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It's Time for an Industry Initiative on Heavy Oil

Last year, five of the 10 largest development projects in the world were going after heavy oil. When oil experts assure outsiders that there are significant petroleum reserves yet to be developed, they are talking about the class of crude that is so difficult to produce, transport, and refine that many companies have stayed away, until now.

What has changed, of course, is supply and demand. Asset managers know they cannot ignore it any longer; if they want to book new reserves, they have to look at heavy oil. There is also some urgency to produce the heavy oil associated with lighter reserves. The reason is transportation. Heavy oil is often blended with conventional crude to make it light enough to flow through a pipeline. If operators wait until the lighter crude is gone, their heavy oil assets may become stranded.

The good news is that heavy oil reservoirs can be huge. What is more, the wells tend to produce at a steady rate and for much longer than conventional wells. Some heavy oil operators producing 100,000 BOPD expect to maintain that rate for 15 or 20 years. Total recovery of the oil in place can be as great as 70% for certain processes, which is much better than the rate for lighter crudes. While a handful of companies have been producing heavy oil for decades, many more are just entering the game. The knowledge gap between those two groups is large, but even the most experienced players face new challenges.

The Nature of Heavy Oil

Tip a beaker of heavy oil and chances are it will not run out, at least not right away. One definition of heavy oil is any hydrocarbon with a gravity of 22.3° API or below. On the lighter end, that includes oil with the consistency of honey. At room temperature, ultraheavy oil can be as thick as peanut butter. Motor oil has a gravity of approximately 35° API.

Refiners often use API gravity to describe and set the price of heavy oil. For reservoir engineers, however, the more important number is viscosity, because that tells them how well the heavy oil is likely to migrate through the reservoir. Although there is a correlation between gravity and viscosity, the distinction is misleading. Heavy oils with the same gravity can have very different viscosities.

Historically, heavy oil has come from relatively shallow reservoirs. Most are less than 500 m (1,650 ft) deep, but some new plays are as deep as 2700 m (9,000 ft). Even that is not a limit. At greater depths, temperature plays a big role in the ease of production because any oil flows better when it is hot. Keeping heavy oil flowing is the trick. That is a particular challenge in cold climates, or when producing heavy oil from subsea wells.

Most heavy oil is produced by drilling wells, but a small percentage is recovered by mining. Very little heavy oil is obtained through primary production. Operators often inject steam, solvents, or a combination of both to enhance recovery. In one unique operation in Canada, the shallow oil sands are mined using huge earth movers and trucks the size of a two-story house. It takes about 2 tons of the unconsolidated oil sand to recover 1 bbl of high-quality synthetic crude.

Since the quality of heavy oil is low, it sells for about half the going rate for light, sweet crude. That difference, however, can be recovered quickly at the refinery if it has the right technology to handle heavy crude. That is why refining and transportation are central concerns of any new heavy oil development.

Half of the World’s Reserves

Of the five largest heavy oil developments in 2005, three were in Venezuela and two in Canada. In the United States, there is some heavy oil in Oklahoma and Alaska. California still has large reserves in the Kern County region, although some of its fields have been producing heavy oil for more than 100 years.

Global heavy oil resources.

Brazil, Mexico, China, Russia, and the Middle East also have significant amounts of heavy oil. Some estimate that heavy oil accounts for more than half of the world’s known reserves. Venezuela and Canada have as much oil as Saudi Arabia, and there is at least 100 years’ worth of production just from the heavy oil fields we know about now.

Unique Challenges, Creative Answers

Fig. 2 —A typical steam-assisted gravity drain
operation includes two parallel horizontal wells
about 5 m apart. Steam from the upper well heats
the formation, allowing gravity to push heavy oil
toward the bottom well.

In many ways, the industry’s ability to drill complicated wells has outpaced the technology to complete them. That is especially true in heavy oil. One of the most successful new completion methods is steam-assisted gravity drainage (SAGD), a completion process that involves drilling pairs of horizontal wells, one just a few meters above the other. The top well is a steam injector, and the bottom well is the producer. Now, some producers are completing SAGD hybrid wells, which use a combination of steam and solvents. Such wells are profitable in part because of greatly improved electrical submersible pumps that can withstand the harsh environments of SAGD wells. Electrical submersible systems are available now that operate at temperatures up to 218°C, lift 1500 m3/d of heavy oil, and still achieve run times of more than 800 days.

Logging is another challenge. Some of the familiar tools used every day to evaluate conventional plays are of no use in heavy oil reservoirs. If you want to measure in-situ viscosity of the fluid in a heavy oil sand, resistivity does not work. Acoustics does not work. Exhausting all of the conventional logging techniques, the only one that remains responsive to viscosity is nuclear magnetic resonance (NMR), and even that tool had limitations until recently. One of our important research successes over the last few years has been to greatly improve the response of NMR logging in heavy oil.

In planning a new development, it is important to know how the viscosity and composition of heavy oil changes throughout the reservoir. We often discover large variations, even within the same layer. These are typical heavy oil conditions, but if you invest the time and money up front to understand the reservoir and plan the wells for proper drainage, the variations can work in your favor. My company considers the following stages critical to the success of any heavy oil development.

1. Upfront engineering studies.

2. Reservoir and fluids characterization.

3. Well construction and completions.

4. Monitoring and control.

5. Environmentally sensitive processes and technology to minimize the impact of carbon dioxide.

Recovery Costs Coming Down

Heavy oil has a reputation for being expensive to produce, and it is. When oil prices fell rapidly in 1987, some California producers had to continue expensive steam floods (or risk damaging the reservoirs) even though the price they got for the oil was less than the cost of recovering it. In thermal recovery systems, the biggest expense is the steam. The ability to monitor the steam front as it moves through the reservoir can help control those costs and boost production as well.

Technology has lowered the cost of production and will continue to do so, but that does not mean one successful technique can be applied in every field.

Developing static and dynamic models for reservoir simulation of the various recovery methods will help to get the most out of each process. It is also important to be able to identify and screen potential candidates for steam processes such as SAGD because not all fields are appropriate for every technique. Formation-imaging techniques, calibrated to core samples, are useful in this effort.

A process that is right for one place will probably have to be modified to work elsewhere, or even in another part of the same field. Cyclic steam is a good example. The thermal recovery technique was first deployed in Venezuela, but the same process had to be modified for California’s heavy oil fields, then changed again for use in Canada.

Asking the Right Questions

It is clear that no one holds a universal key to unlock heavy oil success. The time is right to create a forum to discuss the challenges of heavy oil. One goal of the forum would be to target critical areas for research and technology development. We would like to get the discussion going now, and we invite the industry to join the debate. Although heavy oil accounts for less than 10% of the world’s supply today, its importance is growing fast. There are still many questions, and the producers of heavy oil need the answers now.

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