Daqing Oil Field Carbon Dioxide Flooding Technology Research and Practice

1. Daqing Oil Field Carbon Dioxide Flooding Technology Research and Practice April, 2016

2. 海拉尔油田 大庆长垣 新肇油田 长垣外围 Main oilfields in Daqing are located in the west of Heilongjiang province, in which, Placanticline majoroilfields, with thick reservoir and good physical properties, is exploited by water flooding and chemical flooding;Placanticline peripheral oilfield, with thin reservoir and poor physical properties, is exploited by water. In addition, main oilfields also include Hailar oilfield in Inner Mongolia Autonomous Region and Tamtsag oilfield in Outer Mongolian. HailarPlacanticline Daqing Placanticline Block 22 Block 19 Block 21 Placanticline periphery Legend Produced oilfield Un-produced oilfield Gas field

3. Launch carbon dioxide flooding project; promote greenhouse gas reduction • Daqing oilfield peripheral extra-low permeability reservoirs reserves, with billions of tons of hard producible reserves, is always the “chicken ribs” of oilfield. Daqing periphery has low permeability reservoir, which is known as “no water can be injected and no oil is produced” for it is difficult to be exploited. Compared to other flooding technologies, carbon dioxide flooding technology has the features of broad application range, low flooding cost, high recovery efficiency, etc., and enables to form displacement without contamination to stratum for its special properties. This method is very suitable for exploitation of low permeability reservoir. In the recent years, in the light of the problems that water flooding of peripheral extra-low permeability reservoirs is difficult to be used, usage effect is poor and Hailar reservoir has the features of strong water sensitivity, peripheral oilfields have carried out carbon dioxide flooding test. According to estimation, for “three low” oilfields, recovery efficiency can be increased by 10% by carbon dioxide flooding on the basis of water flooding. Carbon dioxide flooding is the realistic way to improve the exploitation effect and ensure the stable oil production; it is also the demonstration project for carbon capture and storage and recovery efficiency improvement, boosting the greenhouse gas reduction.

4. For Daqing oilfield carbon dioxide flooding, the annual injection rate of carbon dioxide was about 200,000t, and the annual output of crude oil in 2014 by carbon dioxide flooding was up to 25,000t. The planned output in 2015 reached 77000t. • Daqing Oil Field had specially set up the Carbon Dioxide Flooding Project Management Department to accelerate the industrialization promotion process for carbon dioxide flooding. It is known that Daqing oilfield carbon dioxide flooding is mainly located in five places now: Shu 101 block in Yushulin oilfield, two industrial test blocks in 14 block in Hailaer oilfield, Fang 48 scale-up test block in NO.8 oil production factory, Yuan 121-3 pilot test block in NO. 10 oil production factory and a well group in NO. 7 oil production factory, entering the scheme design stage. At present, 54 gas-injection wells and 95 oil wells have been built. Yushulin oilfield has successfully realized advanced gas injection, and 21 gas-injection wells have been put into production. Wherein, 11 gas-injection wells are put into production by central gas injection method in 101 extended blocks in Yushulin oilfield, and 9 gas-injection wells are normally put into production. The average injection pressure of single well is 18.7 Mpa; daily gas injection rate is 12t and cumulative gas injection reaches 8311t; 10 new injection wells are put into production by mobile gas-injection method in Shu 151 block.

5. In Yushulin oilfield near the miscible flooding, the predicted recovery efficiency will reach 21%, which is 9% higher than that of water flooding if hard producible reservoirs are effectively developed. In Hailar oilfield with miscible flooding, the predicted recovery efficiency will reach 28%, which is 10% higher than that of water flooding if the exploitation effect of reservoirs with the features of strong water sensitivity are improved. According to the on-site test and calculation, when the cumulative gas injection rate of carbon dioxide flooding reaches 300,000t, carbon dioxide storage capacity can be up to 280,000t and the rest of return carbon dioxide can be re-injected underground reservoir for flooding oil after extraction and closed recirculation. At last, all the injected carbon dioxide can be stored underground. • After the project is implemented, the annual carbon dioxide injected underground during carbon dioxide flooding will reach 300,000t, and annual oil production can be up to 60,000t. This can make some contributions for crude oil production and greenhouse gas reduction in the oilfield.

6. Gas source is one of the keys to the development of carbon dioxide flooding. Pang Zhiqing, Deputy Manager of Carbon Dioxide Flooding Project Management Department of Daqing Oil Field, said that parts of gas sources for Daqing oilfield carbon dioxide flooding have to be outsourced and transported by truck, and another parts of carbon dioxide can be separated from gas produced in Xushen gas field and transported through pipeline. • According to the reality of high carbon content the gas produced in several Xushen gas field blocks, Daqing Oil Field has built the NO. 9 Xushen Natural Gas Purification Plant, which was completed in October, 2013. It is the first natural gas purification treatment unit in Daqing oilfield, which adopts the alconol-amine method as the main technology to remove the carbon dioxide in gas. The daily gas processing capacity is up to 2 million cubic meters, and daily processing and recovery of carbon dioxide exhaust can reach 18,000 cubic meters. • In January, 2015, Natural Gas Branch of Daqing Oil Field raised the pressure for this purification unit and conducted increment evaluation. Various evaluation indexes of this unit met the design requirements, and throughput of feed gas was increased significantly. At present, NO. 9 Xushen Natural Gas Purification Plant of Daqing Oil Field processes about 300 cubic meters of liquid carbon dioxide, which will be supplied to Daqing Yushulin oilfield for carbon dioxide flooding.   • Technical personnel said that carbon dioxide content of deep gas was about 16%. Along with the pace of deep gas production sped up in Daqing oilfield, daily gas output of gas wells in Xushen gas field also went upward and separated carbon dioxide production would also increased accordingly. This established the foundation for continuous expansion of the scale of Daqing oilfield carbon dioxide flooding.

7. Using the byproduct CO2 from the gas produced in oilfield itself as gas source and establishing a full-close carbon capture, injection, recovery and re-injection process to achieve the win-win of "flooding" economic benefit and "emission reduction" social benefit Diagram of Natural Gas Reservoirs Development and CO2-EOR & Storage

8. Since 2003, we have carried out four CO2 flooding field test for three objects of extra-low permeability reservoirs and explored a new way to exploit this kind of reservoir effectively • For oil reservoir where water flooding is difficult to produce, inject gas to establish effective driving system • For oil reservoir where water flooding effect is poor, inject gas to improve exploitation effect • For oil reservoir with strong water sensitivity, to change displacement process Daqing Oilfield CO2 Injection Test Condition

9. Outline of the Report CO2 Flooding Research Background II. CO2 Flooding Oilfield Test Result III. Main Technical Achievements IV. Main Problems and Ideas for Next-Step Technological Breakthroughs

10. (I) Placanticline peripheral Fuyang reservoir developing is poor, and water flooding is hard to produce ●With low permeability and fluidity，this reservoir belongs to extra-low permeability reservoirs and the water flooding effect is relatively poor With water flooding fracturing and production, initial daily oil output per wall was ＜1.5t, and reaches ＜0.7t now; rate of oil production is below 0.46% (II) Xing'anling reservoir in Hailaer oilfield has strong water sensitivity , and water flooding effect is poor In Hailaer oilfield with strong water sensitivity, the water injection condition is poor; rate of oil production is low; and declining rate is high. At the end of 2013 (before infilling) , daily oil output per wall was is 1.5t

11. Outline of the Report CO2 Flooding Research Background II. CO2 Flooding Oilfield Test Result III. Main Technical Achievements IV. Main Problems and Ideas for Next-Step Technological Breakthroughs

12. 海拉尔油田 大庆长垣 贝14 新肇油田 树101 长垣外围 In 2007, we began to select Shu 101 block in Placanticline periphery, 14 block in Hailaer oilfield to develop CO2 flooding pilot test according to laboratory experiment evaluation, and in 2014, we entered into the stage of industrial field test Hailaer oilfield Daqing Placanticline Bei 14 Shu 101 Legend Produced oilfield Un-produced oilfield Gas field Placanticline periphery

13. (I) Obtaining good effects in immiscible flooding Shu 101 test block Laboratory experiment evaluation: Slim tube experiment showed that Fuyang reservoir in Shu 101 block is immiscible flooding; CO2 injection capacity is obviously better than water flooding, and CO2 flooding starting pressure gradient is 37% of water flooding; After CO2 infection, formation oil swelling capacity is more stronger, and expansion coefficient can reach 1.7 or above. Without fracturing and production of oil well, the initial daily oil output per wall is 2.9t, which is nearly equal to the Shu 16 water flooding block with fracturing and production. Through classification and precision management, the rate of oil production has remained above 1% in three consecutive years After six-month application of advanced gas injection, oil reservoir gas absorbing capacity is stronger; formation pressure remains at the level of 130% and effective thickness gas absorbing capacity ratio is above 84.6%, which are apparently higher than other similar water injection block • It is predicted that recovery efficiency will be 9 percent point higher than water flooding

14. (II) Output in Bei 14 miscible flooding test block keeps growing Laboratory experiment evaluation: Slim tube experiment showed that Xing'anling reservoir in Bei 14 block is miscible flooding; after CO2 infection, formation oil swelling capacity is more stronger, and expansion coefficient can reach 1.7, and viscosity of crude oil can reduce by 40% • Injection and production capability has been significantly enhanced • Gas absorbing capacity is maintained at more than three times that of water absorbing capacity • For its effect, the daily oil output has been increased to above 2t from 1.2t, and is still rising steadily • Reservoir producing condition becomes better • Formation pressure is gradually  picking up

15. (III) Emerging industrial test To strive to make CO2 floodingtechnological breakthrough, we developed two industrial field test; designed 342 injection and production wells in 2014. Maximum annual gas injection reached 397,000t and maximum annual oil output 151,000t • Injection capacity in Shu 16 test site has significantly improved and output has risen sharply

16. Outline of the Report CO2 Flooding Research Background II. CO2 Flooding Oilfield Test Result III. Main Technical Achievements IV. Main Problems and Ideas for Next-Step Technological Breakthroughs

17. With the support of China Petroleum major development test, after more than 10 years research and test, we has basically formed three major technology series for extra-low permeability reservoir, including CO2 flooding reservoir, injection and production and ground project, and primarily practiced the whole CCS-EOR process • CO2 flooding design and development technology • CO2 flooding design and adjustment technology CO2 Flooding Reservoir Project Technology Series • CO2 flooding injection and production technology • CO2 flooding sealing channeling technology • CO2 flooding injection-production well corrosion protection technology CO2 Flooding Injection and Production Project Technology Series CO2 Flooding Ground Project Technology Series • CO2 pipeline transportation and injection technology • CO2 flooding produced liquid gathering and transportation and processing technology We have built more than 30 laboratory experiment equipment, had stronger test and research ability, and initially formed CO2 flooding supporting standard and technical specifications

18. (I) CO2 flooding design and development technology has been formed We have conducted integrated reservoir earthquake prediction, laboratory simulation experiment, three-dimensional geological modeling and numerical modeling simulation results, so as to improve the single well production rate and recovery efficiency; with the aim to effectively control gas channeling, optimally designed CO2 flooding well pattern and injection-production parameter.

19. (II)CO2 flooding development adjustment technologies have been formed preliminarily. Carry out fine adjustment to different types of well groups in different gas injection stages to ensure test effect. After there is gas visible in oil well, implement cycle gas injection to gas injection wells according to gas-oil ratio, injection-production ratio and other indexes of well groups; manage oil production wells as per classification to improve flowing pressure.With further rise of gas-oil ratio, we studied water-gas alternation, cycle injection & production, chemical profile control, and other channeling-control and channeling-blocking technologies. (III)CO2flooding injection production technologies have been formed preliminarily. We developed CO2abstraction and layered injection processes to realize abstraction injection and 2 to 3 layer layered injection; we developed CO2 flooding efficient lifting processand efficient gas- liquid separation, increasing high lifting of gas-oil ratio.

20. (IV) CO2 flooding sealing has been formed, and four sets of sealing channeling formula system technology has been developed • These measures have obtained a preferable gas channeling control effect. After application of these measures, the oil output has been increased, and gas-oil ratio has been obviously decreased Nine wells has been subject to on-site test. For the seven wells completed at the earlier stage, output of oil have been enhanced and gas output has been decreased. Average gas-oil ratio has been decreased to 99m3/t from 471m3/t; average oil enhancement of connected oil wells is 716t; and average period of validity is more than 14 month.

21. (V) CO2 flooding injection and production well corrosion protection technology has been explored We have developed new type of corrosion inhibitor formula with optimized the working concentration; its inhibition rate is above 98%, and better protecting effects are obtained during field application to 65 wells

22. Injection station 液化系统 Natural gas purification plant Gas liquefaction plant Liquid phase Byproduct CO2 transportation pipe Molecular sieves dehydration Gas injection  valve group Gas transportation Gas-injection well Liquidation and purification CO CO2storage tank CO Pretreatment CO CO Compressor 储罐 液 液 液化 储存 注 液 2 2 2 2 气 Gas-injection well 阀 组 Noncondensable gas recovery Feed pump Gas injection pump Water injection  valve group low-pressure water from outstation Liquid phase Liquid phrase recycle & reinjection system water injection pump Oil well Gas phase Gas from gas well 脱水 Gas collection station Gas phase Gas phase Oil well 油井 Oil collection valve group 集 Gas-liquid predissociation Natural gas collection system Heating, separation, sedimentation and buffering 油 注气井 原油外输 阀 Liquid phase Output of aquiferous oil 集 Gas-liquid phrase 气液相 组 Oil well 油井 生产分离器 油 接转站 掺 注气井 Metering separator 水 Watering valve group 掺 Hot water 热水 计量分离器 水 阀 Oil well 分 组 Established system 配 阀 油气集输系统 System to be established Oil transferring station Metering room Outstation pipe network (VI) CO2 flooding supporting ground technologyhas been formed With the aim of full-process airtight production, we have strived to CO2pipeline transportation, CO2 liquid injection, produced liquid and processing technology Oil collection watering valve group

23. Outline of the Report CO2 Flooding Research Background II. CO2 Flooding Oilfield Test Result III. Main Technical Achievements IV. Main Problems and Ideas for Next-Step Technological Breakthroughs

24. (I)The main problems Firstly, minimum miscible pressures of peripheral oilfields of Daqing is generally high, so it is necessary to study the method of improving miscible degree.At present, slim-tube test has been carried out for 13 wells in peripheral Fuyang oil layer, and average MMPis 35.7MPa.

25. Secondly, air source is the main bottleneck restricting large-scale application,and it is necessary to explore air source guarantee method for large-scale development. Research on CO2 air source trapping method Research on CO2transportation method Research on integration production method Research on CCUS policy Perfect oilfield internal chemical enterprise CO2 trapping system, realize zero-emission CO2 of chemical plant; carry out research on CO2 trapping in thermal power plant to establish a power plant CO2 trapping demonstration project. Carry out basic research on supercritical CO2 tube transportation and overall layout research on supercritical CO2 tube transportation in Daqing oilfield. Establish a block development mode of overall course from air source trapping place to onsite pressure-adjustment injection; perfect and promote gas-lifting production gradually by taking tube transportation air source as drive carrier. Carry out benchmarking with international greenhouse gas emission reduction detection & evaluation & consultation agencyto establish a CCUS standardized system for Daqing oilfield.

26. Thirdly, an economical and efficient technology shall be explored because of high ground process cost of conventional oil. Daqing oilfield CO2 flooding technology is applied in extra-low permeability oil reservoir with poorly developing oil layers, low-output single wells, current technology, high ground process investment cost, and high cost in operation maintenance, measures and anticorrosion. Therefore it is necessary to research low-cost CO2 flooding technology adapted to oilfield with extra-low permeability and low output.

27. (II) Ideas for Technological Breakthroughs Carry out systematical technological breakthroughs in oil reservoir, oil production and ground projects to achieve the goals of “keeping miscible phase, controlling gas channeling, enhancing effect and reducing cost”and form CO2 flooding technology series with Daqing oilfield characteristics. • Oil reservoir project: Research the method of lowering MMP, deepen oil reservior analog technology, and develop comprehensive adjustment and CO2 flooding effect evaluation technologies. • Oil production process: Further improve production well anti-corrosion, separate injection, low-cost channeling blocking, well killing, high gas-liquid ratio lifting and other processing technologiesto form standard specification. • Ground supporting measures: Track adaptabilities of established and newly established systems, research adaptability of anti-corrosion nonmetal tubes and internal anti-corrosion technology for treatment equipment, optimize processes and technologies, and develop supporting drugs.

28.  The CCUS-EOR GHG Emission Reduction Methodology Research & DevelopmentRoadmap is under preparation.

29. We’d greatly appreciate it if all leaders and experts present would offer comments and suggestions for this report.