Evolution of Heavy Oil Mining and In-Situ Extraction Techniques from Alberta s Oil Sands

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Ellen King
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1 see the VALUE Evolution of Heavy Oil Mining and In-Situ Extraction Techniques from Alberta s Oil Sands Presentation to; Mining Institute of Scotland December 12 th, 2007

2 Agenda The Case for Oil Sands Historical Perspective Oil Sands by Definition Extraction Methods Drivers for Success The Issues / The Future Questions

3 The Case for Oil Sands Development or Why Is Industry Excited? WORLD OIL RESERVES billions of barrels Canadian Oil Sands Canadian Conventional 17.1 Rest of World Source NEB Rest of OPEC Saudi Arabia 264.3

4 Heavy Oil & Bitumen Production

5 Heavy Oil and Oil Sands Resources Fort McMurray Edmonton Calgary Canada Province of Alberta

6 Heavy Oil and Oil Sands Comparison

Scottish Heritage Early exploration In 1788, Alexander MacKenzie wrote in his journal: At about 24 miles from the fork

7 The bitumen is in a fluid state and when mixed with gum, the resinous substance collected from the spruce fir, it serves to gum the Indians' canoes. In its heated state it emits a smell like that of sea coal. Scottish Heritage Early exploration In 1788, Alexander MacKenzie wrote in his journal: At about 24 miles from the fork (of the Athabasca and Clearwater Rivers) are some bituminous fountains into which a pole of 20 feet long may be inserted without the least resistance.

280,000 now Syncrude BasePlant 300,000 now CNRL Horizon 110,000 2008 Imperial

8 Surface Mining <150 feet deep cutoff Mining Projects Company Project Size (bbl/d) Date Albian/Shell Muskeg/Jackpine 150,000 now Suncor BasePlant 280,000 now Syncrude BasePlant 300,000 now CNRL Horizon 110, Imperial KearlLike 100, Synenco NorthernLights 50, PetroCan FortHills 50,

9 In Situ SAGD Projects Company Project Size (bbl/d) Date ConocoPhillips Surmont 100, Total Joslyn 45, Devon Jackfish 35, Encana Christina Lake 18, Encana Foster Creek 40,000 60,000 now Husky Sunrise 50, , Husky Tucker Lake 30, JACOS Hangingstone 10,000 now MEG Energy ChristinaLake 25, North American Kai Kos Dehseh 10, PetroCanada MacKay River 30,000 74,000 OPTI/Nexen Long Lake 72, Suncor Firebag I&2 70,000 now now

10 Early History A rich opportunity Unlocking the sands First steps Initial development

11 Commercialization Early commercialization A giant undertaking Early operations

12 Athabasca Oil Sand A mixture of bitumen, water, solids and fine clays The average composition 11% bitumen 5% water 84% solids

13 Mineralogy and Characteristics Primarily quartz (>84%) Processibility concerns Fines (< 44 µm) Presence of clay Aromatics, asphaltenes Viscosity range Sulphur, heavy metals

14 Geology Devonian Producer Injector

15 Stacked Channels 100 Feet SHALE PLUG CHANNEL IHS IHS

(8.6 o API) Oil Viscosity (cp) 100000 10000 1000

16 Oil Sands Recovery Technologies Mining and In-Situ (SAGD) Athabasca Bitumen, Canada (8.6 o API) Oil Viscosity (cp) Temperature ( o C)

17 SAGD Well Pair Architecture Pad 02 Well Pair / /W4 02P01 100/ /W4 02S01 Well Pair Architecture mm Surface Hole Surface Casing mm J- 55, 81.1kg/m Tenaris ER mkb mkb 508mm Surface Hole Surface Casing 406.4mm, H-40, kg/m Tenaris ER 374.7mm, Intermediate Hole Intermediate Casing 298.5mm, K-55, kg/m, Tenaris Blue Heel Inj. String 177.8mm, K-55, R2, kg/m, Tenaris ER SC SB landed at mkb 406 mkb mkb / mtvd 1231 mkb mkb / 237 mtvd Toe Inj String mm, J-55, 17.3 kg/m Tenaris ER landed at mkb Guide String 73.0mm J-55, AB STL Flush, landed at mkb, with gas-lift pup at mtvd Thermal 40F Cement 0.010" slotted liner 219.1mm, K-55, kg/m, Tenaris ER 269.9mm Hz Hole 222.3mm Hz Hole " rolled on 0.018" slotted liner mm, K-55, kg/m, Tenaris ER mkb 311 mm Int. Hole Intermediate Casing 244.5mm, K-55, kg/m, Tenaris Blue Prim. Prod. String mm, J-55, 18.8 kg/m Tenaris ER SC SB, tapered to 88.9mm, J-55, 13.7 kg/m Tenaris ER SC SB at mkb, landed at mkb mkb mkb / mtvd 1219 mkb / mtvd

18 SAGD Pads

19 Concurrent Operations

20 Challenges

21 Oil Sands Recovery Technologies Mining and In-Situ (SAGD) Syncrude operates mining, extraction, upgrading and utilities plants in order to produce synthetic crude from oil sand Mining Utilities Upgrading SSB Extraction

22 Oil Sands Mining B.C. Alberta Edmonton Sask. Athabasca Oil sands Calgary Syncrude

23 Surface Mining is a Material Management Operation

24 Oil Sands Extraction

25 Nexen s Oil Sands Insitu Assets Long Lake B.C. Alberta Edmonton Calgary Athabasca Oil Sands Sask. Long Lake Project (Phase 1) Start of Site Construction Q2, bbls/d by 2008

26 Integrated Extraction and Upgrading 39º Api End Product

27 Security Gate Nexen Long Lake DrillingCamp Well Pad 9 Future Steam Expansion (to 3.3 SOR) Lime Sludge Ponds Water & Bitumen Storage Area Steam Generation Air Separation Unit North Camp Water Treatment Area Admin Building & Warehouse Emulsion Treating Area Hydro-Cracker Unit Orcrude Unit Well Pad 2 Gasifier Unit Well Pads 6,7 & 8 Product Storage Area Rail Spur Phase 3 Upgrader Site Phase 2 Upgrader Site

28 SAGD Water Treatment

29 SAGD Water Treatment (Lime Sludge Ponds)

30 Upgrading

31 Comparison of Bitumen and Synthetic Crude Raw Bitumen Synthetic Crude Product A.P.I. Gravity Boiling Range 400 o o F 80 o -900 o F (204 o -593 o C) (27 o -482 o C) Sulfur 4.5-5% 0.2% Nitrogen 0.5-1% 0.1% Vanadium 150 ppm Nil Nickel 50 ppm Nil Colour Black Straw Ash 1% Nil

32 Converting Dirt to Dollars 1000 million tons of oil sands mined 44.9% 449 million tons of oil sands processed

33 Converting Dirt to Dollars 11.3% 51 tons of crude bitumen in mined oil sands 90%

34 Converting Dirt to Dollars 260 million bbls of crude bitumen production 85% 220 million bbls of synthetic production 30% -60% of WTI 95%-105% of WTI

35 Economic Drivers of Oil Sands Development Integrated Solution Required Cost of Natural Gas Product Quality Successful Project Execution

36 What are the Challenges Leaders in reclamation Continuous innovation Community development

37 The Future? Looking ahead

Oil Sands Supply Outlook Potential Supply and Costs of Crude Bitumen and Synthetic Crude Oil in Canada,

Oil Sands Supply Outlook Potential Supply and Costs of Crude Bitumen and Synthetic Crude Oil in Canada, 2003-2017 Breakfast Seminar March 10, 2004 1 Agenda Introduction Study Conclusions Overview of Alberta