“Possible R&D Futures for the Canadian Oil and Gas Industry”

Bruce R. Peachey, MCIC, P.Eng.

On Forecasts & Opinions

Opinions are like watches; no two are ever the same; but each believes their own.

Forecasts are science-fiction. • Predicting R&D breakthroughs and examining their impacts is

needed to focus and stimulate research efforts. Where would NASA be without Jules Verne or Star Trek?

Forecasts help plan to meet future needs.• Directionally correct; precisely wrong.

R&D Needs Identification

Key Sources:• Petroleum Technology Alliance Canada (PTAC)• Canadian Oilsands Network for R&D (CONRAD)• Panel on Energy Research and Development (PERD)• Alberta Chamber of Resources (ACR)• Experience with New Paradigm Development

Petroleum Technology Alliance Canada (PTAC) Objective:

• Technology for WCSB conventional oil and gas. • Fill the R&D gap left by downsizing of the majors.

Activities:• Focused on the process of collaboration. Put researchers

together with funding.• Open to membership by individuals ($100) and major producers

($11,000)• Workshops to highlight needs --> generate proposals

Canadian Oilsands Network for R&D (CONRAD)

Objective:• Share expensive R&D infrastructure for Oil Sands

development• Work on common problems/issues through collaboration

Activities:• Generation of projects that members opt into• Membership Oil Sands Producers, Government Research

Organizations• Sub-Committees to focus effort and set goals

Panel on Energy Research & Development (PERD)

Objective:• Provide support to energy resource development through

additional funding to Federal researchers. Activities:

• Several Tasks - Total 1998/99 Budget $54 million • Tasks - Energy Efficiency, Energy & Climate Change,

Transportation, Renewable Energy and Hydrocarbons with input from industry

• Hydrocarbons $15.6 million. Planning Study in 1998 to provide input on needs.

Alberta Chamber of Resources (ACR)

Objective:• Ensure Alberta resource development remains competitive in

a Global Environment

Activities:• Form focus task groups - Oil Sands, Blackoil Pipelines,

Carbon Dioxide Utilization• Membership open to small and large firms.• Commissions studies to evaluate external forces and initiate

actions in response.

New Oil & Gas Developments

Horizontal Wells• Enhance reservoir access with less surface impact.

3-D, 4-D and Comparative Seismic• Understanding the reservoirs and how fluid flows.

Downhole Oil/Water Separation/Processing• Remove contaminants at or near the source.

Oil Sands Mining, Extraction, Upgrading• Cost/bbl reduced from $35 to $13 and potentially lower.

Planning for the Future

R&D will be based on Collaboration• Meet needs of producers, inventors, researchers,

manufacturers, governments and the public.

Main Canadian industry threats or opportunities will be from Global factors

• World Oil Price Fluctuations• Venezuelan/Mexican Heavy Oil Production• Increasing Energy Demand - Decreasing Reserves• Global Climate Change Impacts

What Specifically is Needed?

Oil Sand Mining• Improved Upgrading Processes

Oil Sands In-Situ• Improved Energy Utilization

Conventional Heavy Oil• Opportunity to Improve Access

Convention Oil• Enhance Recovery of Original Oil in Place (OOIP)

Natural Gas• Reduce Energy Costs of Compression

Critical Change Analysis

Current StateMore or less

Defined

Change

Needed

Outcome 1

Outcome 2

Outcome 3Outcome 4…..etc.

S yn the tic C rude P roduc tion 1970 -1996

0

5 ,000

10 ,000

15 ,000

20 ,000

T housands C ub ic M etres

Oil-Sands Mining(Synthetic Crude)

Improved Methane

Reforming Catalysts

ImproveUpgradingProcesses

UpgradingBreakthrough

Find a use for CO2

from Reforming

Low cost CO2Disposal Process

Upgrading - Hydrogen SupplyCosts and CO2Emissions High

Bitumen Production 1970-1996

0 2000 4000 6000 8000

10000

Thousands Cubic Metres/yr

Oil Sands In-situ(Bitumen)

Control of Reservoir Heating

Thermal Recovery Energy

Intensive

ImproveEnergy

Utilization

Monitoring of Reservoir

Distribution

In-Situ Upgrading

Co-Generation on Surface

Conventional Heavy Oil Production 1971-1996

0

10000

20000

30000

Thousands Cubic Metres/yr

Conventional Heavy Oil

Stir Up the Reservoir

Access Without Casing

LargeVolumes ofSand - Poor

Access

Produce the

Reservoir

Enhanced In-SituSeparation

Turn IntoOpportunity

C onventiona l O il P roduction 1971 -1996

0

40,000

80,000

120,000

T housands C ub ic M etres/yr

Conventional Oil

High Cost ofInjectants for

EOR

Low CostInjectantSupplies

Alternate Water Sources

Carbon Dioxide

NitrogenAir or Oxygen

Natural Gas Production 1971-1996

0 40,000 80,000

120,000 160,000

Million Cubic Metres/yr

Natural Gas

Geothermal Co-generation

Technology

10-15% of Gas Used for Fuel

ReduceFuel

Costs

Co-generation inGas Treating

Acid Gas Injection

Gas Liquefaction for Pipelines

Canadian Fossil Fuel Emissions

050

100150200250300350400450500

1958 1968 1978 1988

CO

2 E

mis

sio

ns

(Me

ga

ton

ne

s)

0

2

4

6

8

10

12

14

16

18

CO

2 E

mis

sio

ns

(T

on

ne

s p

er C

ap

ita)

CO2 Emissions(Megatonnes)

CO2 Emissions(Tonnes perCapita)

Source: Statistics Canada

Environmental Responses

Focus onEnd-Use

Better Lifestyle

Decisions

Full-Cycle Analysis of

Energy Alternatives

Oil & GasIndustry Major

Emitter

Public Information

Producers vs... Users

Sharing

Comments on Other Futures

Hydrocarbon Use will not go Away• Will remain largest Global energy source.• “Renewables” not all environmentally friendly

Coal Bed Methane - Newest Source• Enhanced contact for CO2 to CH4 exchange.• Potential for major impacts on industry

Natural Gas Hydrates - Unlikely Source• Energy required to produce likely higher than energy

contained.

Oil and Gas Industry R&D Supporting the 3R’s

Reduce - Main R&D thrust = Efficient use• Life Vs.. Lifestyle and reduce energy waste

Reuse - All energy/processing industries will become more integrated

• Co-generation with waste heat, minimize hauling of wastes or intermediate products

Renewal - Oil and Gas Industry has lots of room to adapt to change.

For Chemical Engineers

Will likely be considerable work to do Future will demand

• Flexibility• Broad Knowledge Base• Collaboration between industries• Innovative Ideas

Everyone should look forward to:

“Living in Interesting Times!”

Acknowledgments

Clients - NRCan & PERD, Oil & Gas Producers Alliance Partners - C-FER Technologies Inc.,

KR Croasdale & Associates, R&D 2000, Colin Gosselin

Contact Networks - CSChE, PTAC, ACR, CIM, SPE, CAPP, individual colleagues

New Paradigm Affiliates - KeyTech Energy Inc. & Avatar Systems Inc.

Family and Friends

Contact Information

Advanced Technology Centre

9650-20 Avenue

Edmonton, Alberta

Canada T6N 1G1

tel: 780.450.3613

fax: 780.462.7297

email: info@newparadigm.ab.ca

web: www.newparadigm.ab.ca