- Fig 1: Title
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- Ladies and Gentlemen, Friends and Colleagues
First, I would like to congratulate the Lloydminster Oilfield Technical
Society, as well as all others involved in organization, including the
companies that participate, for the remarkable effort over the last 20
years in developing the Lloydminster oil show and conference into an ongoing
success story.
I have talked to many people in many countries about what is happening
in the heavy oil and oil sands industry in Alberta and Saskatchewan, but
I take particular pleasure at talking to you tonight. I must admit
that I was more nervous about this after-dinner talk than any other talk
I?ve given in the last few years. After all, what can I tell Lloydminster
people about heavy oil that you don?t already know? On the other
hand, coming here is like coming home. My great-grandparents settled
in the province over 100 years ago as farmers, so Alberta is home to me
in many ways.
Fig 2: Alberta map
Heavy oil has been good to Lloydminster, particularly in the last twenty
years. Lloydminster has also been good for heavy oil. Many
new technologies have been developed in this region, and many more have
been attempted and abandoned. You can fly over this region and see
many derelict pilot projects where some oil company in the 1970s or 1980s
tried the latest idea to produce cheap heavy oil, only to walk away a few
years later, humbled by the huge technological difficulties. This
is the main reason why, for most of Lloydminster history, large integrated
oil companies ignored you: heavy oil is hard to get out of the ground.
But failures are part of the learning process, and major new successes
have taken place. Big oil is no longer ignoring heavy oil; they understand
the vital role that heavy oil will play in the next few generations.
We also should understand this because business, political, and environmental
decisions depend on it.
Figure 3: World oil production prediction
The rate of increase in conventional oil production worldwide is slowing
down, and many experts predict that the peak will occur in the next five
years. As a result of this, there has been a dramatic recent upsurge
in heavy oil and oil sands development. But, just how much heavy
oil is there in the world?
Figure 4: Heavy oil in the world
There is 2.5-3 times the amount of viscous oil as there is conventional
oil. Conventional oil is soon going to peak, slowly decline, and
then heavy oil and oil sands will make up most of the difference.
Figure 5: So what?
In fact, if we extract 30% of our viscous oil in Canada, it will be enough
to meet 100% of current Canadian and USA needs, about 20 million barrels
per day, for over 100 years.
Figure 6: Oil for 100 years
I often ask American colleagues what they are doing in the Middle East
fighting wars over oil when a fully secure supply exists in Canada for
over 100 years. Interestingly, two years ago, Canada became the largest
exporter of oil to the USA, and has likely permanently passed Saudi Arabia
and Venezuela. Few Americans or Canadians know this.
Figure 7: Source of USA imports and reserves
I believe that our American colleagues will soon clearly recognize the
advantages we bring them, and we may even see an acceleration of heavy
oil and oil sands development that could surpass the Alberta Energy Utilities
Board predictions. It makes sense.
Figure 8: AEUB predictions
These predictions suggest that both heavy oil and oil sands production
will triple in the next ten years, and I know this is reasonable.
In fact, the major limitation on production capacity right now is the lack
of sufficient upgrading capacity in North America. There are about
850,000 b/d of heavy oil and bitumen produced (not counting oil sands mines),
and over 80% of this is shipped to the USA as raw, diluted crude oil for
upgrading. We are now at maximum upgrading capacity, and need more
upgrading capacity for more growth.
So this means that the Lloydminster area is going to be experiencing continued
robust growth for many years, certainly well beyond my lifetime.
Let?s review some of the developments made in the Lloydminster area, in
a general manner.
This slide summarizes the massive production technology shift in the last
20 years:
Fig 9: Technology shift
Only cyclic steam injection was viable 20 years ago, but a new group of
production technologies has emerged. Cyclic steam has some limiting
difficulties and the operating costs are high.
Figure 10: Cyclic steam stimulation
The Lloydminster area has been the focus of CHOPS ? Cold Heavy Oil Production
with Sand, but horizontal wells and SAGD were also largely developed in
the area. The technology drivers are listed here, but this is a very
short and incomplete list of the many small micro-engineering improvements
that have been made.
Fig 11: Technology drivers
Let?s look a little closer at some of the technologies that have been developed
in the last 20 years. The most important one for the region is perhaps
CHOPS. Here is an example of a single well that, after 12 years of
very modest production, was converted to CHOPS.
Figure 12: Well conversion to CHOPS
What has made CHOPS viable, even in zones as thin as 4 m? First,
and perhaps most important, was the development, here in Lloydminster,
of progressing cavity pumps that can tolerate extremely large amounts of
sand in the viscous oil. The first PC pumps used in 1982, only 20
years ago, were barely adequate, but continued micro-engineering has resulted
in highly reliable pumps that can last 20 months or more while pumping
4-6% sand. These pumps are now being shipped around the world, wherever
there are large volumes of sand in heavy oil. In China, when I advise
on a heavy oil project, I insist on Canadian-made PC pumps.
Figure 13: PC pumps
The drilling of long horizontal wells at shallow depth was perfected in
the 1980?s and early 1990?s in the greater Lloydminster region.
Figure 14: Horizontal wells
Horizontal wells have opened up new technologies based on gravity drainage.
The idea is to heat the oil and let it drain by gravity to the lower production
well.
Figure 15: SAGD chamber
New developments have been made in the lifting of the hot oil, and these
developments are continuing here in the Lloydminster region. Here
is a picture of two SAGD well pairs operated by Husky Oil at nearby Pike?s
Peak, using two different lifting methods. Of course, Husky has been
a mainstay of the heavy oil industry in the Lloydminster area for many
years.
Figure 16: Pumping in a SAGD project
Oil is heavier than the steam and gas, so the oil and water sink to the
bottom, and the steam and methane rise to the top during the steam-assisted
gravity drainage process. The process is much more stable than any
high-pressure injection process, requires less steam, and produces more
of the oil in place.
Figure 17: Production costs per barrel
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- Figure 18: Oil recovery efficiency
There are many supporting technologies that have been developed as well.
For example, CHOPS means sand handling and disposal, either in landfills
or through slurry injection into salt caverns or sand strata. A whole
industry has arisen, based on the need to handle sand efficiently and in
an environmentally safe manner.
Figure 19: A sand stockpile north of Lloydminster
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- Fig 20: A vacuum truck emptying its load at a stockpile
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- Figure 21: Sand auger trucks cleaning a tank
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- Figure 22: Tank bottoms being augered into a truck
for disposal
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- Figure 23: Emptying sand and slops waste into a
salt cavern storage facility
There are many other new technologies in various stages of development
that started here in the Lloydminster area. The list includes down-hole
electric-drive PC pumps, computer-optimized production management, high-temperature
pressure sensors, pumps that can directly extract 55% sand from the well,
new workover approaches such as foam and pump-to-surface methods, new oil-water-sand
separator technology, new production technologies, new methods to increase
well flow rate, improvements in upgrading, and so on.
Figure 24: Some emerging technologies
For example, we are trying reservoir pulsing as a means of sustaining CHOPS
production in this region.
Figure 25: Pulsing a well in Lone Rock
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- Figure 26: Close-up of pressure pulsing device
I understand that there are many emerging technologies in upgrading that
will reduce the costs per barrel in the future, and make these huge facilities
cheaper to develop as well as more efficient. I?m told that the Lloydminster
upgrader consistently operates at over 110% of its design capacity!!
Figure 27: Lloydminster upgrader
There are so many developments taking place that I haven?t mentioned that
I must apologize to anyone who I?ve neglected, and that is probably half
of this room.
So what is the future for the Lloydminster region? What would I like
to see?
Figure 28: What I?d like to see
I?d like to see the provincial governments recognize the importance of
CHOPS and not focus taxation benefits solely on huge oil sand plants.
I?d like to see Lloydminster technology spread around the world.
I?d like to see more upgrading capacity installed in Canada. I?d
like to see greater environmental care. I?d like to see continuing
innovation here in the Lloydminster area. I?d also like to see warmer
winters and more summer rain!
Lloydminster may be a small city, but the region has played a huge role
in the development of technologies that are now spreading around the world.
Lloydminster has always been a special place for me, and many of you know
that I prefer to come here rather than to visit most other places in the
world.
Figure 29: Lloydminster the star
I guess you can take the boy out of the country, but you can?t take the
country out of the boy.
Figure 30: Dino
Thank you all, and continued success in the years to come.
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