royalties
Income Tax
Fixed Capital
Other OperatingCosts
Return on Investment
Source: CERI
Bitumen Supply Cost Sensitivities
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
36/53
36
pp y
Typical Athabasca SAGD Project25% Change in
Steam-Oil Ratio
Natural Gas Price
Initial Capital Cost
Discount rate
Operating Cost
10.3 10.7 11.0 11.4 11.8 12.2 12.6 13.0 13.4
Bitumen Supply Cost (US$/barrel @ Plant Gate)
Source: CERI
Both Mining and In Situ Extraction
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
37/53
37
g
Processes use large amounts of Natural Gas
Mined
Oil Sands Extraction
Synthetic Crude Oil(SCO)
In situ
ExtractionBitumen
Diluent
PipelineMarkets
Steam
Plant
Warm Water
Distillation,Coking,UpgradingBitumen
Natural Gas for hydrogen and heat
Natural Gas for steam generation
Dilbit
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
38/53
38
Increasing Natural Gas Prices reduce the
Profitability of Mined Oil Sands Plants
I i N l G P i d h
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
39/53
39
Increasing Natural Gas Prices decrease the
profitability of SAGD Projects even more
Gasification of Coke or Asphaltenes Replaces
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
40/53
40
Natural Gas in Mining/Upgrading and in SAGD
Processes and Reduces CO2 emissions
Coke orAsphaltenes
frombitumen
Slag
Oxygen
Acid GasRemoval
Electricity
Gasifier
SulphurBitumen
Upgrading
SAGDHorizontal
Wells
CO2
CO2 Pipeline
H2
SynthesisGas (CO + H2)
Boiler
Separation
Steam
Gasification Replaces Natural Gas
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
41/53
41
for hydrogen and heat & produces a higher value synthetic crude
OPTI Nexen Long Lake Process
Gasification
Plant
D i bl f t f Alb t SCO
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
42/53
42
Desirable features of Alberta SCO
PipelinableLow SulphurLow Nitrogen
U di T h l 1940 T d
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
43/53
43
Upgrading Technology - 1940- Today
Visbreaking Hydrogen Addition Coking
Thermal Cracking
Deasphalting
Gasification
Shell/AlbianOpti-Nexen Husky
SuncorSyncrude
CNRL
Opti-Nexen
Heat H2
Innovation in UpgradingT h l i
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
44/53
44
Technologies Solvent deasphalting
Used by Shell and Opti
Supercritical Solvent Deasphalting to improveproduct quality
Replace natural gas as a source of hydrogen andsteam by gasifying coke or asphaltenes
Extract valuable by-products: petrochemicals (and
metals) Integrate Upgrading-Refining-Petrochemicals
Membrane separation and Catalysts
Refined Products and Petrochemicals IncreaseValue and Market Options for Rapidly Growing
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
45/53
45
Value and Market Options for Rapidly Growing
Oil Sands Production
2.7
6.9
8.2
8.3
8.6
9.4
9.7
10.9
11.1
16.6
19.7
26.8
0 5 10 15 20 25 3
Bitumen
SCO
Diesel
Natura l Gas
Jet Fuel
Propane
Gasoline
Ethylene
Xylene
Propylene
Ethylene
Styrene
U.S. Cents per Pound. Constant 2003 Dol la rs
Increasing Valueand market options
Adapted from Purvin & Gertz, March 30,2004
Propylene is a component
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
46/53
46
of existing process streams
0
20
40
60
80
100
120
140
Suncor
Syncrude
NOVA
Do
w
PCRe
finery
Im
perialR
ef
KTA
Extracted
& produced
by Williams
Energy
Propylene Potential
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
47/53
47
py
Kilotonnes/year
Refineries 320
Existing Upgraders 230
Petrochemical Plants 110
Total 660
Other sources
Existing upgrader expansions
BA Energy Upgrader
Opti
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
48/53
Summary
48
Albertas Oil Sands in 2020
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
49/53
49
Offshore Exports
United States Exports
Rest of Canada Exports
Upgrading &Refining
Petrochemical
Development
World Scale Hub for Energy and Refined Products
Alberta Bitumen ProductionAlberta Bitumen Production
3 Million Barrels Per Day3 Million Barrels Per Day
Electricity
Generation
Exports of Crude Oil andExports of Crude Oil andRefined Petroleum ProductsRefined Petroleum Products
Oil Sands Reserves
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
50/53
50
O Sa ds ese ves
Capturing the Opportunity
Opportunity
Recoverable
Today0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Initial In-Place Initial Established
Billion
barrels
Insitu
Mineable
Source: EUB
Alberta Oil Sands Advantage
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
51/53
Abundant resource and world-class industry
Regulatory stability andcertainty
Competitive fiscal regime
Track record of innovation
Open and competitive markets
Oil sands pictures courtesy of Syncrude Canada. 51
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
52/53
52
Alberta- A Good Place to do Business
Vision for the Future
-
7/27/2019 Albertas Oil Sands Resources, Production Growth,Products and Markets
53/53
53
2000 2010 2020 2030
million barrels per day
6
5
4
3
2
1
3rdOIL
SANDSW
AVE
conventionallightandheavycrude
greenfu
elspetroche
micals
energy/power/H2
bitumen
syntheticcrude
Vision for the Future
Oil sands: a sustainablecompetitive source
of synthetic crude oil,
refined products,petrochemicals and
clean energy
Adapted from Oil Sands Technology Roadmap, Alberta Chamber of Resources, Jan 30, 2004