The Awl Bidness Larry W. Lake Petroleum and Geosystems Engineering The University of Texas

The Oil Business Exploration Production Upstream Refining Larry W. Lake Petroleum and Geosystems Engineering The University of Texas Exploration Production Refining Transportation Marketing Upstream Downstream

A Brief Quiz… 1. What is the usual unit for a quantity of crude oil? 2. What is the usual unit for a quantity of natural gas? 3. How much crude oil goes into making gasoline? 4. How much of your gasoline bill pays for the crude oil?

A Brief Quiz (cont.)… 5. When was oil first discovered in commercial quantities? 6. Name a transportation fuel that is not hydrocarbon based. 7. What is the largest reservoir in the U.S.? In the world? 8. When will we run out of oil?

Exploration… Gas cap Seal or trap Oil column Water column or aquifer Source rock

Seismic

Onshore Seismic…

Offshore Seismic…

Offshore Receiver Spreads…

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Driving Force Productivity Index, PI

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Oil Rate - make as large as possible Goal of everything we do

Constants - Live with them Production… qo = 4pkhkro 4A gCArw2 ( ) ln + 2s [ ] mo (P – Pwf) Constants - Live with them

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Natural logarithm - makes a large number small For example, ln(1000) = 6.9 Natural logarithm

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Permeability - basic property of rocks Make large God provides or doesn't Fracturing

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Well pressure Make small Lift with gas Pump (reduce fluid level)

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Average reservoir pressure Make large Reinject produced gas Inject water (waterflood)

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Penetrated thickness Make large God provides, etc. Reperforating Horizontal wells

Horizontal Wells….

Aggie Drilling Engineer From A.D. Hill

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Oil relative permeability Make large Large oil content Inject chemicals, CO2

Schematic of solvent flood Fig. 7-1 Drawing by Joe Lindley, U.S. Department of Energy, Bartlesville, OK

Typical Micellar-Polymer Flood... Low salinity Low calcium Usually 0.5 PV Surfactant Co-surfactant Co-solvent Polymer Oil (sometimes) Usually 0.1 PV Additives Gradual change to water Fig. 9-1

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Oil viscosity Make small Inject heat (steam) Burn a little oil

Driving the Oil... Steam Drive Process variations… Cold Oil Steam Inject (2-30 days) Cold oil Hot Water Soak (5-30 days) Shut in Produce (1-6 months) Oil + Water Steam soak Driving the Oil... Steam Drive Steam Oil + Water Water Cold Oil

More variations... Using horizontal wells (SAGD) Burning the Oil

In-Situ Conversion Process (ICP) What is it? Enhancement of natural maturation of kerogen by slow heating Results in: thermal cracking in-situ hydrogenation high sweep vapor phase production high API oil N,S,O content vary with resource Average temperature limited to boiling point of diesel, i.e. essentially no bottoms How is it done? Electric resistance or, potentially, gas heaters Underground conductive heat transport Current target resources: Oil Shale Heavy Oil / Tar Sands Coal Naphtha Jet Diesel Nat. Gas Hydrogen Chem. Feed Heat High Value Products Light Processing Perspective View ¢ Producer Heater High Temperature Causes Long, Horizontal Fractures Overburden

Next Research Phase 2 Step Process (at least) to Commercial Freezewall Test Football field sized test on 10 acres near existing research Test robustness of freezewall barrier Active construction/production from late ’05 – early ’07 Reclamation 2010

Ice Wall on Surface

[ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf) Well damage (skin factor) Make small Fracture well Inject acid

Results of Quiz… 1. What is the usual unit for a quantity of crude oil? 1 barrel = 1 bbl = 42 U.S. gallons 1+6 zeros = 1 MMbbl 1+9 zeros = 1 Bbbl 1 metric ton = 7.5 barrels Giant field: 100 MMbbl = 0.1 Bbbl

Results of Quiz… 2. What is the usual unit for a quantity of natural gas? 1000 standard cubic feet = 1 MCF 1 MCF+6 zeros = 1 BCF 1 MCF+9 zeros = 1 TCF Roughly: 6 MCF gas = 1 Bbl crude

Cost of gas= 0.405 $/Ccf

Results of Quiz… 3. How much crude oil goes into making gasoline? 39 % Transportation Residential/ Commercial Industrial Electricity Generation & Transmission Non-Fuel Waste = 25 % Waste = 20 % Waste = 83 % Waste = 68 % Work Achieved 23 % 15 % 39 % Coal Natural Gas Nuclear Petroleum Hydro Other Crude oil = transportation Source: LLNL/DOE

Results of the Quiz… How much of your gasoline bill pays for the crude oil? (American Petroleum Institute, Sept. 2008)

Results of Quiz… 5. When was oil first discovered in commercial quantities? Drake’s Folly … 1859 Corsicana … 1894 Spindletop … 1901 Big Lake (Permian) … 1923 East Texas … 1928 Texas

Results of Quiz… 6. Name a transportation fuel that is not hydrocarbon based. Wind Solar Hydrogen (fuel cells) Coal Muscles

Results of Quiz… 7. What is the largest reservoir in the U.S.? Prudhoe Bay, Alaska – 20+ Bbbls in place In the world? Ghawar, Saudi Arabia – 300+ Bbbls

Results of Quiz… 8. When will we run out of oil? 2005 2047 2% Growth USGS Est. of Ultimate Rec UR B-Bbls Probability Low (95%) Mean (Expected Value) High (5%) 2,248 3,003 3,896 2026 2037 2047 2% Growth Decline R/P = 10 History Mean 70 60 50 40 30 20 10 Billion Barrels per Year 1900 1925 1950 1975 2000 2025 2050 2075 2100 2125 Campbell-Laherrere World Oil Production Estimates, 1930-2050 2005 EIA- DOE Estimates, 1900--2125

When will we run out of oil? U.S. Production, Hubbert vs. Actual Undulating Plateau vs. Peak Oil From Jackson (JPT, 2007)

Major Points… Hydrocarbons found in porous rocks Crude oil = transportation Crude oil is about 70% of gasoline price Hydrocarbons essential to current way of life World has a 30+ year supply; delivery rate a question

Hydrocarbons and Prosperity…

For More Information… U.S. Energy Information Administration American Petroleum Institute International Energy Agency California Division of Oil and Gas Early Texas Oil (Rundell) www.factsonfuel.org/gasoline Larry_Lake@mail.utexas.edu

Chemical EOR Processes... Process Typical Typical Agent Recovery (%) Utilization Polymer 5 1/3-1/2 lb polymer/ bbl oil produced Micellar/ 15 15-25 lb surfactant polymer bbl oil produced Alkaline/ 5 35-45 lb chemical polymer bbl oil produced

US CO2 Emissions by Sector and Fuels 2000 Millions of metric tons per year carbon equivalent 100 200 300 400 500 600 700 Residential Commercial Industrial Transportation Electric Generation Natural Gas Petroleum Coal Source: U.S. EPA Inventory of Greenhouse Gas Emissions, April 2002

Solvent EOR Processes... Process Ult. Recovery % OOIP Utilization Miscible 10-15 10 MCF/bbl Immiscible 5-10

Results of Quiz… Expense ¢ per gallon Production 15-60 Producer profit 53-58 Refining 13 Marketing 5 Transportation 15 Retailer 6 Refining etc. profit 10 US taxes 19 Ave. state taxes 23 Total 159 4. How much of your gasoline bill pays for the crude oil? 1$ change in crude price causes 2.5¢ change in gasoline price www.factsonfuel.org/gasoline

Thermal Recovery Processes... Ult. Recovery % OOIP Utilization Steam (drive and soak) 50-65 0.5 bbl /bbl equivalent Combustion 10-15 10 MCF air/bbl SAGD ?? Various EM Like steam

Undulating Plateau vs. Peak Oil From Jackson (JPT, 2007)