The Future of Oil

Max Willis

Energy & the Environment

4/5/10

Darcy’s Law

Q = dischargeA = cross-sectional areaμ = viscosityL = lengthP = pressureκ = permeability

Multiphase flow:

Relative permeability of one phase to the permeability of a single phase in the medium

Selley, 1998

Oil Economics

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1975 1980 1985 1990 1995 2000 2005 2010

USGS Fact Sheet FS 028-01; OPEC Annual Report 2008

Oil Economics

Deffeyes, 2008; Hirsch, 2005

Giant Oil Fields

• Two definitions:– Reserves of greater than 500 million bbl

• 500 fields

– Production of greater than 100,000 bbl/day• 120 fields, 3% of all oil fields

• 47% of worlds oil supply, 65% of total reserves

• 14 largest produce over 20% of worlds supply, average age is 43.5 years

• Worlds 19 largest produce average of 500,000 bbl/day, average age of 70 years

Hook et al., 2009

Hook et al., 2009

Field Production Profile

Hook et al., 2009

Field Decline

• Newer technology has increased plateau phase– Higher URR produced at decline

– Higher depletion rates at decline

– Longer time from first production to decline

– Giant fields of future will have much high decline rates

• Depletion at peak is same for almost all giants, allows for prediction of onset of decline– 87% of giants in non-OPEC countries are post-plateau with

84% of reserves in these fields

– OPEC fields have 50% reserves in fields in plateau phase, prolonged production will increase decline rates

Well Productivity

EIA; Lynch, 2006

Hook et al., 2009

Peak Oil

Hubbert, 1956

Discoveries vs. Production

Discoveries lead production by 21 years

Hubbert, 1981, Deffeyes, 2008

World Peak Production Predictions

Sorrell et al., 2009

World Peak Production Predictions

Hirsch, 2005

USGS 2000 World Petroleum Assessment

• Monte Carlo simulation

• 939 billion bbl undiscovered– 83 billion in USA

• 730 billion bbl reserve growth

• What may be added between 1996-2025

• Extreme variations even in heavily explored countries

Laherrere, 2000

Worldwide Exploration

Maugeri, 2009

Field Growth

• During field lifespan, reserve revisions due to better data lead to increases (generally) in the URR

• Not as important outside USA where reserves are listed as 2P

USGS Fact Sheet FS-115-00

Saudi Arabia• If Saudis are actually overstating reserves, why are they doing so?

•Reality:• Produce from only 23 developed reservoirs, 80 known (≈$3/bbl)• Only 70 exploration wells drilled in last 10 years• Most of reserves are usually found in smaller fields (Ghawar responsible for 40% of Saudi oil, normal largest is closer to 10%)

• Why don’t Saudis withhold production and run the price of oil up?• In doing so, they would make alternatives to oil more attractive and potentially run themselves out of their own market

• Is Ghawar (5 Mbbl/day) peaking?• No field data is released, but field has been producing for over 50 years at high levels• Field begin peripheral water injection early, has produced more than 40% of URR, could have a steep decline without tertiary recovery• A 10% annual decline would be difficult for the world to compensate for• Similar fields have had recovery up to 70%

Lynch, 2006

Unconventional Petroleum Reserves

• Tar Sands

• Arctic

• Deep Water

• Enhanced Oil Recovery (EOR)

• Natural Gas Liquids (NGL’s)

• Oil Shale

• Coal to Liquids

Tar Sands

• Athabasca, Alberta

– 170 billion bbl remaining reserves

– 27.1 billion bbl under active development

• Orinoco Belt, Venezuela

– Estimated reserves of 513 million bbl

Cost (C$/bbl) Crude Type

Operating Cost

Cold Production Bitumen 6-9

Cold Heavy Oil Production with Sand (CHOPS)

Bitumen 8-10

Cyclic Steam Stimulation (CSS)

Bitumen 10-14

Steam Assisted Gravity Drainage (SAGD)

Bitumen 10-14

Mining/Extraction Bitumen 9-12

IntegratedMining/Upgrading

Synthetic Crude

18-22

Maugeri, 2009; www.theoildrum.com

Oil Sands Production• Multiple methods for in situ extraction

– All involve heating

– Huff n’ puff

• Pump steam in, allow to soak, then use same well to extract viscous oil

– Steam assisted gravity drainage (SAGD)

• Needs depths greater than 500 ft to maintain pressure

– Toe-heal air injection (THAI)

• Upgrades oil in situ (increases API°)

www.theoildrum.com

Arctic Oil

• ANWR: 5.7-15 billion bbl

• NPRA: 6.7-15

• Total arctic: 90 billion bbl oil, 44 billion NGL’s

USGS Factsheet 045-02

Deep Water Oil

• Oil fields in water deeper than 200 m• One of largest finds is Tupi in Brazil, 4000-5000 m below sea floor in, in more than 2000 m of water• Each well costs $100 million ($ 50 – 100 billion total for field), take up to a year to drill• Cost up to 10x more than normal offshore fields, take much longer to develop

Enhanced Oil Recovery (EOR)• New technology generally doesn’t increase URR, but increases depletion rate, causes faster decline• Injected gases generally are reproduced and reinjected and will remain in the formation relatively indefinately once production is ceased

USGS Fact Sheet FS-115-00; www.slb.com

Cantarell Example

• Discovered 1976, producing 1.6 Mbbl/day in 1981•Nitrogen injection started in 1997, currently producing at 600 kbbl/day• Nitrogen plant largest in world, 10x the next largest

http://www.offshore-technology.com/projects/cantarell/

Natural Gas Liquids (NGL’s)

• Heavy hydrocarbons which condense out of produced natural gas at the surface once temperature is reduced below the “hydrocarbon dew point”

• Propane, butane, pentane, etc.

www.theoilposter.org

Oil Shale

• Green River Formation, Colorado– Total in place oil 1.525 trillion barrels

• Much of this is low grade

• Processing– Oil shale must be heated to 600-750° F to refine kerogen into crude

oil and natural gas– Using electric heaters and a freeze wall for in situ upgrading

(requires 1.2 GW for 100,000 bbl/day)– Rock can be mined and heated in a retort– 3-4 times energy out per energy in according to Shell’s in situ

method– Nuclear weapons?– Huge water requirements (up to 10 bbl/H2O per bbl oil produced)– Problem with producing large tailings if retorted

USGS Fact Sheet 2009-3012

Feasibility

Hirsch, 2005

Coal to Liquids

• Fischer – Tropsch• South African company Sasol has produced since

1970, produces 150,000 bbl/day

• Economically viable at $40-55/bbl (China has started), feasible around $70/bbl

• 1 ton of coal yields between 1-2 bbl diesel• 5 bbl H20 / bbl Oil• 50% upper limit efficiency

Sources• EIA Annual Energy Review 2009• EIA Annual Energy Outlook 2009• IEA World Energy Outlook 2009• OPEC Annual Statistical Bulletin, 2008• Alberta’s Oil Sands, 2008. Alberta Department of Energy, June 2009.• Attanasi, E., and Root, D., 1994, The enigma of oil and gas field growth: American Association of Petroleum Geologists Bulletin, v. 78.3, p. 321-332• Bird, K., and Houseknect, D., 2002, U.S. Geological Survey 2002 Petroleum Resource Assessment of the National Petroleum Reserve in Alaska

(NPRA): USGS Fact Sheet 045-02• Bird, K., and Houseknect, D., 2001, Arctic National Wildlife Refuge, 1002 Area, Petroleum Assessment, 1998, Including Economic Analysis: USGS

Fact Sheet 028-01• Bird, K., and Houseknect, D., 2008, Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle: USGS Fact

Sheet 2008-3049• Charpentier, R., and Klett, T., 2005, Guiding principles of USGS methodology for assessment of undiscovered conventional oil and gas resources:

Natural Resources Research, v. 14.3, p. 175-186• Deffeyes, Kenneth. Hubbert’s Peak: The Impending World Oil Shortage. Princeton: Princeton University Press, 2001.• Demaison, G. J., 1977, Tar sands and supergiant oil fields: American Association of Petroleum Geologists Bulletin, v. 61.11, p. 1950-1961• Dyni, J., 2005, Geology and resources of some world oil-shale deposits: USGS Scientific Investigations Report 2005-5294• Hirsch, R., 2005, The inevitable peaking of world oil production: The Atlantic Council, v. 16.3, 1-9• Hook, M., Hirsch, R., and Aleklett, K., 2009, Giant oil field decline rates and their influence on world oil production: Energy Policy, v. 37.6, p. 2262-

2272• Hook, Soderbergh, B., Jakobsson, K., and Aleklett, K., 2009, The evolution of giant oil field production behavior: Natural Resources Research, v.

18.1, p. 39-65• Hubbert, M. K., 1956, Nuclear energy and the fossil fuels: Shell Development Company Publication No. 95• Hubbert, M. K., 1981, The world’s evolving energy system: American Journal of Physics, v. 49.11• Jarrell, J., 2005, Another day in the desert: A response to the book, “Twilight in the desert”: Geopolitics of Energy, Oct 2005• Johnson, R., Mercier, T.J., Brownfield, M., Pantea, M., and Self, J., 2009, Assessment of In-Place Oil Shale Resources of the Green River Formatuion,

Piceance Basin, Western Colorado: USGS Fact Sheet 2009-3012• Laherrere, J., 2000, Is USGS 2000 Assessment Reliable?: cyberconference, WEC• Lynch, M., 2006, Crop circles in the desert: The strange controversy over Saudi oil production: ICEED, p. 1-30• Maugeri, L., 2009, Squeezing More Oil From the Ground: Scientific American Oct: 2009, 56-63.• Schenk, C., Cook, T., Charpentier, R., Pollastro, R., Klett, T., Tennyson, M., Kirschbaum, M. Brownfield, M., and Pitman, J., 2009, An Estimate of

Recoverable Heavy Oil Resources of the Orinoco Oil Belt, Venezuela: USGS Fact Sheet 2009-3028• Selley, Richard C. Elements of Petroleum Geology. London: Academic Press, 1998.• Simmons, M., The World’s Giant Oilfields, White Paper, Simmons & Company International• Sorrell, S., Speirs, J., Bentley, R., Brandt, A., and Miller, R., 2009, Global oil depletion.• Verma, M., 2000, The Significane of Field Growth and the Role of Enhanced Oil Recovery: USGS Fact Sheet 115-00• Wennekers, J., 1981, Tar Sands: American Association of Petroleum Geologists Bulletin: v. 65.10, p. 2290-2293