Evaluation of Western Kentucky s Heavy Oil and Bitumen Resources

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2014 Eastern Unconventional Oil and Gas Symposium - November 5-7, 2014 in Lexington, Kentucky, USA http://www.euogs.

1 2014 Eastern Unconventional Oil and Gas Symposium - November 5-7, 2014 in Lexington, Kentucky, USA Evaluation of Western Kentucky s Heavy Oil and Bitumen Resources 2014 Eastern Unconventional Oil & Gas Symposium Lexington, Kentucky, November 6, 2014 J. Richard Bowersox, PhD, PG, CPG Kentucky Geological Survey Lexington, Kentucky Kentucky Rock Asphalt Mine, Sweeden, Kentucky, ca Kentucky Historical Society photo

2 Western Kentucky Tar Sands Belt Heavy oil and bitumen are found in a 60-mile belt from Logan County to Breckinridge County. Past development was largely in Edmonson and Grayson Counties.

Photo by Husky Oil Company Bitumen is a natural form of petroleum or may be the

3 Heavy Oil and Bitumen Heavy oil being produced from a well in Lloydminster, Alberta, Canada. Photo by Husky Oil Company Bitumen is a natural form of petroleum or may be the byproduct of refining crude oil. This sample was recovered from well tubing in McKittrick oil field, California, where the bitumen was mobilized by steam stimulation of the well.

4 Tar Sands and Oil Seeps The presence of tar sands and oil seeps has been known since the earliest settlement of Kentucky. They are most prominent on the eastern and southeastern margin of the West Kentucky Coal Field. Erosional exposure of their reservoirs has exposed tar sands in western Kentucky. Fractures and faults allow migration of oil from a petroleum reservoir to surface seeps.

5 Exposure of oil-saturated tar sand in a roadcut on the Western Kentucky Parkway, Grayson County. Oil seep in the tar sands along the Western Kentucky Parkway. KGS photo by Brandon Nuttall KGS photo by Brandon Nuttall

6 Early Development History Quarrying rock asphalt for road paving began commercially in 1889 in Grayson County. About thirteen quarries and mines were opened from 1889 to The largest operation was in Edmonson County by Kentucky Rock Asphalt Company and its predecessor (1904 to 1957). The collapse of the industry is largely attributed to growth of the more reliable plant-mix asphalt industry (Rose, 1992).

7 Kyrock processing plant c The Kentucky Library, WKU

8 Rock Asphalt Production 1889 to 1957 About 2.8 million barrels of bitumen, an average of 0.50 barrels per ton of rock asphalt, were produced during this period. Missing production was not reported for competitive reasons.

9 Tar Sands Geology Records of 3930 wells as well as 113 surface samples were reviewed for this evaluation. The productive areas are located on the north and south flanks and east end of the Rough Creek Graben. Heavy oil and bitumen are found in surface and shallow subsurface reservoirs. Chester Series Big Clifty and Hardinsburg Sands Unconformably overlying Caseyville Formation The greatest resources are in the Big Clifty Sand.

10 A B West Kentucky Coal Field A. Distribution and subsurface stratigraphy of the western Kentucky tar sands. B. Typical electric log and core analysis from central Edmonson County.

11 Rough Creek Graben A A Structural Contours on Top of the Haney Limestone

12 A A Caseyville Hardinsburg Big Clifty Stratigraphic cross section from Logan to Grayson County (Datum is the top of the Haney Limestone)

13 A Net Thickness of Big Clifty Oil Sand: 2.46 Billion Barrels of Oil Resources under 389,000 acres (Average 6300 BO/Ac).

14 Big Clifty Core Butler County

Tar Sands Resources Evaluation Methods Compile core analysis for calculation of the bulk volume oil in place (SoPhi) by reservoir Correlate stratigraphic intervals and determine the thickness of

15 Tar Sands Resources Evaluation Methods Compile core analysis for calculation of the bulk volume oil in place (SoPhi) by reservoir Correlate stratigraphic intervals and determine the thickness of oilsaturated sections by well Construct isopach maps of reservoirs and calculate the net oil-saturated volumes (ha, acre-feet) by fault block for each reservoir Do the math: OOIP = So * Phi * h * A * 7758 BO/acre-foot

16 Big Clifty Sand Oil in Place About 90% of the cored wells in this evaluation had less than 20,000 BO/acre in place. 90% Bulk volume oil in place (left) of 2017 samples from 119 wells cored in the Big Clifty.

17 Tar Sands are Typically Oil-Wet Reservoirs Big Clifty Core Porosity

18 Movable oil is about 40% of OOIP

19 EOR Pilot Projects Major oil companies and independent producers have evaluated the tar sands and tested enhanced oil recovery methods from the early 1960s to mid-1980s. Recovery was very good, 25% to >50% of oil in place, but this was only 5000 to 10,000 barrels of oil per acre. Gulf Oil 0.26-acre inverted 5-spot fireflood in the Caseyville, Edmonson County: est. OOIP = 5700 BO (21,700 BO/acre), recovered 3100 BO (54% of OOIP) Westken Petroleum 1.0-acre inverted 7-spot wet-combustion fireflood in the Big Clifty, Edmonson County: est. OOIP = 21,700 BO, recovered 6005 BO (28% of OOIP) Berry Petroleum 1.25-acre inverted 9-spot steamflood in the Big Clifty, Warren County: est. OOIP = 29,900 BO (23,900 BO/acre), recovered >50% of OOIP (May, 2013)

20 Gulf Kerr McGee Marathon Shell Major Oil Companies Drilled 119 Coreholes and Sampled 27 Surface Sites

21 What was learned from these EOR pilot projects? There is an enormous volume of oil in place The reservoirs are thin, typically 25 to 50 feet thick Production would be spread over a large areas. Production operations are expensive Usually no nearby gas pipelines for fuel Water sources for the volumes required for an EOR project, from either surface or groundwater, can be problematic No nearby pipelines or refineries High-viscosity oil has to remain heated or require diluents Greater transportation costs from wells to refineries Difficult oil to refine, yielding low-value products

22 Proposed MegaWest Pilot Steamflood, Butler County Four 1-acre inverted 7-spot patterns Average 52 ft of net Big Clifty oil sand OOIP 15,000 BO/acre Recoverable oil ~6000 BO/acre

SAGD Might Work Steam-assisted Gravity Drainage (SAGD) Horizontal injection wells are drilled above horizontal producing wells Gravity drags heated oil into the producing well 20-acre horizontal

23 SAGD Might Work Steam-assisted Gravity Drainage (SAGD) Horizontal injection wells are drilled above horizontal producing wells Gravity drags heated oil into the producing well 20-acre horizontal reach to contact sufficient reservoir Advantages Multiple horizontal wells are drilled from a single wellsite create less surface disturbance Larger, centralized production facilities are more economical, though with proportional local impact Still has the disadvantages of any other oil EOR pilot project Would probably require fracing producers and injectors

24 Steam-assisted Gravity Drainage (SAGD) Process

25 What about mining the tar sands to recover the heavy oil and bitumen? Modern Mining TXG-Green Coal Company joint venture (1983) TARCO bitumen extraction test (1983) TXG Resources, in a joint venture with the Green Coal Company in Logan County, tested extraction of oil from surface-mined tar sands. About 700 core holes were drilled on the 2250-acre initial mine site to evaluate the tar sand resource. The Dravo solvent extraction process using methylene chloride was used in the pilot plant. Despite encouraging results after operating for about a year, the project was ended by 1985 when Federal subsidies were withdrawn.

26 N Stampede Resources mine, Logan County, is the only active tar sands development in Kentucky.

27 Developing Western Kentucky Tar Sands: Environmental Issues to Consider Surface use: Mine pits and spoil Well drilling sites and roads Production facilities and pipelines Production processes: Toxic solvents Spill potential Petroleum is hazardous Hydrocarbons Heavy metals Water: Production processes use large volumes of water Waste water must be treated and reused or safely disposed Air quality: VOCs, CH 4, CO, and CO 2 NOX, SOX, and H 2 S Local infrastructure: Road maintenance Public utilities In common with any extractive industry, can development of the tar sands be sustainable?

Thermal Recovery Status and Development Prospect for Heavy Oil in China

UNITAR Centre for Heavy Crude and Tar Sands 1998 1 No.1998.198 Thermal Recovery Status and Development Prospect for Heavy Oil in China Liu Wenzhang Research Institute of Petroleum Exploration and Development,