Uchenna Izundu
International Editor
HOUSTON, May 5 -- In developing heavy oil resources, water management is a bigger problem than handling carbon emissions, according to David Bairrington, general manger of nonconventional resources at ConocoPhillips.
Bairrington told delegates May 5 at the Offshore Technology Conference in Houston that the company uses 2.5 bbl of water and 1,000 cu ft of gas to obtain 1 bbl of bitumen when applying the Steam-Assisted Gravity Drainage (SAGD) process. About 30,000 b/d of production is typical under this method.
Production of heavy oil—touted as the future of the industry—produces a high volume of carbon emissions because of the intensive techniques required to develop it, and regulators are exercising pressure on operators to reduce the emissions to address climate change.
About 63% of the world's heavy oil resources are in North and South America. It is only within the last 5 years that its production has become economically viable, with operators breaking even at an oil price of $50-55/bbl.
Operators in Alberta's Athabasca area have found that development costs have soared. There they spend $30,000/bbl for throughput compared with $15,000/bbl 4 years ago.
"It is a high cost resource from the production standpoint, so we're looking at using solvents to accelerate the viscosity," Bairrington added. Other upgrading options include thermal cracking, removing carbon, and hydrogen additions. "Carbon taxes and dealing with CO2 emissions will be a burden to the industry as a whole," he said, stressing that carbon capture is problematic.
Scale in developing unconventional petroleum resources is crucial in managing costs, said Timothy Parker, chief executive officer at HighMount Exploration & Production LLC. HighMount operates the Sonora field in West Texas, which has 20 tcf of gas originally in place. The company has 15,000 development locations and plans an aggressive drilling program in the field to sustain gas production over the coming years.
Parker criticized the industry for focusing on repeatability as a key success factor, stressing that this may not be the criteria for success in tomorrow's operating environment. He said HighMount regularly carries out controlled experiments to identify areas where costs can be slashed and other improvements made. Compared with its peers, he said, the company has drilled identical wells for 70% of the cost others incur.
Contact Uchenna Izundu at [email protected].
