Technology Innovation Expanding U.S. Oil and Gas Resource Potential

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1 Technology Innovation Expanding U.S. Oil and Gas Resource Potential Prepared for: 36th USAEE/IAEE North American Conference Presented by: Michael Godec, Vice President Advanced Resources International, Inc. Arlington, Virginia USA September 23-26, 2018 Washington, D.C. 1

2 Presentation Topics Technology advances in shale resource exploitation Technology advances for improved CO 2 enhanced oil recovery and CO 2 storage performance. Environmental technology impacts on improvements in productivity Options for both private and public support for future technology developments. 2

3 What Changed the Shale Gas Game? Horizontal Well with Multi-Stage Fracturing Natural gas production from shallow, fractured shale formations in the Appalachian and Michigan basins of the U.S. has been underway for decades. What changed the game was the recognition that one could create a permeable reservoir and high rates of gas production by using intensively stimulated horizontal wells. Source: EnCana 3

4 Adapting and Using Unconventional Gas Technology The overnight success of unconventional gas in North America rests on a thirtyyear foundation of fundamental science and field-based E&P technology research. DOE s R&D Program for Unconventional Gas Breaking the Technology Lock for Shale The U.S. DOE R&D program, set forth in the 1978 report Enhanced Recovery of Unconventional Gas, built the scientific knowledge base. GRI s field-based R&D applied this knowledge, helping break the technology lock. Countries interested in efficiently developing their unconventional gas resources and adapting the technology used in North America will need to combine their own research and technology investments with outside technical assistance. 4

5 Machine Learning in the Marcellus Range Resources utilized machine learning across its Marcellus Shale wells to determine top contributing factors to high-productivity wells. With 72 attributes, gas production prediction was 94% accurate. High-accuracy estimates enable more accurate planning and scheduling of pipeline commitments and other logistics, optimizing profits. Source: Anderson, et al URTeC

6 Synergy Between Environmental and Economic Objectives Drilling Multiple (22) Wells From a Single Well Pad (Williams Fork/MV, Piceance Basin) Drilling Faster and More Efficiently Leads to Reduced Environmental Impacts 6

7 CO 2 -EOR Process Technology Innovation Expanding U.S. Oil and Gas Resource Potential While relatively simple in concept, successful application of CO 2 -EOR entails sophisticated design, process/flow modeling, and continuous monitoring. Recovery of OOIP - - Gulf Coast Source: Denbury Resources, The injected CO 2 contacts and becomes miscible with the oil remaining in the formation, promoting its recovery. Source: Denbury Resources, In Gulf Coast oil fields, CO 2 -EOR can produce as much oil as primary or secondary recovery. 7

8 The CO 2 -EOR Prize Technology Innovation Expanding U.S. Oil and Gas Resource Potential In the U.S., primary recovery and water flooding have recovered about a third of the 624 billion barrel oil endowment, leaving behind 414 billion barrels. Much of this left behind oil, equal to 284 billion barrels, is technically favorable for CO 2 -EOR and is widely distributed across the U.S. Original Oil In-Place: 624 B Barrels Remaining Oil In-Place: 414 B Barrels Conventional Domestic Oil Resources Favorable for CO 2 -EOR Target for EOR 414 Billion Barrels Proved Reserves 20 Billion Barrels Cumulative Production 190 Billion Barrels *Does not include tight oil production or reserves. Source: Advanced Resources International, Source: Advanced Resources International internal analysis, 2016 JAF2016_052.PPT 8

9 Next Generation CO 2 Enhanced Oil Recovery Use of more efficient CO 2 -EOR technologies and extension of these technologies to new oil resource settings constitutes next generation CO 2 -EOR: 1. Scientifically-based advances in CO 2 -EOR technology 2. Application of CO 2 -EOR to residual oil zones (ROZs) 3. Integrating CO 2 capture with CO 2 utilization by CO 2 -EOR 4. Deployment of CO 2 -EOR in offshore oil fields. 5. Deployment of CO 2 -EOR in tight (shale) oil formations. Use of next generation CO 2 -EOR will expand oil production and CO 2 storage capacity in the U.S. 9

10 Permian Basin ROZ Below Existing Oil Fields OWC Oil Saturation Profile in the TZ/ROZ (Wasson Denver Unit Well Log) Oil Saturation % Main Pay Zone (MPZ) Base of Producing OWC Transition Zone (TZ) Residual Oil Zone (ROZ) Base of Ultimate OWC Wasson Denver Unit Oil Resources (Billion Barrels) Main Pay Zone TZ/ROZ OOIP P/S Recovery * Stranded EOR Potential 0.5** 0.5*** *Produced by nature. **Approximately 0.3 billion barrels already produced/proven to date. ***Numerous ROZ projects underway. Seminole Unit (San Andres) ROZ Project (Three Hess Oil operated miscible CO 2 floods in the ROZ interval show successful oil response.) Project Acres CO 2 Injection Patterns Oil Production (B/D) Phase ,200 1,200 Phase ,700 1,800 Stage 1 2, ,000 3,500 10

11 Permian Basin ROZ Fairways Technology Innovation Expanding U.S. Oil and Gas Resource Potential ARI and Melzer estimate that up to 100 million barrels of OOIP exist in the ROZ Fairways of the Permian Basin. Theorized U. Permian Hydrodynamic Fairways NM TX Palo Duro Basin Boundary of Northwest Shelf San Andres Platform Carbonate Play Northwest Shelf Area Midland Basin Permian Basin Outline Central Basin Platform Source: Modified from Melzer Consulting (2010) JAF2012_092.PPT 11

12 Industry/DOE-NETL Pursuit of Advanced MMV Technologies for CO 2 -EOR and CO 2 Storage Case Study #4: CO 2 -EOR Monitoring Pilot. The PennWest Pembina Cardium (AB, CA) Case Study #3: Use of Surface Deformation and InSAR to Monitor the CO 2 Plume. In Salah CO 2 Capture and Sequestration Project (Algeria). Case Study #1: Case Study #1 Application of Time-Lapse (4-D) Seismic Surveys for Monitoring CO 2 -EOR and CO 2 Storage. Weyburn oil field (SK, CA), Hall-Gurney oil field (KA, USA), Monell Unit/Patrick Draw oil field (WY, USA) and Salt Creek oil field (WY, USA) Case Study #5: Application of Smart Well Technology to Improve CO 2 Utilization and Oil Recovery Efficiency of CO 2 Enhanced Oil Recovery. SACROC Oil Field (W. TX, USA) Case Study #2: Development and Testing of Integrated MMV Technologies. SECARB s Cranfield (MS, USA) and Citronelle (AL, USA) CO 2 Storage Test Sites. 12

13 U. S. Oil Recovery and CO 2 Storage From "Next Generation" CO 2 -EOR Technology* Reservoir Setting Oil Recovery*** (Billion Barrels) CO 2 Demand/Storage*** (Billion Metric Tons) Technical Economic** Technical Economic** L-48 Onshore L-48 Offshore/Alaska Near-Miscible CO 2 -EOR 1 * 1 * ROZ (below fields)**** Sub-Total Additional From ROZ Fairways *The values for economically recoverable oil and economic CO 2 demand (storage) represent an update to the numbers in the NETL/ARI report Improving Domestic Energy Security and Lowering CO 2 Emissions with Next Generation CO 2 -Enhanced Oil Recovery (CO 2 -EOR) (June 1, 2011). **At $85 per barrel oil price and $40 per metric ton CO 2 market price with ROR of 20% (before tax). ***Includes 2.6 billion barrels already being produced or being developed with miscible CO 2 -EOR and 2,300 million metric tons of CO 2 from natural sources and gas processing plants. **** ROZ resources below existing oilfields in three basins; economics of ROZ resources are preliminary. 13

14 DRAFT June 11, 2015 Technology Innovation Expanding U.S. Oil and Gas Resource Potential Concluding Thoughts Technology developments have changed the game in shale resource exploitation; this overnight sensation took 30+ years of R&D. Evolution of technology responding to environmental requirements on oil and gas E&P also resulted in productivity improvements. The synergistic pursuit of advances in technologies have resulted in both improved CO 2 -EOR and CO 2 storage performance. Both private and public support for future technology developments is critical. 14

15 Office Locations Washington, DC 4501 Fairfax Drive, Suite 910 Arlington, VA Phone: (703) Advanced Resources International Houston, TX Wickchester Ln., Suite 200 Houston, TX Phone: (281) Knoxville, TN 1210 Kenesaw Ave. Suite 1210A Knoxville, TN