Downhole Oil/Water Separation Part of the Oil Industry’s Future Bruce R. Peachey, P.Eng., MCIC

Downhole Oil/Water Separation Background and Basic Operation What Has Already Been Done What Can Be Done What Might Be Done in Future

Water and Oil Production in Western Canada Water Production Oil Production

Downhole Oil/Water Separation Problem - Wells being shut-in Still producing oil Producing too much water Most North American wells shut-in @ WOR<10-20 North Sea/Offshore wells shut-in @ WOR<5-10 Middle East wells shut-in @ WOR<1-2 Solution - In Well Separation Downhole Mechanical solution more reliable than shut-offs Re-Inject water into producing formation

Basic Downhole Separation New Paradigm – 1991 Oil to Surface Separator & Pump(s) Basic Downhole Separation New Paradigm – 1991 Water to Injection C-FER/NPEL

What Has Already Been Done “DHOWS” Commercial Systems Developed with C-FER ESP Commercial – AQWANOTTM and HydrosepTM PCP (Weatherford) and Beam (Quinn) available New “DHOWS” Versions in Trial Stage Desanding (PCP and ESP) Gravity Separation Systems - Beam Pumps Texaco/Dresser, Quinn (Q-Sep) Reverse Coning Without Separators

Basic “DHOWS” Prototypes ESP - Electric Submersible Pump - 1800 bfpd Oil Rate went up 10-20% at same bottom-hole rates Reduced water to surface by 97% PCP - Progressing Cavity Pump - 1800 bfpd Reduced water to surface by 85% Well previously in sporadic operation for about 3 yrs Beam Pump - 600 bfpd Demonstrated Gravity Separation

Basic “DHOWS” Installation - PanCanadian C-FER/NPEL

Injection zone(s) above the production zone(s) Uphole Reinjection Pump System Separator Producing Zone Injection Perforations Injection zone(s) above the production zone(s) ESP DHOWS

Dual Horizontal Well “DHOWS” Also Installed With Uphole Injection Talisman Energy Inc

“DHOWS” with C-FER Desander Pump(s) - ESP or PCP Desander De-oiler Hydrocyclone To Surface To Injection Problem - Heavy Oil Wells “Sand” Plugs Injection Solution – Desanding Sand & Oil to Surface Water to Injection

Gravity Separation C-FER/NPEL Figure 14 - Gravity Separation Simple but have to keep it that way Limited to low volumes and large density differences Supported by observations that oil droplets out of the reservoir are large upstream of pumps and equipment C-FER/NPEL

NPEL/C-FER/Petro-Can Coning Control Louisiana State Pump oil & water separately NPEL/C-FER/Petro-Can Pump oil & water together Open more of well to oil C-FER/NPEL

What Can Be Done Reverse Coning with DHOWS Re-Entry Drillout (Single Well) Re-Entry Drilling (Multi-well) Cross-Flooding Between Zones

Zone cross-flooding between wells Re-Entry Drillout Pump (Dual or Single; ESP, PCP, Beam) Separator Injection Zone Old Producing Zone (Cement or Leave Open) Horizontal Re-entry Horizontal Producing Zone Create or activate water disposal leg on producing well or producing leg on watered-out or water disposal well Re-entry drillout or drilled and plugged-off during initial drilling program Zone cross-flooding between wells

Re-Entry Drilling Use when zone between injector and producer is swept Directionally drill to establish new producing or injection location(s) Producing zone in well provides water for flood Existing wellbore could be used as producing zone or injection zone New Injection Location New Producing Location Existing Swept Zone Producing Well Injector

Cross-Flooding Multi-layered reservoir application Some wells produce from lower zone & inject into upper zone Other wells produce from upper and inject lower Double the number of injectors or producers without drilling!

What Might be Done In Future Offshore: Already under way. Gas Lift Proposal High Volume: Larger capacity system under development Lower Water cut to surface: Feasible for offshore subsea Alternate Lift Systems: Flowing, Jet Pump Alternate Separation Units: More options at low rates

Oilfield Water Management – Same Well Source/Injector/Recycle Lake or River Source Cap rock Oil Leg Water Leg Underlying Aquifer DHOWS Move toward “Ideal” Pump

The Middle East Water Challenge Reservoirs contain billions of barrels Recovery only projected to be 40% due to water Most wells flowing only oil now No water handling infrastructure Wells “die” at 30-40% water cut Major costs and infrastructure to operate with water Solution needed: Install in well and leave for years No external power No increase in water

Downhole Oil/Water Separation Summary Positive experience is quickly building All “DHOWS” wells show water reduced 85-97% Still many applications to try Plenty of potential and opportunity for new concepts For more public info see: Argonne National Labs – http://www.ead.anl.gov

Clients - NRCan & PERD, Oil & Gas Producers Acknowledgments Clients - NRCan & PERD, Oil & Gas Producers Alliance Partners - C-FER Technologies Inc., KR Croasdale & Associates, R&D 2000, Scott-Can Industries, Colin Gosselin Contact Networks - CSChE, PTAC, ACR, CIM, SPE, CAPP, individual colleagues New Paradigm Affiliates - KeyTech Energy Inc., Blackline Oil Corp. & Avatar Systems Inc. Family and Friends I would like to acknowledge the support of: New Paradigm’s clients particularly in their contributions to providing input to the PERD hydrocarbon report which forms the basis for most of this talk. Alliance partners who have worked with me on numerous projects and supported the development of many new paradigms themselves. The contact networks and collaborative organizations which New Paradigm supports through membership and other activities, and which support new paradigm development by sharing information, knowledge and facilitating R&D efforts New Paradigm Affiliated companies which are small but growing through a focus on moving new oil and gas concepts and technologies into practical application. And my family and friends who put up with having to continually look at everything with new eyes as new paradigms develop and old ones are left behind.

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