The Energy Gap How CO 2 Tertiary Recovery will mark its place in the 21 st Century David H. Merchant

Transcription

1 The Energy Gap How CO 2 Tertiary Recovery will mark its place in the 21 st Century David H. Merchant Presented to Midland CO 2 Conference December 6, 2012 Midland, Texas

2 Merchant Consulting 36 Years Petroleum Engineer 26 Years of CO 2 Experience 14 Years of Consulting Experience

3 Tertiary CO 2 Flooding CO 2 Flood History since 1972 Since 1972 over 120+ CO 2 Tertiary Projects have been implemented in the United States. Today, over 250,000 BOPD of Tertiary Oil is produced with CO 2 Injection with over 4,000 miles of CO 2 pipeline. Sacroc Field

4 Permian Basin Statistics 1.2 billion barrels of tertiary oil have been recovered due to CO 2 Injection

5 CO 2 Well Operations 10,000 Production Wells 8,000 CO 2 Injection Wells Note: Since 1972, the oil and gas industry has: Excellent Safety Record. Note: Corrosion is not an issue - Casing, Tubulars, Field Piping, etc. are 95+% Carbon Steel

6 United States CO 2 Supply (Natural Sources) Approximately 75% of the CO 2 today is supplied by Natural CO 2 Source Fields 1. Permian Basin - McElmo Dome, Sheep Mountain, Bravo Dome 2. Mississippi Jackson Dome 3. Wyoming LaBarge

7 Conventional CO 2 Pipeline Operations Pipeline Transport is Best Overall Note: Since 1972, the oil and gas industry has: 1. Produced and injected more than 10.8 TCF of CO 2 from 7 sources. 1.2 TCF of which came from sources otherwise would have been vented. 2. Constructed over 4,000 miles (6,436 kilometers) of CO 2 mainline pipeline systems. 3. In 2012, Producing at Maximum Capacity of over 3.5 BCF/day.

8 Conventional CO 2 Pipeline Operations Pipeline Transport is Best Overall Note: Since 1972, the oil and gas industry has: Excellent Safety Record. The CO 2 is dehydrated (water removed), pumped, and transported as a super-critical fluid. Very little corrosion problems have been reported to date.

9 Conventional CO 2 Operations Oil Production Facilities and Gas Separation Facilities Note: Corrosion is not an issue Vessels, piping, etc. is 95+% Carbon Steel

10 What are they doing?

11 Tertiary CO 2 Flooding The Energy Gap 21 st Century

12 Tertiary CO 2 Flooding CO 2 Sequestration Future In the 21 st Century, CO 2 Sequestration will provide CO 2 from IGCC Natural Gas and Coal Fired Power Plants, Refineries, and other large scale Anthropogenic CO 2 Sources to fill the Energy Gap that exists between Peak Oil and the future Hydrogen Energy Economy.

13 Gap Fillers

14 Gap Fillers 1. Primary Oil Recovery 2. Secondary Oil Recovery 3. Tertiary CO 2 - Conventional Tertiary Oil Recovery 4. Tertiary CO 2 - Residual Oil Zone (ROZ) 5. Tertiary CO 2 Heavy Oil (14+ API) 6. Offshore Shallow and Deep Water 7. Natural Gas (Conventional Reservoirs) 8. Liquefied Natural Gas (LNG) 9. Shale Oil (Bakken, Others) 10. Shale Gas (Marcellus, Barnett, Eagle Ford) 11. Coal to Gas, Coal to Liquids 12. Steam, Thermal, and MEOR (Bacteria)

15 Hydrogen Economy Clean Air Environment 1. Wind Power 2. Solar Power 3. Nuclear (Fission) 4. Nuclear (Fusion) 5. Hydrogen Power (Hydrogen Cars and Hydrogen Fuel Cells) 6. Tertiary CO 2 EOR and CO 2 Sequestration 7. Mass Transportation (Automobiles poor means to move people) 8. Clean Coal Gasification (Pre-Post Combustion, Oxy-fuel) 9. Clean Natural Gas (Conventional and Un-Conventional) 10. Biomass Balance with Mother Nature 11. Nano Tech 12. Algae (Clean Fuels)

16 CO 2 Flood Basics What makes CO 2 work?

17 Oil Field Basics Oil Field Life Cycle (All Fields Worldwide) Well Log Recovery Mechanisms Primary Oil Recovery Secondary Recovery Tertiary Oil Recovery

18 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 BOPD Primary and Secondary Oil Recovery Historical Unit Oil Production Performance Field Discovery 1000 Primary Recovery Field Example CLAYTON RANCH NORTH FIELD SPRAYBERRY FIELD UNIT SCOPING MODEL PREDICTION Secondary Recovery Today BOPD(WF) BOPD(History) BOPD(Primary) BOPD(Primary) Primary Prediction Secondary Prediction Time, years (World Perception - Two Stages of Oil Recovery)

19 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 BOPD Primary, Secondary, and Tertiary Oil Recovery CO 2 Tertiary Flooding Primary, Secondary, and Tertiary Prediction Field Discovery 1000 Primary Recovery CLAYTON RANCH NORTH FIELD SPRAYBERRY Field Example FIELD UNIT SCOPING MODEL PREDICTION Secondary Recovery Today Tertiary Recovery BOPD(WF) BOPD(Tertiary) BOPD(History) BOPD(Primary) BOPD(Primary) CO2 Startup Jan Tertiary Prediction Primary Prediction Secondary Prediction Time, years (Three Stages of Oil Recovery)

20 Primary, Secondary, and Tertiary Oil Recovery (Main Pay + ROZ) ROZ CO 2 Flooding Primary, Secondary, and Tertiary Prediction (Four Stages of Oil Recovery - ROZ)

21 Permian Basin (Residual Oil Zone - ROZ) ROZ - Oil Saturation Profile Oil Saturation Original 0% 100% Oil Saturation Today 0% 100% Note: Reservoir originally contained full column of oil Oil migrated elsewhere in basin A Residual Oil Saturation remained afterwards Note: ROZ Pay Zones do not exist in all Basins

22 CO 2 Flooding Techniques

23 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation)

24 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation) SPE Paper Life Beyond 80 A look at Conventional WAG Recovery beyond 80% HCPV Injection in CO 2 Tertiary Floods

25 Permian Basin First Commercial CO 2 Flood Latest Success Story Sacroc Unit in Kelly Snyder Field

26 EXISTING MARKETS Year Wyoming CURRENT CO2 SOURCES and PIPELINES Canadian Washington Oregon Nevada California Idaho Arizona Montana LaBarge Wyoming Nebraska Utah Colorado North Dakota Minnesota South Dakota McElmo Dome Sheep Mountain Great Plains Coal Plant Kansas Oklahoma Bravo Dome Wisconsin Iow a Illinois Missouri Arkansas Maine New Hampshire Vermont New York Massachusetts Michigan Rhode Island Connecticut Pennsylvania New Jersey Ohio Indiana Delaw are Maryland W. Virginia Virginia Kentucky North Carolina Tennessee South Carolina Sacroc Unit Kelly Snyder Field New Mexico Permian Basin Texas Terrell, Puckett, Mitchell, Grey Ranch Plants Louisiana Mississippi Alabama Jackson Dome Georgia Florida Louisiana/Mississippi PETRA 12/1/99 10:10:02 AM Ft/In

27 Canyon Reef Map Sacroc Unit SACROC UNIT KELLY SNYDER FIELD BASE MAP By: David H. Merchant Date: September Ft/In PETRA 9/12/00 12:17:43 AM The Kelly Snyder Field (Sacroc Unit) recovers Tertiary Oil from the Canyon Reef Limestone Formation about 6,700 ft. deep

28 Jan-48 Jan-50 Jan-52 Jan-54 Jan-56 Jan-58 Jan-60 Jan-62 Jan-64 Jan-66 Jan-68 Jan-70 Jan-72 Jan-74 Jan-76 Jan-78 Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 BOPD, MCFIPD BWIPD Sacroc Unit Production History Sacroc Unit Historical Production and Injection Field Discovery November , ,000 Water Injection Septembe r 1954 CO2 Injection January 1972 SACROC UNIT KELLY SNYDER FIELD Peak Oil Rate 209,000 BOPD Peak Water Inj. 126,000 BWIPD BOPD MCFIPD BWIPD 1,200,000 1,000, , , , , ,000 50, , ,000 Year Time, years Curre nt Oil Rate 9,071 BOPD

29 Sacroc Unit Pennzoil Operatorship

30 Jan-48 Jan-50 Jan-52 Jan-54 Jan-56 Jan-58 Jan-60 Jan-62 Jan-64 Jan-66 Jan-68 Jan-70 Jan-72 Jan-74 Jan-76 Jan-78 Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 BOPD, MCFIPD BWIPD Sacroc Unit Pennzoil Operatorship ,000 SACROC UNIT KELLY SNYDER FIELD BOPD MCFIPD BWIPD 1,200, ,000 1,000, , , , , , ,000 50, , Time, years

31 Sacroc Unit Pennzoil Ownership Center-line Project 1996 CO 2 Pattern Development Plan 300 Acre Pilot

32 BOPD, MCFD, MCFIPD Sacroc Unit Pennzoil Ownership Historical Production Oil Production and CO 2 Injection SACROC UNIT KELLY SNYDER FIELD BOPD MCFIPD 40, ,000 32,000 Pennzoil 200, ,000 24,000 3 years 120,000 16,000 80,000 8,000 40,000 - Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Time, years -

33 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 BOPD Sacroc Unit Pennzoil Ownership Historical Production by Project Area SACROC UNIT KELLY SNYDER FIELD Oil Rate - Historical ( ) CENTERLINE NORFLOOD SOUTHWEST BANK NON PROJECT AREA Center-line Project Up 3000 BOPD Time - years

34 Sacroc Unit Devon Operatorship Kinder Morgan Ownership Today

35 MSCFIPD BWIPD Sacroc Unit Current CO 2 and Water Injection SACROC UNIT KELLY SNYDER FIELD MSCFIPD (CO2)-HIST BWIPD-HIST 900, , , , ,000 Historical Water and CO2 Injection Kinder Morgan Company purchased Shell CO2 Company in April MMSCFD 800, , , , , , , , , Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Time, years CO 2 Injection Increase 120 MMSCFD Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul , , , ,000 -

36 Sacroc Unit BOPD Current Oil Production 40,000 35,000 30,000 Historical Oil Rate Kinder Morgan Company purchased Shell CO2 Company in April 2000 SACROC UNIT KELLY SNYDER FIELD Predictions Oil Rate BOPD-HIST BOPD-(Base Case) BOPD-(2000 Prediction) 33,000 BOPD 25,000 20,000 15,000 10,000 5, ,500 BOPD Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Time, years Tertiary Oil Response Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul

37 What is Conventional WAG Management?

38 Wetting the WAG

39 Tertiary CO 2 Flooding The Previous Millennium 20 th Century Life to 80% HCPV Injected

40

41 1980 s

42 Tertiary CO 2 Flooding The New Millennium 21 st Century Life beyond 80% HCPV Injected

43 SPE Paper Life Beyond 80 A look at Conventional WAG Recovery beyond 80% HCPV Injection in CO 2 Tertiary Floods 2010 s

44

45 Dean C Unit - Mobil Duggan Slaughter Unit - Pennzoil Dean C unit Altura Anadark o Smith Igoe M R Berry Alt ur a GB Luc as Unit Apac he Hudgens Unit Pennzoil Glimp Unit WG Frazier Unit - Altura Mallet Land and Cattle - Pennzoil Sundown Unit - Altura Coons Unit Ex x on Alex Slaughter Unit M edallion M G Gordon Pennzoil Example -WAG BENEFITS (Control CO 2 Process) Slaughter Estate Unit in Slaughter Field SLAUGHTER FIELD - Slaughter Field Project - All Leases in Slaughter Field Slaughter Field Map - Current Operators Tyner Unit - Oxy XIT Unit - Apache NW Mallet Unit - Altura Mallet Unit - OXY West RKM Unit - Altura Conoco Dean Unit - Merit East RKM Unit - Altura CS Dean A Unit - Apache FL Woodley Unit - Mobil League 91 Unit Igoe Smith Unit HT Boyd Unit Mallet Unit - Mobil East Mallet Unit - Mobil Bass Properties Altura Dean B Unit - Union Royalty Boyd Mallet Unit - Belco Central Mallet Unit - Altura Bob Slaughter Unit - Texaco Slaughter Estate Unit - Altura Mallet LC (C,D,F) - Texaco Cochran County Hockley County Yoakum County Terry County Ft/In PETRA 8/1/99 9:35:02 AM SPE Paper Reservoir Management in Tertiary CO 2 Floods

46 Example - WAG BENEFITS (Control CO 2 Process) Slaughter Estate Unit in Slaughter Field Production and Injection ( ) Slaughter Estate Unit CO 2 Tertiary Study 1984 Oil Production Gas Production Gas Injection Water Injection WAG Adjustment SPE Paper No

47 Example - WAG BENEFITS (Control CO 2 Process) Level Load Gas Production WAG Change Effect of Constant WAG Injection Operations Oil Prod Gas Prod Effect of Over-WAG Ops.

48 What are they doing?

49 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation)

50 Tertiary CO 2 Flooding Permian Basin (Seminole Field) Seminole Field Location Seminole Field Seminole Field The Seminole field recovers Tertiary Oil from the San Andres Formation about 5,500 ft. deep which also includes a large Residual Oil Zone (ROZ). The Field is developed on 9-spot pattern spacing.

51 Permian Basin (Residual Oil Zone - ROZ) ROZ - Oil Saturation Profile Oil Saturation Original 0% 100% Oil Saturation Today 0% 100% Note: Reservoir originally contained full column of oil Oil migrated elsewhere in basin A Residual Oil Saturation remained afterwards Note: ROZ Pay Zones do not exist in all Basins

52 BOPD Seminole San Andres Unit Jan-35 Jan-40 Jan-45 Jan-50 Jan-55 Jan-60 Jan-65 Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15 Jan-20 Jan-25 Jan-30 Jan-35 Jan-40 BWPD, MSCFD (Total Gas) Primary Recovery 100,000 Seminole San Andres Unit Total Unit Performance Historical Production and Injection - Rate Predictions (Primary, Secondary, Tertiary Recovery Mechanisms) BOPD BOPD (WF) BOPD (PRIMARY) MCFD BWPD BOPD (PREDICTION) MCFD (PRIMARY PRED) BWPD (PRIMARY PRED) 100,000 BOPD 500,000 BWPD, MCFD Field Discovery ,000 80, ,000 60,000 Today 300,000 40,000 Primary Peak Oil Production - 25,000 BOPD 200,000 20, , Time, years

53 BOPD Seminole San Andres Unit Jan-35 Jan-40 Jan-45 Jan-50 Jan-55 Jan-60 Jan-65 Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15 Jan-20 Jan-25 Jan-30 Jan-35 Jan-40 BWPD, MSCFD (Total Gas) 100,000 Seminole San Andres Unit BOPD Secondary Recovery BOPD (WF) BOPD (PRIMARY) Total Unit Performance MCFD BWPD BOPD (PREDICTION) Historical Production and Injection - Rate Predictions MCFD (SECONDARY PRED) BWPD (SECONDARY PRED) (Primary, Secondary, Tertiary Recovery Mechanisms) 100,000 BOPD 500,000 BWPD, MCFD Field Discovery ,000 80,000 Secondary Peak Oil Production - 75,000 BOPD 400,000 60,000 Water Injection Today 300,000 40, ,000 20, , (WF) Time, years

54 BOPD Seminole San Andres Unit Jan-35 Jan-40 Jan-45 Jan-50 Jan-55 Jan-60 Jan-65 Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15 Jan-20 Jan-25 Jan-30 Jan-35 Jan-40 BWPD, MSCFD (Total Gas) Tertiary Recovery (Main Pay Only) 100,000 80,000 60,000 Seminole San Andres Unit Total Unit Performance Historical Production and Injection - Rate Predictions (Primary, Secondary, Tertiary Recovery Mechanisms) BOPD (WF) BOPD (PRIMARY) BOPD (PREDICTION) BOPD MCFD BWPD BWPD (Pred) MCFPD (Pred) 100,000 BOPD 250,000 BWPD, MCFD Field Discovery Secondary Peak Oil Production - 75,000 BOPD Tertiary Peak (MP) Peak Oil Production - 43,000 BOPD (Level Load) 250, , ,000 40,000 Today 100,000 20,000 50, CO 2 Injection 1983 (MP) Time, years

55 BOPD Seminole San Andres Unit Jan-35 Jan-40 Jan-45 Jan-50 Jan-55 Jan-60 Jan-65 Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15 Jan-20 Jan-25 Jan-30 Jan-35 Jan-40 BWPD, MSCFD (Total Gas) Tertiary Recovery (ROZ Addition) 100,000 80,000 60,000 Seminole San Andres Unit Total Unit Performance Historical Production and Injection - Rate Predictions (Primary, Secondary, Tertiary Recovery Mechanisms) BOPD BOPD (WF) BOPD (Tertiary MP) BOPD (ROZ) MCFD BWPD BWPD (Pred) MCFPD (Pred) 100,000 BOPD 250,000 BWPD, MCFD Field Discovery Secondary Peak Oil Production - 75,000 BOPD Tertiary Peak (MP) Peak Oil Production - 43,000 BOPD (Level Load) 250, , ,000 40,000 Today 100,000 20,000 50, CO 2 Injection 1983 (MP) 1996 (ROZ) Time, years

56 100

57 Tertiary CO 2 Flooding Residual Oil Zone Target Big Horn Basin

58 Tertiary CO 2 Flooding Wyoming - Big Horn Basin 1. Main Pay 500 to 800 Million barrels over 40 years 2. ROZ 800 to 1,200 million barrels over the next 40 years 3. Existing Wells Implementation will utilize a majority of the. estimated 2,000 existing wells drilled 4. Facilities New Facilities will be required for implementation 5. Sequestration EORI estimates between 12 and 19 TCF can be. sequestered in petroleum reservoirs Ref: Enhanced Oil Recovery Institute

59 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation)

60 CO 2 Sequestration, Gas Storage and Gravity Drainage Projects Low Dip Reservoir (Conformance can be detrimental) Gas Cycling is a big problem Moderately Low or High Dip Res. (Can run Miscible or Immiscible) Conduct a gravity Stabilized CO 2 flood with chase gas CO 2 Conformance Problems Chase Gas Inj. CO 2, Flue gas, Nitrogen, Air CO 2 Bank Displacement Process Replacement Process

61 San Andres Map Yates Field San Andres Map Yates Field

62 Yates Reservoir History Discovery: 1926 Discovered in of Oil Column at Structure Top Produced By Individual Operators Unitized in 1976 to Prevent Aquifer Influx Gas Re-injected,Water Re-injected Oil Column Thinned Double Displacement Reservoir Dewatering Contact Lowering Contact Stabilization (30 ft oil column) Gas Cap Injection Aquifer Maintenance By Offsite Disposal

63 Jan-25 Jan-30 Jan-35 Jan-40 Jan-45 Jan-50 Jan-55 Jan-60 Jan-65 Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 BOPD, MSCFD BWPD Yates Unit Historical Performance Yates Total Unit Performance Production and Injection BOPD MCFPD MSCFIPD(Total Gas) 250,000 Primary Production History Secondary and Tertiary Production History BWPD 500,000 BWIPD 200, ,000 Oil Production (Peak) 130 MBOPD (approx.) 150, , , ,000 50, , Time, years Field Production and Injection

64 Jan-70 Jan-72 Jan-74 Jan-76 Jan-78 Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 BOPD, MSCFD MSCFIPD (GAS,CO2, N2) Yates Unit Historical Performance Yates Total Unit Performance Gas Injection Only BOPD MSCFPD(GAS) 200, ,000 Gas Inj Startup - July 1976 Tertiary Production History MSCFPD(CO2) 250,000 MSCFPD(N2) 160,000 CO2 Gas Injection 200, ,000 N2 Gas Injection 120, , ,000 80,000 Comb Gas Injection 100,000 60,000 40,000 50,000 20,000 0 Flue Gas CO2 Nitrogen/CO2 CO2 0 CO2 Injection Startup - Nov Time, years Field Gas Injection Breakout

65 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 MSCFIPD Yates Unit Historical Performance 250,000 Historical N 2 and CO 2 Injection Yates Total Unit Performance Nitrogen and CO2 Injection (Current) MSCFIPD (N2)-HIST MSCFIPD (CO2)-HIST 200, ,000 N 2 100,000 50,000 Kinder Morgan returned CO2 injection to Yates field in 2003 in addition to a horizontal drilling program CO 2 - Time, years Field Injection (Current)

66 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 BOPD Yates Unit Historical Performance Yates Total Unit Performance Oil Production (Current) BOPD-HIST 70,000 60,000 50,000 Historical Oil Rate Kinder Morgan returned CO2 injection to Yates field in 2003 in addition to horizontal drilling program 40,000 30,000 10,000 BOPD Increase 20,000 10,000 - Time, years Field Production (Current)

67 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation)

68 Gas Cycling Example Denbury Little Creek Field and West Mallalieu Field

69 Gas Cycling Example Denbury Little Creek Field and West Mallalieu Field Denbury: 2006 CO 2 Conf

70 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation)

71 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation) Wilmington Onshore CO 2 Pilots Wilmington Offshore THUMS Unit

72 Heavy Oil Example 14+ API Gravity Wilmington Field Los Angeles (3 CO 2 Pilots) Wilmington Field

73 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation)

74 Bakken formation Shale Oil Rocky Mountain CO2 Tertiary Market - Year 1986 Canada Montana North Dakota GARFIELD DAWSON CLEARWATER MINERAL MISSOULA POWELL LEWIS AND CLARK CASCADE JUDITH BASIN FERGUS PETROLEUM PRAIRIE WIBAUX Williston Basin MEAGHER GRANITE WHEATLAND IDAHO RAVALLI JEFFERSON DEER LODGE SILVER BOW MADISON BROADWATER GALLATIN PARK MUSSELSHELL TREASURE CUSTER GOLDEN VALLEY ROSEBUD YELLOWSTONE SWEET GRASS BIG HORN STILLWATER CARBON Powder River Basin POWDER RIVER FALLON CARTER HARDING PERKINS CORSON DEWEY CAMPBELL WALWORTH POTTER MCPHERSON EDMUNDS FAULK BEAVERHEAD ZIEBACH LEMHI BUTTE SULLY CROOK VALLEY CAMPBELL YELLOWSTONE NATIONAL MEADE STANLEY BIG HORN SHERIDAN HUGHES Big Horn Basin HAAKON JOHNSON LAWRENCE BUFFALO PARK CUSTER CLARK FREMONT BOISE CAMAS ELMORE BLAINE GOODING LINCOLN MINIDOKA JEROME TWIN FALLS CASSIA BUTTE Idaho WESTON JEFFERSON TETON MADISON WASHAKIE TETON JONES LYMAN PENNINGTON BRULE JACKSON MELLETTE South Dakota CUSTER TRIPP HOT SPRINGS SHANNON TODD GREGORY BENNETT BONNEVILLE NATRONA FALL RIVER LaBarge CO2 BINGHAM KEYA PAHA FREMONT Source CARIBOU Field SUBLETTE DAWES POWER NIOBRARA CHERRY BROWN ROCK CONVERSE SHERIDAN SIOUX BANNOCK Wind River Basin PLATTE Nebraska GOSHEN BOX BUTTE BEAR LAKE 40 miles LOUP FRANKLIN (24") BLAINE HOOKER THOMAS ONEIDA GRANT 112 miles (20") Wertz and Lost Soldier CO2 Floods SCOTTS BLUFF MORRILL LINCOLN LOGAN GARDEN ARTHUR MCPHERSON CACHE CUSTER Shute Creek Wyoming BANNER RICH Plant HOLT WHEELER GARFIELD VALLEY GREELEY HOWARD SHERMAN LKO WHITE PINE BOX ELDER TOOELE JUAB WEBER UINTA MORGAN Rock Springs DAVIS SUMMIT DAGGETT SALT LAKE DUCHESNE UINTAH UtahWASATCH UTAH CARBON ALBANY LARAMIE SWEETWATER CARBON JACKSON LARIMER MOFFAT ROUTT Colorado GRAND Rangely CO2 Flood RIO BLANCO GARFIELD EAGLE SUMMIT BOULDER GILPIN DENVER CLEAR CREEK JEFFERSON KIMBALL WELD MORGAN ADAMS ARAPAHOE CHEYENNE LOGAN WASHINGTON DEUEL SEDGWICK PHILLIPS YUMA KEITH PERKINS CHASE DUNDY LINCOLN HALL BUFFALO DAWSON KEARNEY ADAMS GOSPER PHELPS FRONTIER HAYES WEBSTER HARLAN FRANKLIN FURNAS HITCHCOCK RED WILLOW SANPETE DOUGLAS KIT CARSON MILLARD EMERY GRAND PITKIN LAKE PARK ELBERT LINCOLN CHEYENNE Ft/In PETRA 5/1/2005 6:36:06 PM

75 Williston Basin Bakken Formation Shale Oil Target To improve Primary Oil Recovery, operators have resorted from single to bilateral Horizontal Well Completions with massive sand fracture technology to improve Primary Oil Recovery.

76 Williston Basin Bakken Formation To make this technology work, large investments involving many horizontal wells on steep decline are required to keep a reasonable continuous rate profile. This results in a many well, many year continuous drilling programs.

77 Williston Basin Bakken Formation Results of this effort are shown below The 10 year Bakken development plan shown above contains 10 one year phases. Ninety wells per phase per year are required for the first four phases with 45 wells per phase per year for the last six phases. This results in a total of 635 wells to be drilled over a 10 year period with a single well cost of around 3 million dollars. For other areas of the Bakken drilling costs can exceed 12 million dollars per well.

78 Williston Basin Bakken Formation Reservoir Model Study CO 2 Tertiary Prediction CO 2 Oil Recovery Primary Oil Recovery Simulation Comparison study results are shown above. Primary recovery was limited to 5 years (3.64% OOIP). With CO 2 Injection over 95 years, Continuous Injection of CO 2 out-performed water injection and other cyclic Huff-n-Puff injection schemes.

79 Williston Basin Bakken Formation Reservoir Model Study CO 2 Tertiary Prediction Water flood Recovery CO 2 Recovery The simulation results show that CO 2 flooding presents a technically promising method for recovering Bakken oil, but over a very long injection period (95 years of injection). Also, note the long time to breakthrough (several months to many years).

80 Tertiary CO 2 Flooding Eight CO 2 Recovery Methods used for Tertiary Oil Recovery in the United States 1. Conventional WAG Recovery (90%+) 2. Residual Oil Zone (ROZ) (Seminole) 3. Gravity Drainage (Yates Field) 4. Double Displacement (Yates Field) 5. Gas Cycling (Denbury, Mississippi). 6. Huff-and-Puff (100+ Projects) 7. Heavy Oil - Calif. (14+ API Gravity) 8. Shale Oil (Bakken) (Under Investigation) Enhanced Oil Recovery - EOR Ninth CO 2 Recovery Method used for EOR and CO 2 Sequestration Note: Remove both Tertiary Oil and Water

81 Merchant Thanks to Steering Committee! 1995 Reservoir Management in Tertiary. CO 2 Floods SPE Screening CO 2 Candidate Reservoirs.. Fundamentals of Pattern Analysis 2000 Setting up the Pieces.. What Constitutes a Simulation? 2004 Pattern Performance as a Diagnostic.. Tool for Reservoir Surveillance 2004 Monitoring the CO 2 Flood -.. Problem Identification and Solutions 2009 Comparisons of Conventional CO 2 WAG. Injection Techniques used in the Permian Basin 2010 Life beyond 80 A look at Conventional WAG. Recovery beyond 80% HCPV in CO 2 Tertiary. Floods SPE The Energy Gap - How CO 2 Tertiary Recovery will mark its place in the 21 st Century

82 Thanks, Now its your turn? David H. Merchant Merchant Consulting CO 2 Storage Solutions WEB: Key Words: Merchant Consulting, CO2 Storage Solutions, CO2 Seminars on Wheels Magnolia, Texas o