Refining moves upstream

The heavy oil session at the SPE ATCE foresaw a co-located oilfield and refinery for Alberta’s tar sands, merging the digital oilfield with the refinery of the future. It’s all about fixing the H2 deficiency.

A report from Cambridge Energy Associates this month suggests that ‘unconventional’ oil is to triple the world’s oil resource base, providing an extra quarter century of production. The plenary session of the Society of Petroleum Engineers’ convention in San Antonio offered a timely investigation as to what might be involved in turning heavy oil (HO) into usable synthetic crude oil (SCO). According to session moderator Vic Rao (Halliburton CTO), HO presents challenges to the status quo, particularly its high carbon to hydrogen ratio, aka the ‘hydrogen deficiency.’ One approach is to upgrade in the field, avoiding the ‘transportation challenge.’ CO2 emissions are an issue but sequestration is ‘a semi-valid method of disposal.’


Robert Skinner (Oxford Institute for Energy Studies) stated that there was considerable technology-driven upside potential in heavy oil. Improvements in technology go ‘straight on the bottom line.’ On the downside, supply costs are increasing. Industry needs $30-35/bbl for a 10% return. Project overruns are frequent and costs are rising. But most development will continue at $50 WTI.


According to Murray Smith (Alberta Government), by 2020 Canada will be the largest non OPEC producer. Alberta is N° 2 behind Saudi Arabia in reserves. There is ‘still optimism’ that production can go to 3mm bbl/day and a ‘blue print’ for 5 mm bbl/day. Production is now ‘energy positive’ but you need to move a lot of ‘stuff’—this is ‘a mining process.’ Alberta is ‘looking to reduce’ natural gas usage with in situ coking and produced water is a ‘charged’ political issue. But when companies reclaim land, the buffalo come back!


Don Paul (Chevron CTO) described the process as an oilfield ‘downstream,’ or a refinery ‘within the natural resource environment.’ This ties in with Chevron’s concept of the oilfield as a factory. A considerable effort is needed to integrate all the disciplines. But just as the SPE embraces drilling plus production plus chemical—no one organization or discipline ‘has the ball.’


One questioner took the panel off-guard, asking if there was a role for nuclear energy in HO production. Rao ventured that a small, purpose-designed nuclear plant alongside a heavy oil plant, was a possibility. Smith said that this would guarantee front page news, ‘If someone wants to try this in Alberta, file for a permit—here will be a robust public debate!’ Skinner was skeptical—‘You might need a nuke on skids to move around to where the steam is needed.’ Skinner also opined that North America is becoming increasingly technologically illiterate. Debate on these subjects is hard and the outcome may not be decided on the basis of their technical merits.

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