3. “Possible R&D Futures for the Canadian Oil and Gas Industry” Bruce R. Peachey, MCIC, P.Eng.

4. 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.

5. 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

6. 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

7. 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

8. 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.

9. 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.

10. 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.

11. 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

12. 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

13. Critical Change Analysis Current State More or less Defined Change Needed Outcome 1 Outcome 2 Outcome 3 Outcome 4 …..etc.

15. Oil-Sands Mining (Synthetic Crude) Improved Methane Reforming Catalysts Improve Upgrading Processes Upgrading Breakthrough Find a use for CO2 from Reforming Low cost CO2 Disposal Process Upgrading - Hydrogen Supply Costs and CO2 Emissions High

17. Oil Sands In-situ (Bitumen) Control of Reservoir Heating Thermal Recovery Energy Intensive Improve Energy Utilization Monitoring of Reservoir Distribution In-Situ Upgrading Co-Generation on Surface

19. Conventional Heavy Oil Stir Up the Reservoir Access Without Casing Large Volumes of Sand - Poor Access Produce the Reservoir Enhanced In-Situ Separation Turn Into Opportunity

21. Conventional Oil High Cost of Injectants for EOR Low Cost Injectant Supplies Alternate Water Sources Carbon Dioxide Nitrogen Air or Oxygen

23. Natural Gas Geothermal Co-generation Technology 10-15% of Gas Used for Fuel Reduce Fuel Costs Co-generation in Gas Treating Acid Gas Injection Gas Liquefaction for Pipelines

24. Canadian Fossil Fuel Emissions Source: Statistics Canada

25. Environmental Responses Focus on End-Use Better Lifestyle Decisions Full-Cycle Analysis of Energy Alternatives Oil & Gas Industry Major Emitter Public Information Producers vs... Users Sharing

26. 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.

27. 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.

28. 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!”

29. 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

30. 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