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Oil Sands 08 Review III

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Tue, 19 Aug 2008|

An expert panel addressed five questions crucial to the oil sands and heavy oil industry. 1. How should capital investment and the distribution of profits be adapted to: a) the need to expend energy to move oil sands or heavy oil out of the subsurface, and b) the transparency requirements of public ...

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Is the refinery permitting environment and in Alberta and the US midwest similar and will it impact -- operators will be built. It's not that I don't have an opinion but I'm giving -- -- there like -- here. Some other expert comment -- -- Just a general -- that I -- And this -- personal observation. I think that the regulatory environment and Alberta. Is a little bit. More favorable to. Doing these -- -- in the regulatory environment. In the US. Having said that I mentioned that. If we took over production for one million barrels per day of production today to formally by twenty Tony we need thirty new app creators. It's truly like the refineries are creators are -- capacity so. You know there's six planned for -- but in order to. Achieve that need a lot more I think I was reading the paper where there's 22. Operators plan for the US all of which fall over are supposed to be new. And the other seventeen we're gonna be refineries who -- be adding. -- -- upgrading equipment in order to receive. Pitchman. And again I understand that -- -- processes much more stringent new us then I think what we have here. Let's take another very quick uncertainty Internet question. Is the public at large not the people who are in this room -- the people -- -- the -- -- -- in on the Internet but -- public at large. One of their key words that comes up immediately. An industry is mentioned is nimby. Sure. Upgrade it refined but not in mighty -- yard. I'm -- I think not of course is reflected in the regulations that the government put in to protect. Who else the old oops. I'd -- refused to -- silence is overpowering in this room. -- look like perfectly normal people. -- don't. And opinions and I put out. I have I have -- a good questions from the Internet that they relate more to some of the questions will be dealing with later so. -- moved -- before move off of critters I wanna make sure everybody has -- chance to. To add to comment or or talk about the location of -- -- -- Big issue. I don't like the big one comment about the questions from the Internet I think it was on involving a competition with Brazil. I think there's one important -- in this -- wasn't mentioned it's called Hugo Chavez. And I think everybody in this room knows that colonel Chavez is doing his best to create America -- -- or -- it. -- -- -- -- Doubtful -- off huge effect on the Ctrl+Alt. Hydrocarbon energy in in the Americans. On -- results based out of all about in Brazil is a very important part -- Mr. Chavez -- -- Bill -- stays out of then that's it completely different picture of visa V competition with -- is oil silence than. If Brazil goes in with necklace -- -- My idea question in and perhaps -- Also an observation is that -- find that that. That question. At this point doesn't have a an easy answer -- simplistic or simple resolution. Economically -- mean given the capital. Expenditures anticipated to upgrade the -- -- around the production side versus the cost of modifying it. Refineries in the lower 48 to. Except. As -- -- -- human. You're looking at an economic decision that points that you should. -- the material to the marketplace. And upgraded at that site it would be. Let's intensive less. Costly from a capital standpoint it also. Would take the voice products so for an -- -- closer to points where it would be consumed. On the other hand the government of Alberta. Wants to employ people now they want him -- the men. All around the Fort McMurray area or -- cold lake. Or closer to US centers of population is another matter but the two parties seem to -- be it. On opposite sides of the seesaw and we're. Further apart from resolution I think -- The industry in the government were three years ago and I. With through that openness. Or questions or comment to -- answers -- comments. I had to call man regarding that would use -- palpable way. And proved that they always send me some other plant crude -- -- -- -- -- -- -- Even though we always use the whistle -- but. That the truth is we've never -- -- -- -- friends and at Lucent can never called he would like could noise because these sought to deepen -- material that's what you've -- there. And the different asset price disparity -- -- -- lighter note for himself right if you have candidate Bruce who look like for VoIP. When these two -- they don't compete because -- so many people random. And there. So the -- are -- are the reason why did the Lopez because we we would would come from product by the time you're busy come off on the refinery and decent what indeed what do you take. That the price based fees they call -- -- office. Very little competed. If we could basically put narrowing it Honda on the -- -- -- -- saying that no dialogue yes -- ocean to swung them. There's no competition that. Another problem is that this -- is gonna get updated somewhere. It makes more sense from Iran are expected to have a closer. Not -- operator around the world but reality is that if the US doesn't want the pitchman. The Chinese. As I understand they're refineries or more easily adopted to receive the -- well. Which brings on to another -- -- vote. Mixed messages from our political leaders both -- candidate US's includes government opposition. The like to say that. There's too much -- -- too much greenhouse gas coming overall sense but. Also complain about the high price of yes -- -- energy costs. US wants. The security of supply they don't want except. Probably is that the best -- secure supply of well that they could get so. For -- doesn't want to have jobs export but. If you make more difficult to do work inside -- overdue by raising royalties of one of -- -- Again it's it's it's a mixed message and I don't think -- -- -- to department -- Sound basis but. It just interesting when you hear all the return are being thrown around from all the political leaders. They just don't -- just it can't push pull the same time. She and result that they want. Won our last question on upgrading and we just got time for a brief answer. No -- increase -- natural gas consumption by any update isn't going from one to four million barrels per day. I'm not sure that that's the price. Of the natural costs that would be to controlling -- here it would be its availability. But it is thirty years ago. The work countries in this world that we're actually -- every drop of natural gas that came over the ground with the oil. May -- lights burning natural -- -- -- he hit city of a million people for a whole year and in northern counted on in the in the in the gulf. So I think it's it's the supply of messy and it's a critical Procter and -- Not be the cost of it. -- we've seen not with. Cars and got Celine that the people want it bill pay an awful for it and that of course -- the people who are gonna be paying for a high price -- No I think that that brings us it to another whole question area which has been discussed at this conference -- -- -- alternative sources of hydrogen. And the pain call this the -- product that we of millions and billions of -- well up in the oil silence you can make hydrogen out of vote -- not simply technical but -- it's a feast off for making hydrogen. OK well moving on to the next question. Can we. Put mine slides up the pipelines -- You'll find. Eight you'll find -- very. Repetitive nature Tuesday to these questions because there is this -- -- little mix. Of chemistry physics and politics. We've just talked about it yet again the fact that he's heavier -- are themselves not transportable. And so in order to do anything with them you have to invest something and that something is hydrogen. And where's that hydrogen going to be invested does it make sense to invest it at the well site does it make sense to invest -- at the end user. We have less fun. Okay. The answer is you have to back. Necessity make an investment of some kind that the web site. Because the -- and and heavy oil will not -- down the pipe until you do. There are five basic technologies. For getting heavy oil it's essentially a solid to move down a pipeline as a liquid. And it was almost -- back up please. I'm afraid -- -- router and that's and this I thought better looking than I am. In general. In general if you've gotta think hydrocarbon you can apply some -- to it. And -- -- -- -- will be reduced in you can move it down a pipeline that's what -- Alaska. Unfortunately for Ross. If you look at Bittermann has is the target of most of the sag. Conditions this -- somewhere around 101000. -- Not -- points 101000 points. In third to the -- it into a liquid state. You've got to create temperatures only move a hundred -- 240 degrees centigrade. Durable over a short distance but it's a long way to Houston from here you're having to carry it at a 140 degree centigrade. -- you know the next slide please. The other way. I'm too little reply. Solid this demand -- by dilution. If you've been gone to -- -- diluted material. -- it takes 30% dilution. To effect the root out this -- reduction that you need then you need not only the pipeline. To yeast and you need that pipeline of about half that size going back up. To pop the -- you enough so you can dissolve the -- to carry it down to wherever it is you're going to refine. -- the next life. -- we asked around this issue of upgrading it is a very very complicated issue you can't just say upgrading. The problem the underlying problem is. Heavy air and gentlemen as represented by the -- -- in the lower left hand corner. Is too low in hydrogen content to be liquid. And it's too loaded with had a atoms and sulfur and oxygen. In order to make it fluid you have to invest hydrogen. So will. Hydrogen come from there was the question before about. Natural gas natural gas right now is the cheapest source of hydrogen particularly when it stranded -- you don't have to bid. Against the people trying to keep their houses warm in -- backed. As we introduce hydrogen into the heavy well you can trust revenue -- grass in -- and distillate and gas oil. Which are fluid enough to move. But where -- the hydrogen come from auction as we discussed before -- Utility room. Well and you -- the heck out of it. And you -- hydrogen from one molecule. And give it to another to converted into NAFTA or to distillate. And convinced that molecule that you brought -- into pure -- or petroleum Coke that's it's been discussed. Intermediate between areas to use that the accepting fluid that can push out -- please. Which are -- hey. A portion of bill oil that's already. -- -- hydrogen -- -- than the other material. Bottom line -- lose that as you create products and you can move. You've already million upgrading investment in hydrogen somewhere. We can -- the next life. I really like this slide because. Those little dotted lines. Okay should make sure -- -- And here we're talking about. -- truths in Nablus someplace you -- -- quantities. Which are characterized. Badly. -- -- contents and how -- they are. But those little dotted lines. Do you get. That fluid he needed to take it from where this stuff is coming out of the ground. To -- back -- can turn it into. Those liquid products if you've got a lot of big mind someplace. Where you can integrated altogether. Instead you do inside heat in 5020 different little places and you come up with Richmond how do you get from point a to point B. So we can have -- last slide. The underlying question is do you want to know pension. Or do you want to move product. The Tressel didn't. Affects the total yield. As you. Can move -- you can. And I'm using -- -- Perhaps but those are really. Value products -- the high quality -- and just let. That you would like to use because they can't disaster although they have the ends of the products. So -- dissertation on. The background. For moving. You'll see -- once again -- a restatement. Where you push our later. Has an impact on how low cost effective it is to produce from distributed locations. And how -- -- -- -- You that it just in order to make it to move. No -- over to questions. When will pipeline assets in place to handle three to four million barrels per day to the United States. You know. I'm guessing that I see barring disasters. Of political geopolitical or wherever -- years. Also I understand from. Forms -- documents that there's something like 22 pipelines. Under consideration. With in and outside developers take product. -- Question here. I was curious about -- -- -- On well water emotions. Yes. What are the economies. Using well water -- transport it -- men -- like. This error are. Underneath that -- of course a wide range. B. Invent another dimension to transport the extra heavy crude as the venezuelans like to describe it in Venezuela. Created an irreversible. Emulsion. That was in itself and and product because it was so difficult to undo. -- -- also finds a fact -- at the at the far end of pipeline. It certainly made it convenient to transport. And upgraded material. More or less. As aide Lewis -- liquid. But of course it takes about thirty to 40% water to do that. But we pipeline water lots of places you certainly wouldn't want to try to combine that with a product. Shipment. But -- -- -- -- also and you end up with this with this very tough and robust. Emulsion and it effectively. -- you the end product. And for all people tried to use it as a bunker fuel as a heating fuel. Accepting the heat loss. -- vapor rising -- water used to make the emotion as as part of the cost of just being able to move it. More recently there are other technologies out there that are clinging to create. -- staple. Emotions. One where you get benefit. Of creating an emulsion that allows you to transport. Hydrocarbon as as produced. But then that the other end of the pipeline. Effect a eight separation. Of the water and and the -- our. I don't know did did did that he is. -- used in any large scale pipelines at this time but it you know it's being used in some small. Applications now. I just -- a -- -- -- further previous question what natural gas consumption just using night. Point eight. Because -- for -- girl Padilla had no three million barrels you're looking at probably two point seven billion cubic feet per day. Of natural gas consumption which is almost. -- our pipeline I -- -- that the proposing to take from Oscar down into. -- -- to. And hopefully into the states. So it's a large amount if everybody's natural gas. Questions I propose that we move onto the fifth question -- because we have a lot have been questions in. Like -- have some. Time left at the end to address those. Peter you don't have these these questions and it -- probably one of the most contravention. Controversial questions -- -- sons and heavy oil industry respond to charges that the energy supply. And wealth that result from its work do not justify the environmental. And social consequences. And and visually in my county coroner's I think that everybody as -- overt a thing -- we don't care and over. And everybody in the audience and most of us in the final eleven Alberta and we certainly do care. And the people who run these companies and our top executives used front companies live in Alberta in the of children and grandchildren. And we do care and if you -- but -- contain. All the emissions there were four years ago. Are approximate changed. So. That's a question that's my take on -- so. 27 audience we have here and the guys -- have on the Internet. Go ahead. Okay so. Hello I'm and we'll give us. Not just -- -- anybody anybody who can address this.

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