What is Important in the Reservoir for CO 2 EOR/EGR and Sequestration? Presented by: Richard Baker

1. What is Important in the Reservoir for CO2 EOR/EGR and Sequestration?Presented by:Richard Baker Prepared for APEGGA Annual Conference GHG Opportunities: Small and Large Technologies April 22-24, 2004

2. Outline • Conclusions • Field CO2 EOR response • Determination of Incremental Reserves • Incremental CO2 Response RF vs. HCPVI • Typical cash flow for CO2 /EOR • CO2 sequestration • What are the most important factors? • Summary

3. Conclusions • There has been very good to excellent response on many USA/Canadian CO2 floods to date in a wide range of conditions • CO2 is a mature technology in USA and in Canada it will be mature in 5 -10 years • Early time response often control CO2 economics • There is wide variations in early time response between various fields. Early time response is a function of heterogeneity , current oil saturation and injection rates.

4. Conclusions • Forty plus years of EOR (CO2 + HC) miscible have shown that the controlling factors in CO2 economics are (early time response); • Reservoir heterogeneity • Remaining oil saturation • CO2 price • Infrastructure • Well bore integrity • Screening needs to include historical field response and level of depletion as well as infrastructure and mapping of current oil in place • Concerns about CO2 emissions will force action • Cooperative approach will aid implementation

5. Options for CO2 Usage/Disposal EGR EOR ‘Value Added’ CBM GOB CO2 Emission Regulatory driven ‘Rental of pore space’

8. Response time Peak oil rate

10. Time to peak oil rates response time

11. CO2 Flooding – World Wide 75 Projects worldwide 194,000 Bbl/d 66 in US From Jarrell et al, ‘Practical Aspects of CO2 Flooding’

12. CO2 Flood Performance Total oil rate Incremental oil rate SPE paper 26391

13. CO2 Flood Performance Total oil rate Incremental oil rate Hansford Marmaton = secondary, low initial pressure, low permeability reservoir

14. Initial response 0.5-2 years Time to peak oil rate 4-6 years depends on expansion From DOE Spraberry Doc.

15. Cum. injection Vol. of reservoir Comparison Normalization of CO2 behaviour Cum. oil Vol. of original oil For comparison purposes

16. SPE paper 35391, SPE monograph Stalkup, SPE paper 26391, and Epic’s interpretation How Do These Floods Compare to Each Other?

17. What’s Different between Texas and Canadian Reserves • Infrastructure • Thicker continuous net pay • General geological environment • Depth • Temperature • Some of the best Canadian have already miscible flooded • Horizontal wells • Rules of thumb

18. So What is Important ? Initial Response drives payout time

19. Important • The major objection to CO2 by oil producers is long pay out times not necessarily total reserves or NPV  initial oil response  large capital exposure

20. What’s worked in Western Canada in the Petroleum Industry? • Short pay out time • Good to excellent local knowledge of the reservoir/geology • Very good execution of plans • Using technical edges; horizontal well/3D seismic/screw pumps • Economy of scale (shallow gas or heavy oil drilling)

21. Disjoint between Government and Industry If CO2 capture and geological storage is to play a significant role in mitigating global emissions, then the quantity of CO2 place in geological storage will need to approach 10 Gt/yr worldwide roughly 300 times the current rate of CO2 injection for EOR. D. Keith and M. Wilson Nov. 2002 • 34 Mt/yr vs. 10,000 Mt/yr • ~ target • {1.79 Bcf/d} {527 Bcf/d}

22. SUGAR vs. SALT Disjoint between Government and Industry • Specific field screening • Field experience critical • Large capital expense • CO2 flood payout • Keeping low costs ($/bbl) • Global screening techniques • Research focused • Regulation focus GOVERNMENT Industry ? Pilots Commercial Scale

23. Use the Past to Forecast the Future What is the classical Screening Criteria? • API gravity • Current reservoir pressure • Depth • Oil saturation But what about Heterogeneity?

24. Screening T. Bu, I. Soreide, T. Kydland: “IOR Screening: What Went Wrong?”, Norsk Hydro E & P Norway, Steering Committee of the European IOR Symposium, This paper was prepared for presentation at the European IOR Symposium in Moscow, Russia, October 27-29, 1993 • “ The most common screening methods are reviewed and some shortcomings are pointed out. One important aspect is that more effort should be put on mapping of remaining mobile oil in the reservoirs and methods for producing these resources.” • “not taking heterogeneities into account in realistic manner”

25. Initial oil response (response time/peak oil rate); current oil saturations and injection rates Permeability/Reservoir heterogeneity CO2 price Infrastructure What is the most important for CO2 EOR?

26. Some Info on CO2 Sequestration • Oil & Gas • Known • Seismic • Core • Prod • Minimizes risk Which reservoir should I inject in? • Deep Saline • Unknowns • Long term liability increased It is better to have the devil that you know than the one you don’t.

27. Summary • Early time response (<5 yrs) is critical to CO2 flood economics • Early time response is a function of heterogeneity, current oil saturation and CO2 injection rates • Because of point 2 above; screening needs to include historical dynamic reservoir performance • Screening needs to include historical field response and level of depletion as well as infrastructure and mapping of current oil in place • Beware of averages • There is a large disjoint between expectation and reality between oil producers and government, in term of • CO2 volumes and rates • Cost and economics • Historical trend (timing/phasing of projects)

28. ROIP > 5 MMSTB ROIP>10 MMSTB 743 pools 1218 pools API Gravity > 25 º 391 pools 723 pools Reservoir Temperature < 93ºC 376 pools 694 pools Mean Formation Depth > 610 m 374 pools 691 pools Current Recovery Factor > 25% 125 pools 213 pools Exclude pools with previous miscible floods 85 pools 164 pools #Reservoirs vs. screening criteria 9067 Pools (Alberta 2000 Oil Reserves Database)

29. Infrastructures: CO2 Sites & Sources

30. Source: Bachu, 2001 (EUB)

31. Source: Waldie, 2003 (Combustion News)

32. Source: Bachu, 2003 (AGS)

33. CO2 Flood:Tools Available • PRIze • CO2 Prophet • Kinder Morgan Predictive Tool • Epic CO2 Analysis Package

34. Epic CO2 Analysis Package:Technical Analysis Preliminary Screening Data Collection Develop Injection Patterns Input Reservoir, Fluid & Production/Injection Data Calculate & Evaluate Production Forecasts Proceed To Economic Analysis

35. Economic Analysis Input Production & Injection Profiles Input Capital Costs & Economic Parameters Calculate Economics Evaluate economics results

36. Salient Features • Uses current water saturation • Uses current reservoir pressure • Can model WAG floods • Program can be validated where CO2 flood history exists • Screening, technical analysis & economic evaluation tied-in

37. Base Case Example Economics • Describe the base case • ROIP = 10 MMBBl • CO2 price: Cdn $1.50/Mscf • Oil price: Cdn $30/bbl • CO2 Recycling Cost: Cdn $ 0.40/Mscf • Percent CO2 Recycled: 90% • Discount factor: 15% • Royalty rate: 16.7% • What areal size does this correspond? • Assume OOIP = 15 MMSTB (30% RF) • h = 6 m (20 ft) • Porosity = 15% • Swi = 30% Areal extent 1,050 acres ( 1¾section)

38. Validation (Joffre Viking, AB)

39. Validation (North Cross, TX)

40. Production/Injection Profiles

41. t > 5 yrs t < 1 yr Payout versus CO2 & Oil Prices

42. Payout versus CO2 & Oil Prices

43. NPV versus CO2 & Oil Prices(Capital = MM$11)

44. ROR versus CO2 & Oil Prices

45. Effect of Royalty (1%)

46. Sensitivity To ROIP • ROIP increased 10 times; 100 MMSTB

47. ROIP 100 MMSTB; Royalty 16.67%

48. Highlights – Economic $creening • Royalty reduction will be beneficial to small size pools • Following economic parameters emerged out of this study: • Oil price: $30 • CO2 price: $1 – 1.50/MSCF • Payout: 5 – 10 years • ROR: 15 – 30 years • CO2 should be attractive for small size pools (ROIP  10 MMSTB)

49. Some Recent Developments Streamline modeling of miscible Compositional modeling Sector Model 40,000 cell sector model Run time ~ 10 hours 475,000 cell model, ~600 wells Run time ~70 minutes FDP delivered in <5 months

50. Summary • Concerns about CO2 emissions will force action • CO2 flooding is a mature process used successfully worldwide for >35 years • CO2 infrastructure to be developed in Alberta • Cooperative approach will aid implementation • Approximately 100-200 reservoirs are good candidates from initial screen • Generic economics positive - Site specific economics the next step