What is Important in the Reservoir for CO2 EOR/EGR and Sequestration 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

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

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.

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

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

Response time Peak oil rate

Time to peak oil rates response time

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

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

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

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

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

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

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

So What is Important ? Initial Response drives payout time

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

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)

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}

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

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?

Screening “ 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” 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

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

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.

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)

#Reservoirs vs. screening criteria 9067 Pools (Alberta 2000 Oil Reserves Database) ROIP>10 MMSTB ROIP > 5 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

Infrastructures: CO2 Sites & Sources

Source: Bachu, 2001 (EUB)

Source: Waldie, 2003 (Combustion News)

Source: Bachu, 2003 (AGS)

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

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

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

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

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 ( 1¾ section)

Validation (Joffre Viking, AB)

Validation (North Cross, TX)

Production/Injection Profiles

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

Payout versus CO2 & Oil Prices

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

ROR versus CO2 & Oil Prices

Effect of Royalty (1%)

Sensitivity To ROIP ROIP increased 10 times; 100 MMSTB

ROIP 100 MMSTB; Royalty 16.67%

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)

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

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