“Possible R&D Futures for the Canadian Oil and Gas Industry”

2. “Possible R&D Futures for the Canadian Oil and Gas Industry” Bruce R. Peachey, MCIC, P.Eng.

3. On Forecasts & Opinions • Opinions are like watches; no two are ever the same; but each believes their own. • Forecasts are science-fiction. • Predicting R&D breakthroughs and examining their impacts is needed to focus and stimulate research efforts. Where would NASA be without Jules Verne or Star Trek? • Forecasts help plan to meet future needs. • Directionally correct; precisely wrong.

4. R&D Needs Identification • Key Sources: • Petroleum Technology Alliance Canada (PTAC) • Canadian Oilsands Network for R&D (CONRAD) • Panel on Energy Research and Development (PERD) • Alberta Chamber of Resources (ACR) • Experience with New Paradigm Development

5. Petroleum Technology Alliance Canada (PTAC) • Objective: • Technology for WCSB conventional oil and gas. • Fill the R&D gap left by downsizing of the majors. • Activities: • Focused on the process of collaboration. Put researchers together with funding. • Open to membership by individuals ($100) and major producers ($11,000) • Workshops to highlight needs --> generate proposals

6. Canadian Oilsands Network for R&D (CONRAD) • Objective: • Share expensive R&D infrastructure for Oil Sands development • Work on common problems/issues through collaboration • Activities: • Generation of projects that members opt into • Membership Oil Sands Producers, Government Research Organizations • Sub-Committees to focus effort and set goals

7. Panel on Energy Research & Development (PERD) • Objective: • Provide support to energy resource development through additional funding to Federal researchers. • Activities: • Several Tasks - Total 1998/99 Budget $54 million • Tasks - Energy Efficiency, Energy & Climate Change, Transportation, Renewable Energy and Hydrocarbons with input from industry • Hydrocarbons $15.6 million. Planning Study in 1998 to provide input on needs.

8. Alberta Chamber of Resources (ACR) • Objective: • Ensure Alberta resource development remains competitive in a Global Environment • Activities: • Form focus task groups - Oil Sands, Blackoil Pipelines, Carbon Dioxide Utilization • Membership open to small and large firms. • Commissions studies to evaluate external forces and initiate actions in response.

9. New Oil & Gas Developments • Horizontal Wells • Enhance reservoir access with less surface impact. • 3-D, 4-D and Comparative Seismic • Understanding the reservoirs and how fluid flows. • Downhole Oil/Water Separation/Processing • Remove contaminants at or near the source. • Oil Sands Mining, Extraction, Upgrading • Cost/bbl reduced from $35 to $13 and potentially lower.

10. Planning for the Future • R&D will be based on Collaboration • Meet needs of producers, inventors, researchers, manufacturers, governments and the public. • Main Canadian industry threats or opportunities will be from Global factors • World Oil Price Fluctuations • Venezuelan/Mexican Heavy Oil Production • Increasing Energy Demand - Decreasing Reserves • Global Climate Change Impacts

11. What Specifically is Needed? • Oil Sand Mining • Improved Upgrading Processes • Oil Sands In-Situ • Improved Energy Utilization • Conventional Heavy Oil • Opportunity to Improve Access • Convention Oil • Enhance Recovery of Original Oil in Place (OOIP) • Natural Gas • Reduce Energy Costs of Compression

12. Critical Change Analysis Outcome 1 Current State More or less Defined Change Needed Outcome 2 Outcome 4 …..etc. Outcome 3

14. Oil-Sands Mining(Synthetic Crude) Upgrading Breakthrough Upgrading - Hydrogen Supply Costs and CO2 Emissions High Improve Upgrading Processes Improved Methane Reforming Catalysts Find a use for CO2 from Reforming Low cost CO2 Disposal Process

16. Oil Sands In-situ(Bitumen) Monitoring of Reservoir Distribution Thermal Recovery Energy Intensive Improve Energy Utilization Control of Reservoir Heating Co-Generation on Surface In-Situ Upgrading

18. Conventional Heavy Oil Produce the Reservoir Large Volumes of Sand - Poor Access Turn Into Opportunity Stir Up the Reservoir Access Without Casing Enhanced In-Situ Separation

20. Conventional Oil Alternate Water Sources Low Cost Injectant Supplies High Cost of Injectants for EOR Carbon Dioxide Air or Oxygen Nitrogen

22. Natural Gas Co-generation in Gas Treating Reduce Fuel Costs 10-15% of Gas Used for Fuel Geothermal Co-generation Technology Acid Gas Injection Gas Liquefaction for Pipelines

23. Canadian Fossil Fuel Emissions Source: Statistics Canada

24. Environmental Responses Better Lifestyle Decisions Oil & Gas Industry Major Emitter Focus on End-Use Full-Cycle Analysis of Energy Alternatives Producers vs... Users Sharing Public Information

25. Comments on Other Futures • Hydrocarbon Use will not go Away • Will remain largest Global energy source. • “Renewables” not all environmentally friendly • Coal Bed Methane - Newest Source • Enhanced contact for CO2 to CH4 exchange. • Potential for major impacts on industry • Natural Gas Hydrates - Unlikely Source • Energy required to produce likely higher than energy contained.

26. Oil and Gas Industry R&D Supporting the 3R’s • Reduce - Main R&D thrust = Efficient use • Life Vs.. Lifestyle and reduce energy waste • Reuse - All energy/processing industries will become more integrated • Co-generation with waste heat, minimize hauling of wastes or intermediate products • Renewal - Oil and Gas Industry has lots of room to adapt to change.

27. For Chemical Engineers • Will likely be considerable work to do • Future will demand • Flexibility • Broad Knowledge Base • Collaboration between industries • Innovative Ideas • Everyone should look forward to: “Living in Interesting Times!”

28. Acknowledgments • Clients - NRCan & PERD, Oil & Gas Producers • Alliance Partners - C-FER Technologies Inc., KR Croasdale & Associates, R&D 2000, Colin Gosselin • Contact Networks - CSChE, PTAC, ACR, CIM, SPE, CAPP, individual colleagues • New Paradigm Affiliates - KeyTech Energy Inc. & Avatar Systems Inc. • Family and Friends

29. Contact Information Advanced Technology Centre 9650-20 Avenue Edmonton, Alberta Canada T6N 1G1 tel: 780.450.3613 fax: 780.462.7297 email: info@newparadigm.ab.ca web: www.newparadigm.ab.ca