Oil & Gas Production The Future is Bright: Oil & Gas Production The Future is Bright Tim Carr Kansas Geological Survey and University of Kansas Energy Research Center


Where I Am Coming From:: Where I Am Coming From: Oil & Gas Background Geologist & Geophysicist Enhanced Recovery Technological Approach Energy is the Basis of Civilization Resource is Adequate Insufficient Investment Geopolitical Questions Can Provide Energy & Protect the Environment Hydrocarbons Are Our Major Energy Source Through the Middle of this Century


Slide3: A Barrel of Crude Provides: Gasoline - 19.5 gallons Fuel Oil - 9.2 gallons Jet Fuel - 4.1 gallons Asphalt - 2.3 gallons Kerosene - 0.2 gallons Lubricants - 0.5 gallons Petrochemicals, other products - 6.2 gallons One Barrel = 42 gallons American Petroleum Institute, 1999


Overview: Overview Resource Forecast and Price Trends Changes in H/C Ratio Future is NOT a Bell Curve Future Production Requires Investment 50% Per Decade Technology and People Investment Geopolitics (Access) Environment In 2004 Economic Growth at 15 Year High China’s Oil Consumption is increased 15%, 900,000 b/d World Oil Consumption Increased 2.5 million b/d


Crude oil prices since 1861 : Crude oil prices since 1861


Slide6: U.S. Primary Energy Consumption by Fuel, 1960-2030 (quadrillion Btu) Natural Gas Petroleum Coal Nuclear Renewables Annual Energy Outlook 2006 History Projections


Slide7: U.S. Primary Energy Consumption by Fuel, 1960-2030 (Billions of Barrels of Oil Equivalent) Natural Gas Petroleum Coal Nuclear Renewables Annual Energy Outlook 2006 History Projections


Slide8: Energy Usage: 1750-2000 Coal An Energy Dependent Civilization Steam Steam locomotive Power stations Internal combustion engine Air travel Population growth Living standards Global markets 1750 1800 1850 1900 1950 2000 Telecommunications WWI WWII Satellite Environmental issues Micro-processor Internet Energy Usage ? Modifiers Drivers Cook and Sheath, 1997


Moving Greater H/C Energy Systems: Moving Greater H/C Energy Systems


Projected World Oil Supplies: Geologically-determined peak could have consequences up to and including “war, starvation, economic recession, even the extinction of homo sapiens” (Campbell in Ruppert 2002). “Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely-respected geologists, physicists and investment bankers in the world.” Projected World Oil Supplies


Projected World Oil Supplies: A successful oilman remarked “I would never hire an exploration geologist who is not an optimist, or a petroleum engineer who is not a pessimist.” “There are 195 deepwater fields slated for development from 2005 to 2009 with a total of 37,279 MMBOE” “If past history was all there as … the richest people would be librarians” (Warren Buffet) Laherre’re, 2000 Projected World Oil Supplies


Slide12: Projected World Energy Supplies 1900 1900 1920 1920 1940 1940 1960 1960 1980 1980 2000 2000 2020 2020 2040 2040 2060 2060 2080 2080 3000 3000 20 20 40 40 60 60 80 80 100 100 100 BILLION BARRELS Billion Barrels of Oil Equivalent per Y ear (GBOE) Billion Barrels of Oil Equivalent per Y ear (GBOE) Natural Gas Natural Gas Hydroelectric Hydroelectric Crude Oil Crude Oil Solar , W ind Geothermal Nuclear Electric 1993 Coal Coal Decreasing Fossil Fuels New Technologies World Energy Demand after Edwards, AAPG 8/97


Slide13: Data: Natural Gas (NPC, 1999) 1,451 Recoverable Portion of In-Place Gas Resource (Tcf) Supply & Technology


Proved oil reserves at end 2004 : Proved oil reserves at end 2004


Oil Reserves-to-Production (R/P) Ratios : Oil Reserves-to-Production (R/P) Ratios BP Statistical Review of Energy, 2005


Proved natural gas reserves at end 2004 : Proved natural gas reserves at end 2004


Natural Gas Reserves-to-Production: Natural Gas Reserves-to-Production BP Statistical Review of Energy, 2005


Oil and Gas Requires Investment: Oil and Gas Requires Investment Catch – About 50% of the daily volume in 10 years is not online. At present, requires approximately $100 billion a year.


Oil Refinery Utilization : Oil Refinery Utilization BP Statistical Review of Energy, 2005


Requirements to Meet Demand: Requirements to Meet Demand Evolution of Technology Available Expertise Geopolitics Access Investment Climate Price Today, 1.6 billion people –one quarter of the world population have no access to electricity. In 2030, 1.4 billion people 17% of the world population will still not have electricity. 2.4 billion people rely on traditional biomass – wood, agricultural residues and dung – for cooking and heating.


Technical Challenges: Technical Challenges Greater Depths Deeper Water Decreasing Quality Reservoir Hydrocarbon Distance to Market Price WHO estimates that 2.5 million women and young children die prematurely each year from fumes from biomass stoves. Shifting to LPG reduces health risk by > 100 In sub-Saharan Africa only half the population has access to an improved water source (energy for pumps and purification) In India, up to seven hours a day are devoted to collecting fuel for cooking.


Energy Production is High-Tech Science: Energy Production is High-Tech Science Multiple Discipline Professionals evaluate “Mountains” of data to maximize reservoir recovery. The extraction process is based primarily on management of the pressure and fluids placement of wells to maximize efficiency. Historically, Traditional “pumping” technologies extracted 20 percent of hydrocarbons in a reservoir New Computer Models and technologies improve recovery to greater than 35 percent (75% Goal). This Science Continues to Improve with new breakthroughs


Petroleum Technology Breakthroughs: Petroleum Technology Breakthroughs


Data Models for Energy Recovery: Data Models for Energy Recovery Data Models are collected utilizing seismic readings. Computer Models are put in place to view these readings in a 3D Model Data is collected over time intervals for a 4D view of the data and changes over time Data sets are in Terabyte range with future projections in Petabyte range as information improves View of 3D Seismic Data


Key Technologies: Key Technologies 3D Seismic, Computer Assisted Exploration Deep-water, Sub-sea, FPSO Horizontal Drilling, Geosteering, & Rotary Steering Systems Source: Bates, 2002, GCAGS Baker Hughes


Ultra-Deep Water: Ultra-Deep Water


Oil Sands - In Situ Deposits: Steam Injection Source: PetroCanada Oil Sands - In Situ Deposits 80% of resource in situ too deep to mine current in situ production of 325,000 b/d bitumen + diluent for pipeline new technology developments: cyclic steam stimulation Steam Assisted Gravity drainage (SAGD) VAPEX, MSAR


Oil Sand Cost Trends: Oil Sand Cost Trends Oil & Gas Journal 7/28/2003. Revolutionary Evolutionary


Slide29: Environmental Impact Tarr Farm, Pennsylvania 1862


Slide30: 1000 Year History Atmospheric Concentration of CO2 800 1000 1200 1400 1600 1800 2000 260 280 300 320 340 360 380 D57 D47 Siple South Pole Years Concentration of CO2 PPM Cook and Sheath, 1997


CO2 Emissions – Real Issue: CO2 Emissions – Real Issue 1990 2050 2100 Economic Model Projections of Global CO2 Emissions (No Kyoto) China India USA W. Europe Russia & EE Mideast & OPEC Other Japan Canada Australia, NZ


Geopolitics and Atlantic Gas Access: Halifax Geopolitics and Atlantic Gas Access Anticosti Basin Magdalen Basin Scotian Basin Deep Panuke 400 MMcf/d – 2005 St. John’s SOEI ~ 500 MMcf/d Boston


Geopolitical Decision: Restricted Access to Gas Resource Base: 21 TCF 346 TCF 31 TCF 43 TCF 100% 40% 100% 56% Restricted Percentage Geopolitical Decision: Restricted Access to Gas Resource Base Approximately 29 trillion cubic feet (TCF) of the Rockies gas resources are closed to development and 108 TCF are available with restrictions.


Urban Legends (Energy): Urban Legends (Energy) CONVENTIONAL OIL & GAS NEAR A PEAK TAR SANDS AND OTHER UNCONVENTIONAL RESOURCES ARE TOO DIRTY OR COSTLY TO BE PRODUCED ENERGY OUTPUT FROM ETHANOL IS NEGATIVE EVIRONMENTAL IMPACT FROM OIL AND GAS PRODUCTION AND USE CAN NOT BE MITIGATED EASY OIL IS GONE, COSTS ARE RISING GEOLOGISTS ARE YOUNG AND HANDSOME


Slide35: Eastern Montana, 1978 “…. you must in the first place realize this that the world has now grown old and does not abide in that strength in which it formerly stood. …. Less and less marble is quarried out of the mountains, and veins of gold and silver are dwindling day by day…… So no one should wonder nowadays that everything begins to fail, since the whole world is failing, and is about to die.” St. Augustine 3th Century Quoted in: St. Augustine Rebecca West, 1933, p.159