Groundwater Supply Development at Canadian Natural Resources Limited s In Situ Oil Sands Operations

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1 THE PREMIUM VALUE DEFINED GROWTH INDEPENDENT Groundwater Supply Development at Canadian Natural Resources Limited s In Situ Oil Sands Operations Overview, Challenges and Lessons Learned Dave Edwards, P.Geol. District Hydrogeologist April 15, 2011

2 THE PREMIUM VALUE DEFINED GROWTH INDEPENDENT Groundwater Supply Development at Canadian Natural Resources Limited s In Situ Oil Sands Operations (Toto, we ain t in Kansas anymore!) April 15, 2011

3 Outline Background Primrose and Wolf Lake Project Water Sources for Steam Generation McMurray Fm Basal Aquifer Development McMurray Geology Pumping Centre Summary Well design, construction and installation Lessons learned along the way 3

4 Introduction The Primrose and Wolf Lake Project East Central Alberta Cold Lake Oil Sands Area Clearwater Formation Cyclic Steam Stimulation Project Shell Cold Lake Area of Alberta Approved In Situ Developments 4

5 Introduction The Primrose and Wolf Lake Project Wolf Lake Central Process Facility Three Satellite Steam Generation Plants Steam Plant Steam Plant Steam Plant Emulsion/Water Treatment Shell 5

6 Introduction Water Volume (m 3 /d) Oil Production of Water Recycle Project? Reduced fresh water use relative to bitumen production Sources Produced and Saline/Fresh Make-up Water 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Historical Fresh Groundwater Forecast RECYCLED/ Produced Water PRODUCED WATER Saline SALINE Groundwater WATER Bitumen Production (m3/d) 6

7 Site Geology Generalized PAW Geology 7

8 McMurray Fm Basal Aquifer Development McMurray Formation Prolific aquifer Ideal for supply in the Cold Lake area Main source of saline make-up water at PAW Fort McMurray Cold Lake CNRL PAW McMurray Fm Basal Aquifer Isopach Map (Westwater) 8

9 McMurray Fm Basal Aquifer Development Seven Source Wells Installed Over Four Years Vertical and Horizontal Wells Development included: Data compilation Well design Well installation Aquifer/Well Testing Wolf Lake Plant Obs Well McMurray Fm Source Wells 9

10 McMurray Fm Basal Aquifer Development Vertical Wells m 3 /d m 3 /d m 3 /d m 3 /d Horizontal Wells 02-12/ m 3 /d 07-06/ m 3 /d 10-08/ m 3 /d 10

11 McMurray Fm Basal Aquifer Development Defining the McMurray Formation Basal Aquifer Geophysical (Well) Logs Density Porosity 30 % - most important Resistivity 4 to 10 ohms Gamma Ray 30 to 45 API Well Log McMurray Fm Top 550 m McMurray Fm Basal Aquifer Top Devonian Top 600 m 11

12 McMurray Fm Basal Aquifer Development Lessons Learned Dealing with Heterogeneities The McMurray Formation Basal Aquifer is highly variable Always drill beside existing wells Example CNRL proposed source well Existing off-set well - 24 m aquifer thickness (Gas Well) 90 m away - 8 m aquifer thickness unsuitable Gas Well Proposed Source Well 90 m 12

13 McMurray Fm Basal Aquifer Development Well Drilling and Completion 100 m 200 m 300 m 400 m Surface Casing Intermediate Casing Procedure Install Surface Casing Install Intermediate Casing Drill Pilot Hole to TD Under-ream aquifer section from 22 cm to 33 cm Install Well Screen and sand pack 500 m 600 m McMurray Fm Aquifer Devonian Limestone 13

14 McMurray Fm Basal Aquifer Development Well - Drilling and Completion Surface Casing Shale 100 m 200 m 300 m Intermediate Casing Aquifer 400 m 500 m Limestone 600 m McMurray Fm Aquifer Devonian Limestone Under-reamed Section 14

15 McMurray Fm Basal Aquifer Development Well - Drilling and Completion Shale Screen Construction Base Pipe Wire Wrapped Screen Screen (10 Slot) Sand Pack Aquifer Aquifer Limestone Limestone Sand Pack Blank at Joint Courtesy of Veriperm 15

16 McMurray Fm Basal Aquifer Development Well Pump Installation 16

17 McMurray Fm Basal Aquifer Development Well Pump Installation 17

18 McMurray Fm Basal Aquifer Development Well Testing Rate: 3200 m3/d (500 gpm) Duration: 7 days Test essentially over after 1 day Better to let recover and start over again Depth to Water (m) ,000 10, ,000 Elapsed Time (minutes) Results Transmissivity 91 m 2 /day Hydraulic conductivity 5 x 10-5 m/s (5 Darcies) Specific storage coefficient - 5 x 10-6 m -1 18

19 Saline McMurray Fm Basal Aquifer Challenges and Lessons Learned Aquifer Gas Production Gas exsolution not free gas Gas exsolves with reduced pressure Gas Water Ratio = m3/m3 Chemical Analysis Methane 92 %, Carbon Dioxide 3 %, Nitrogen 2 % Testing to Estimate Gas Water Ratio Piston Sampler Inline - gas water separator Wolf Lake brackish tank - agreement with Gas Water Separator (GWR = 0.4) However, piston sample can provide Bubble Point depressured in the lab (~1000 kpa) Gas Water Separator Courtesy of Waterline Resources 19

20 Saline McMurray Fm Basal Aquifer Challenges and Lessons Learned Issues include Flow meter over-estimation of pumping rate during testing over-estimate aquifer parameters and deliverability reduced well deliverability gas breaks out in the aquifer = two-phase flow (very low K) could pump well off Paying Royalties! Corrosion carbonic acid Use plastic lined or coated pipelines Gas Breaks Out in Pore Space Pitted Pipeline Section 20

21 Saline McMurray Fm Basal Aquifer Challenges and Lessons Learned - Regional Aquifer Monitoring Regional Aquifer Monitoring Collect data away from pumping well to reduce drawdown effects Observation Well McMurray Fm Groundwater Production and Water Levels Value? McMurray Fm Pumping Centre Provides comfort on aquifer deliverability to regulators and stakeholders Useful data for flow model calibration and model verification 21

22 Saline McMurray Fm Basal Aquifer Challenges and Lessons Learned - Biofouling Well Development and Biofouling Clean-out and develop wells as soon as possible mud and bacteria Utilize Biocide in Muds Be careful with Polymer Muds Well Specific Capacity 20% of expected Poorly Developed Well Well Sampling Characterizing Bacteria Grey pudding not a good sign Biological Activity Reaction Tests can be useful (DROYCON) Expect to see SRB s, IRB s and HAB s Luminultra ATP Test 22

23 Saline McMurray Fm Basal Aquifer Challenges and Lessons Learned - Biofouling Acid Pumper Water Dispersant Well Rehabilitation Operation Specific Capacity Improved from 10 to 50 m3/d/m DDN 23

24 Saline McMurray Fm Basal Aquifer Challenges and Lessons Learned Horizontal Wells Horizontal Water Well True Vertical Depth 580 m Total Measured Depth 1400 m Horizontal Section 600 m Horizontal Well Advantages More screen open to aquifer (higher productivity actually only double) Can access more areas e.g. under a plant, inside a mine Deeper pump = more available drawdown and reduced gas exsolution in well 24

25 Saline McMurray Fm Basal Aquifer Challenges and Lessons Learned Horizontal Wells Horizontal Water Well True Vertical Depth 580 m Total Measured Depth 1400 m Horizontal Section 600 m Horizontal Well Disadvantages More expensive and technically challenging Difficult to develop low productivity per metre Operational Issues - Wells must be very straight or could result in pump size limitations, pump replacements - wear 25

26 McMurray Fm Basal Aquifer - Development Conclusions Reduced fresh water use in the Cold Lake Area McMurray Formation basal aquifer can provide adequate volumes in this area 26

27 McMurray Fm Basal Aquifer - Challenges and Lessons Learned Conclusions Beware of heterogeneities drill beside off-sets Under-reamed completion works well Dissolved gas can create issues plan for it and characterize gas water ratio and gas chemical composition during testing Develop wells ASAP to avoid biofouling Treat biofouled wells with acid and dispersant Horizontal wells not necessarily better wells but have their place 27

28 THE PREMIUM VALUE DEFINED GROWTH INDEPENDENT THE FUTURE CLEARLY DEFINED Canadian Natural Resources Limited 2500, Street SW Calgary Alberta T2P 4J8 phone: fax: VALUE CREATION RETURN ON CAPITAL LOW-COST PRODUCER RETURN ON ASSETS 28

29 Saline McMurray Fm Basal Aquifer Challenges and Lessons Learned Well Spacing in Pump Centre Two Wells on One Lease? Assess Interference Effects Aquifer 60 m thick, 5000 m3/d per well, wells 80 m apart One Well = 40 m DDN, Two Wells = 65 m DDN TWO WELLS ON ONE LEASE Drawdown (m) Well 1 Cone of Depression Radius (m) 30 Well 2 Cone of Depression Radius (m) Drawdown (m) Drawdown (m) Well 1 and Well 2 Composite Cone of Depression Radius (m) Drawdown (m) 29

30 Saline McMurray Fm Basal Aquifer Issues and Learnings 30

31 Outline The Project mainly utilizes Cyclic Steam Stimulation (CSS) some Steam Assisted Gravity Drainage (SAGD) SAGD - Generally McMurray Fm Void space in SAGD Chamber less make-up Bottom water water saturated zones may be water thief zones make-up CSS Generally Clearwater Fm Void space filled with water more make-up Water saturated zones can be significant water thiefs 31

32 McMurray Fm Basal Aquifer Development Well -Drilling 30 m - WSW to off-set well Observation well - serious about getting storativity value Drilled to ICP and installed to intermediate casing with double Installed screen with service rig 32

33 Introduction - In Situ Water Use and Terminology STEAM PLANT 20,000 m3/d Boiler Feed-water Make-up 3,000 m3/d Lost to Formation (5% Reservoir Retention) 1000 m3/d Injected Water SAGD Chambers 20,000 m3/d Recycled Water 17,000 m3/d * Note: Make-up value will be much higher in start-up or expansion or modes due to low volumes of recycled produced water. Treatment and Recycle (90%) Example of Normal Operations Produced Water 19,000 m3/d Blow-down and Evaporator (Treatment) Losses to Disposal 2,000 m3/d DEFINITIONS Injected Water Produced Water Disposal BFW Make-up 33