Enhanced Hydrocarbon Recovery Economic Analysis Presented to: West Coast Regional Partnership for...

Enhanced Hydrocarbon RecoveryEnhanced Hydrocarbon Recovery

Economic AnalysisEconomic Analysis

Presented to:

West Coast Regional Partnership for Carbon SequestrationSacramento, CA

Presented by:

Scott H. StevensAdvanced Resources International, Inc. (ARI)

Arlington, VA(703) 528-8420 – [email protected]

September 30, 2003

EOR CSEGRECBM

Advanced Resources International

Commercial E & P Consulting

• Coalbed Methane

• EOR

• Gas Storage

Introduction toIntroduction toAdvanced ResourcesAdvanced Resources

Introduction toIntroduction toAdvanced ResourcesAdvanced Resources

Geologic Sequestration R&D

• ECBM

• EOR

• EGR

• Natural Analogs


Previous ARI Studies

Calif Enhanced Recovery Economics

• Lifting the Ban on Alaskan Oil Exports – Benefits to CA

oil producers (USDOE).

• “NEMS” Model : National EOR Production Forecasting

Submodule (USDOE-EIA).

• Fuels Hearings : TEOR Forecast (CEC)

• “Buena Vista” CSEGR Economics (with LBNL)

• ECBM : National Screening and Potential (USDOE)


Year 0 1 2 3 4 5RevenuesIncr. CH4 Production (MMcfd/well) 1.66 3.36 5.02 5.02 5.02CH4 Production Wells 16 16 16 16 16Incr. CH4 Production (MMcfd) 27 54 80 80 80Incr. CH4 Production (Bcf/yr) 9.68 19.65 29.34 29.34 29.34Royalty to Mineral Rights Holder 12.5% 12.5% 12.5% 12.5% 12.5% 12.5%Royalty to Mineral Rights Holder (Bcf/yr) 0.00 1.21 2.46 3.67 3.67 3.67Incr. CH4 Prod Net of Royalty (Bcf/yr) 0.00 8.47 17.20 25.67 25.67 25.67Gas Price ($/Mcf) $5.25 $5.25 $5.25 $5.25 $5.25 $5.25Incr. Revenues (MM$) 0 $44.47 $90.29 $134.76 $134.76 $134.76CA State Admin Fee ($/Mcf) $0.004 $0.004 $0.004 $0.004 $0.005 $0.005CA State Admin Fee (MM$) $0.00 $0.04 $0.08 $0.13 $0.14 $0.14CA State Ad Valorem Tax (% reserve value) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%Proven Reserves (Bcf) 0.00 96.81 196.55 293.36 293.36 293.36Discounted Reserves (Bcf) 0.00 7.26 14.74 22.00 22.00 22.00Disc.Reserves Value (MM$) $0 $38 $77 $116 $116 $116CA State Ad Valorem Tax (MM$) $0.00 $0.38 $0.77 $1.16 $1.16 $1.16Net Incr. CH4 Revenues (MM$) $0.00 $44.05 $89.43 $133.47 $133.47 $133.46CostsCO2 Injection (million t/yr) 2.36 2.36 2.36 2.36 2.36 2.36CO2 Capture/Supply Costs ($/t) $15.71 $15.71 $15.71 $15.71 $15.71 $15.71CO2 Capture/Supply Costs (MM$) $37.14 $37.14 $37.14 $37.14 $37.14 $37.14Well CostsCH4 Production Well: New Completion (MM$/well) $0.39CH4 Production Well: New Completion (wells) 4CH4 Production Well: New Completion (MM$) $1.56CH4 Production Well: Workover (MM$/well) $0.04CH4 Production Well: Workover (wells) 12CH4 Production Well: Workover (MM$) $0.48CO2 Inj. Well: New Completion (MM$/well) $0.46CO2 Inj. Well: New Completion (wells) 5CO2 Inj. Well: New Completion (MM$) $2.30CO2 Inj. Well: Converted CH4 Well (MM$/well) $0.18CO2 Inj. Well: Converted CH4 Well (wells) 20CO2 Inj. Well: Converted CH4 Well (MM$) $3.61Monitoring Well: Converted CH4 Well (MM$/well) $0.07Monitoring Well: Converted CH4 Well (wells) 8Monitoring Well: Converted CH4 Well (MM$) $0.56Total Wells 49 49 49 49 49 49Total Well Capital Costs (MM$) $8.51CO2 Pipeline CostsCO2 Pipeline Costs (MM$) $6.25CO2 Field Distrib Lines (MM$) $0.30Total Capital Costs $15.06Operating CostsPipeline Operating Costs (MM$) $0.75 $0.75 $0.75 $0.75 $0.75 $0.75Well Incr. O&M & Monitoring (MM$/well/yr) $0.01 $0.01 $0.01 $0.01 $0.01 $0.01Well Operation & Maintenance Costs (MM$) $0.59 $0.59 $0.59 $0.59 $0.59 $0.59CH4 Compression Costs ($/Mcf) $0.30 $0.30 $0.30 $0.30 $0.30 $0.30CH4 Compression Costs (MM$) $0.00 $2.54 $5.16 $7.70 $7.70 $7.70CH4/CO2 Separation Costs ($/Mcf) $1.00 $1.00 $1.00 $1.00 $1.00 $1.00CO2 Content (%) 0% 0% 0% 0% 0% 0%CH4/CO2 Separation Costs (MM$) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Total Operating + CO2 Costs $38.48 $41.02 $43.64 $46.18 $46.18 $46.18Net Incr. Revenues Less Capex + Opex (MM$) -$90.68 -$34.12 $8.65 $50.15 $50.14 $50.14Discount Factor 1.00 0.87 0.76 0.66 0.57 0.50Disc. Net Incr. Revenues (MM$) -$90.68 -$29.67 $6.54 $32.97 $28.67 $24.93Net Present Value of Project (MM$) $0.12

Cash Flow Economics

• Simple in concept, but modeling future operator behavior is an art.

• Capital & operating costs.

• Revenues from enhanced production.

• Taxes, royalties

• Carbon sequestration.

• Cash flow, sensitivity.


““Value Added” COValue Added” CO22 Sequestration in the Sequestration in the

Petroleum IndustryPetroleum Industry

CO2-EOR:

Currently performed at large scale in Permian, Rocky Mtn, Gulf Coast basins. Chevron tested first CA pilot at Buena Vista.

Depleted Natural Gas Fields:

Not currently performed, but large storage potential available. Probably requires emissions credits. CSEGR Potential.

Deep Coal Seams:

One commercial pilot underway in the U.S., second planned. Shows some potential but still early days.


Enhanced Recovery Economics

Rules of Thumb

• CO2 Input / Hydrocarbon Recovery generally is the

most important factor (e.g., Mcf CO2 / bbl oil).

• CO2 supply therefore most important cost (or revenue

stream in carbon constrained world).

• Capital costs less important than for conventional

recovery projects, assuming good reservoir

permeability (minimize injection and prod wells).

• Costs of post-injection monitoring unprecedented;

estimated to be low (several %/year; Calif?).


California COCalifornia CO2 2

Flood PotentialFlood Potential

EOR

EOR

EGR

• California has region’s greatest “value added” potential.

• Conversion of existing thermal EOR to CO2.

• New CO2-EOR projects.

• CSEGR• Limited ECBM

potential• Organic-rich

shales (Monterey Fm & equiv)

Advanced Resources InternationalSources: Operator data, ARI estimates

Net CO2Purchases

136 MMBO @ 3.5 Mcf/BO

472 Bcf

25 Mt CO2

136 MMBO @ 8.6 Mcf/BO

1,167 Bcf

62 Mt CO 2

Gross CO2 Inj

472 Bcf

25 Mt CO2

CODissolved (Sequestered

in Immobile Oil)

2

Net Purchases

CO2 Sequestration at Rangely (Estimated Ultimate)

Immobile Oil

Immobile Oil

Rangley WeberSandstoneReservoir

Cap RockCO

Emissions2

Unknown VolumeEstimated at

<1% of net CoPurchases

2

Recycled from

Production Wells

695 Bcf

37 Mt CO 2

Vented CO2 from

Production Wells

Unknown VolumeEstimated at <1%

of net COPurchases

2


0

50,000

100,000

150,000

200,000

250,00019

86

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000E

nh

anc

ed O

il R

eco

ver

y (

bar

rels

/da

y)

0

5

10

15

20

25

30

U.S

. Ave

rag

e C

rud

e O

il P

rice

$/B

O

CO2 –EOR Production in the U.S.

GULF COASTMID-CONTINENTALASKA (22% CO2)ROCKY MOUNTAINSPERMIAN BASIN

Oil Price


Permian Basin CO2–EOR Projects#

#

# #

#

#

# # #

#

##

#

##

#

#Y

#Y

Brushy Draw

Jess Burner

Ford W

Chapman Deep

Ken Regan

mason

Vermejo

Barstow

Gomez

Fort Stockton

McComb

Oates

Elsinore

Sand Hills

Running W

Pecos Valley

ShipleyWards

Mohans

Arenosohalley

Emperor

Keyston

Kermit

Hendrick

Rhodes

Jalmat

Toborg

Tippett

McCaney

Univ Waddell

Dune LeoThompson

Wilshire

Amacker-Tippett

Jordan

Sweetie Peck

Dora Roberts

HeadleeFoster

Harper

Johnson

TXL

Goldsmith E

Parks

Pegasus

Benedum

Olson

Halfe

Shannon

WorldWorld W

Big Lake

Farmer

Amigo

Ketchum Mt

Sugg Ranch

Conger

CalvinSpraberry

Trend

Davidson Ranch

Ozona

South Branch

Indian Basin

Dagger Draws S

Dagger Draw N

Atoka

Red Lake Empire

Artesia

White City

Carlsbad

Culebra Bluffs

High Lonesome

Loco Hills

Turkey TrackMillman E.

Shugart N.

Lusk

Grayburg-Jackson

Square Lale

Corbin

Young NShugart N.

Pearle

Lea

Hat Mesa

BilbreyLivingston Ridge

Sand DunesLos Medanos

Sand Dunes W.

Gram Ridge

Antelope Ridge

Kemnitz

townsend

Lovington W.Lovington

Lovington N

Hobbs

Brown-BassettRussell N

Monument

Eumont

Eunice Monument

Arrowhead

Pen Rose SkelleyEunice S. PaddockDrinkardTubr

Blinebery

WantzEunice N

Hare

Warren

FoulerLanglie-Mattix

Langley

Denton

Anderson Ranch

Saunders

Baum

Caprock

Bagley N

Bagley

INBE

Pecos Slope S

Pecos Slope

Pecos Slope W

Twin Lakes

Cato

TomahawkChaverloo

Tobac

Flying M

Mescalero

Milnesand

Todd

Allison

Buckshot

Yellowhouse

Illusion Lake

Littlefield

Billy

SmyerEdmission

Prentice

Reeves

Seminole W

Robertson N

Robertson

Flanagan

Union

FullertonShafter Lake

Nolley

McFarland

MagutexHutex

Fuhrman-Mascho

Emma

Univ BlockAndrews S

Midland Farms

Andrews NDeep Rock

Martin

Embar

Lowe

Breedlove

Tex-Humon Ackerly

Jo-Mill

VealmoorOceanic

Moore

Buckwheat

Varel

Luther SE

Welch

Lee Harrison

Stinnett

Lea

Pecos

Chaves

Eddy

Reeves

Culberson

Terrell

Crockett

De Baca

Roosevelt

Jeff Davis

Gaines

Irion

Hale

Upton

Floyd

Lynn

Lamb

Andrews

Ector

Terry

Reagan

Motley

Scurry

Crane

Bailey

Martin

Crosby

Borden

Dickens

Sterling

Hockley

HowardMitchell

Midland

Winkler

Lubbock

Loving

Yoakum

Cochran

Glasscock

Hobbs

Pecos

Lamesa Snyder

ODESSA

Lubbock

Roswell

Artesia

Andrews

MIDLAND

Portales

Carlsbad

Plainview

Levelland

Big Spring

West Odessa

Waddell*

New MexicoTexas

Denver City

Puckett FieldPikes Peak

El Mar

Anton Irish

Wellman

S. Crossett

Cordona Lake

E. Penwell

N. Cowden

Means

E. Ford

Seminole

Dollarhide

Sable

Hanford

GMK South

Mid Crossett

N. Crossett

E. HuntleySalt Creek

Reinecke

Slaughter

Levelland *

Kingdom*

Bennett Ranch

Wasson

West Brahaney

Adair

Cedar Lake

Welch*

Garza*

Sacroc

MaljamarVacuum

Ford Geraldine

N. Ward Estes*

Goldsmith

Waddell*

McElroy

Yates*

Two Freds*

S. Cowden

OklahomaNew Mexico

Texas

MexicoGulfof

Mexico Source: Shell CO2Company

0

5

10

15

20

25

30

Yea

r

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

CO

2Deliveries (106t/y)

JAF20013.XLS

Anthropogenic CO2 Natural CO2

Bravo DomeSheep MountainMcElmo Dome

Val Verde Basin Gas Processing Plants


““Early Action Credits”Early Action Credits”

U.S. Landfill Concern, Ontario Utility Agree to Swap Gas-Emissions Rights

In a private exchange, anticipating an international emission trading system:

Ontario Power Generation bought rights to emit CO2 from

Zahren Alternative Power Corp.

2.5 MMt CO2 Equivalent$25 MM Total Deal$10/ton CO2 Equivalent


West Coast Region

California Thermal EOR Production

• Though in decline, California accounts for over 98% of Thermal EOR production in the USA

• 297,000 BOPD in 2002, down sharply from 372,000 BOPD in 2001 due to high fuel costs (natural gas).

• 3 fields account for >75% (Kern River, Midway-Sunset, S. Belridge)

• 20,000 production wells and 16,000 steam injection wells

• Well-characterized resource base for future CO2 flooding.

Advanced Resources InternationalModified by permission from Espie, Dublin CCP Workshop, Sept 2003

BP CSEGR Project“In Salah” Gas Field, Algeria

• Will be first commercial CSEGR project

• Expecting CO2 breakthrough in 5-10 years.


Economic Analysis of CSEGR at California Depleting Gas Field

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0

Breakeven CO2 Supply Cost ($/t; pure, high-P, at pipeline)

Wel

lhea

d C

H4

Sal

es P

rice

($/

MM

Btu

)

CO2/CH4 Volume Ratio = 3.0



ECONOMIC SUB-ECONOMIC

EC SUB SUBEC

Improved Production Technology


Location of ECBM PilotsLocation of ECBM PilotsSan Juan Basin, USASan Juan Basin, USA

Farmington

Aztec

Dulce

Durango PagosaSprings

COLORA DO

NEW MEXICO

LA PLATA CO. ARCHULETA CO.

L a P l at a

Ri v

e r

A n i ma s

S a n

J u a n

R i v e r

Riv

er

JAF01664.CDR

Burlington Allison

Unit Pilot

BP TiffanyUnit Pilot

M cElm o Dom e

CO Field2

CO Pipeline

2

FA

I RW

AY30 m

iles

FloridaGas

Plant


Burlington Resources Allison Unit CO2-ECBM Pilot, San Juan Basin

#142CO2 Injector

3200

3400

TD=3149'

TD=3390'

TD=3148'Fruitland Coal Seam

N 80EN 05E

3000 ft3500 ft

3149'

3328'

3059'3049'

3078'

3092'3104'

3038'

3124'

#112Production Well

#114Production Well

3077'

3385'

3030'

Note: Depths, elevations, thicknesses expressed in feet

CO 2CO 2 CH 4

CH 4

2965'2965'

2900'

0

200

2800

De

pth

(ft

)

3000

JAF01665.CDR


• Regional geology

• Coal reservoir properties

• CBM pilot performance

• Potential reserves and deliverability

• Market assessment

Western Washington

Enhanced CBM Potential


Conclusions: Conclusions:

Proven technology but not yet in West Coast. California depleted oil fields mainly immiscible,

some miscible potential. Field demo needed.

Good potential in Calif, possible OR/WA/AZ/AK

Not commercially proven, watch BP Algeria project

Not commercially proven.

Limited West Coast deep coal potential (Western Washington)

EOR

CSEGR

ECBM


AdvancedResources

Internationalwww.adv-res.com

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