“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 State More or less Defined Change Needed Outcome 1 Outcome 2 Outcome 3 Outcome 4 …..etc.

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

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

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

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

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

Canadian Fossil Fuel Emissions Source: Statistics Canada

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

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 Avenue Edmonton, Alberta Canada T6N 1G1 tel: fax: web: