Upstream Oil and Gas Overview: Reserve Growth for Higher Recovery Efficiency (2009)

1Upstream Overview – Business Confidential

February, 2009Mark H. HoltzFebruary, 2009Mark H. Holtz

Upstream Oil and Gas OverviewUpstream Oil and Gas Overview

Reserve Growth for Higher Recovery Efficiency

Reserve Growth for Higher Recovery Efficiency


Praxair At A Glance

� A Fortune 500 company with 2008 sales of 10.8 billion $.

� One of the largest industrial gases companies worldwide and the largest in North and South America

� Operations in more than 30 countries

� 28,000 employees

� One million customers worldwide


NorthAmerica

SouthAmerica

EuropeAsia

Praxair Industrial Gases Reach World-Wide

Praxair operates in countries shaded green


� Cryogenic air separation � Non-cryogenic air

separation � Hydrogen production� Carbon dioxide

purification� Gas-liquid separations� Oxidation technology

(combustion)� Atmosphere control� Gas dissolution� Refrigeration

Praxair Core Technologies


On-Site/Pipeline Supply

Liquid Supply

Packaged Gases

Praxair Gas Supply Options

�Nitrogen, oxygen, hydrogen�15 + year supply contracts�Designed & operated for reliability

�Nitrogen, oxygen, argon, CO2, helium, H2

�Specialized cryogenic distribution equipment

�Welding, medical, specialty gases�Cylinders for the retail market


Upstream Oil and Gas

� Enhanced Oil Recovery– Over 30 years experience with

Gas Displacement Recovery (GDR)� Nitrogen� Carbon Dioxide� Methane

– More than 25 projects

� Well Stimulation Services

� CO2/N2 EOR Services– Pilots and huff-n-puffs

� CO2 Capture & Purification

Exxon Hawkins Field,65 MMscf/d 2,000 psi


GDR’s Place in the Market

� Number 1 method to add light oil reserves.

� “in the US chemical and thermal EOR projects have been in constant decline since the mid 1980’s with gas injection methods as the preferred recovery Methods”(Dr. Leonid Surguchev et al. World Petroleum Congress 2006)

Historical US EOR Production

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

1985 1990 1995 2000 2005 2010

Years

Oil

prod

uctio

n (S

TB/D

)

Thermal (STB/D)Chemical (STB/D)Gas (STB/D)


N2 Reserve Growth Applications

� Pressure Maintenance– Pressure maintenance condensate and retrograde condensate

gas reservoirs

� Miscible Displacement

� Gas Assisted Gravity Drainage

� Immiscible Displacement– Oil– Gas cap gas

� Mixed Gas Applications– Driving agent for slug/buffer– Mixed gases for density control


Gas Condensate Pressure Maintenance

� Effects of Pressure Depletion:– Reduction in gas permeability and well productivity– Lower ultimate hydrocarbon recovery by 10 to 40 %– Allows water encroachment

� Application Screening Criteria:– Dew point pressure– High condensate yield typically > 175 bbl/MMSCF produced, – High liquid dropout rate with liquid condensation from

20 to 40 % of the hydrocarbon pore space.


Anschutz Ranch E. Field Gas Condensate Pressure Maintenance Example

From Kleinsteiber et al., 1983

1) Dew point pressure is near the original reservoir pressure,

2) Condensate yield of 175 bbl/MMSCF produced,

3) high liquid dropout rate 20 to 40 % of the hydrocarbon pore space.

� Nugget ss, WY

� 10 % porosity

� 3 md perm.

� 5,600 psi injection pressure

� N2 & CH4 injected

� Pi = 5,310 psi

� Pdew= 5,080 psi

Reservoir Characteristics

MILES

0 6 12 18

UINTA

MTNS

ABSAROKALODGEPOLE

ELKHORNPINEVIEW

ANSCHUTZRANCH

CAVE CRKANSCHUTZRANCH E.

Utah YELLOWCRK GLASSCOCK

HOLLOW

CLEAR CRK

WHITNEYCANYON

REDCANYON PAINTER

E PAINTER

RYCKMANCRK

CARTERCRK

Wyoming

DAR

BY

CRAWFO

RD

OVERTHRUST BELT


Anschutz Ranch E. FieldGas Condensate Pressure Maintenance Example

Wendschlag et al., 1983From Kleinsteiber et al., 1983

9 COMP17 COMP

Cumulative N2 Injected, HCPVFig. 3-Recovery comparison from 1-D nitrogen displacement simulations

0.0 0.5 1.0 1.5 2.0

Cum

ulat

ive

Oil

Rec

over

y, %

OH

IP

0

10

20

30

40

50

60

70

80

90

100� Injection scheme

1) Inject 0.1 HCPV of 35% N2 and 65% wet gas

2) Chases with pure N2

� 80-acre inverted 9 spot pattern

� 50 MMscf/day

� 6,200 psi injection pressure


N2 Miscibility Displacement � Results in high

displacement efficiency at the pore level

� There are three types of miscibility including;– First-contact

miscibility– Multi-contact

miscibility– Vaporizing mass-

transfer miscibility

ProducerInjector

Prax

air


Jay Field Miscible WAG

� N2 miscible WAG 3:1 ratio

� Line drive pattern

� Pi = 7,850 psi, Tr = 285 F

� 51 API gravity oil

� Phi= 0.14, K= 20 md

� Reserve growth of 10 -13% OOIP (80MMSTB)

Lawrence et al., 2003

Well pattern and Structure

15300’15300’

5200’

15100’

5100’

Oil producerWAG injectorWater injector


Gas Assisted Gravity Drainage

N2 injector Producer

� The Most Common Gravity Drainage Processes are:– Gas assisted gravity

drainage ( no water present)– Double displacement

process ( water present)

� Double Displacement Process (DDP). The process of gas displacement of a water invaded oil column.

� The double displacement process consists of injecting gas up-dip and producing oil down-dip

Double Displacement ProcessOil Saturation 2000-01-01

0.00.10.20.30.40.50.60.70.80.91.0


Gravity DrainageDouble Displacement Process (DDP)

� Up dip gas injection into a dipping reservoir is one of the most efficient recovery methods.– Recovery efficiencies of 85 % to 95 %

� Increases Sweep Efficiency

� Increases Displacement Efficiency– Oil film flow is an important recovery mechanism

� Film flow connects the isolated blobs of residual oil in the presence of gas

– Strong water wet– Oils with positive spreading coefficient

Modified from Ren et al., 2000)


Hawkins FieldDouble Displacement Process

Lawrence et al., 2003

Double Displacement Process Schematic

Gas

Asphalt

Oil

Water

Water-invadedOil Column

Discovery1940

Project Start-up1994 Current Ultimate Drainage

Oil Producer

GasInjector

Shut in

Shut in

Oil Producer

WaterWithdrawal

Well

Shut In

GasInjector

Shut In

Shut In

GasInjector

Oil Producer(UltimateDrainage)


Immiscible Flooding

� Oil Swelling

� Oil Viscosity Reduction

� 3 Phase Flow Oil Mobilization (Kr effects)

� Improved Volumetric Sweep Efficiency

Modified from Fernandez and Pascual. 2007 Spe # 108031

Recovery Mechanisms Gas Cap Injection

� N2 occupies 23% more space than CH4 at set pressure

� N2 and CH4 Viscosities are similar


Mixed Gas ApplicationsN2 as Driving Agent (chase gas)Nitrogen – CO2 FloodingIn a CO2 flood, the use of nitrogen to displace the CO2 slug and its miscible oil bankMight be desirable due to the lower cost of the nitrogen

NitrogenDisplacer

GasCO2Slug

MiscibleZone

OilBank

AdditionalOil

Recovery

Barsonic EnergyTechnology Center

CentrifugalAir Compressor

Produced Fluids (Oil, Gas and Water)Separation and Storage Facilities

Production Well

Air SeparationPlant

InjectionCompressor

InjectionWell

Carbon Dioxide

Viscosity of oil is reduced providing more efficient miscible displacement.


Project Types

� Full Field Floods– Cryogenic plant

� Single Reservoir Compartment– Small cryogenic nitrogen plant– Non-cryogenic membrane plant

� Pilot Projects– Small cryogenic nitrogen plant– Liquid transport vessels

� Offshore Gas Lift Applications– Membrane plant for platform– Liquid transport vessels for platform or ship

� Huff ‘n’ Puff Applications– Pumping equipment– Liquid transport vessels


The Key to Full Field Projects:Reservoir Characterization Work Flow

Feed

bac

k Lo

opStart

Determine Reservoir ArchitectureDetermine Reservoir Architecture

Establish Fluid-Flow TrendsEstablish Fluid-Flow Trends

Develop a Reservoir ModelDevelop a Reservoir Model

Identify Reserve Growth PotentialIdentify Reserve Growth Potential


GDR Pilot Project DesignFor Reserve Growth

� Key is Proper Planning– Determine goals, objectives, and strategy

� 5 Major Steps Include:1. Initial reservoir characterization

– Identifying reserve growth method

2. Monitoring program3. Facilities design4. Proper implementation5. Postmortem evaluation


Praxair’s Portfolio of GDR Projects

Pemex 190 MMcfd / 3000 psig

Amoco 50 MMcfd / 6000 psig

� Miscible Displacement– Block 31, TX, USA– Painter Field, WY, USA– Binger, OK, USA– Flomaton, AL, USA– Vealmoor Field, TX USA– Odessa, TX USA– Douglas, WY, USA– Glenrock WY, USA

� Gas Assisted Gravity Drainage– Hawkins, TX, USA– Samaria, Mexico

� Pressure Maintenance– Samaria, Mexico– Anschutz, WY, USA– Bakersfield CA, USA– Iraan, TX, USA– Tatums, OK, USA– Colorado, USA– 2 Kansas, projects USA

� Enhanced Coalbed Methane– Farmington, NM, USA– Trinidad, CO, USA


Tula, Hidalgo

Salamanca, Guanajuato

MexicoCiudad Madero, Tamaulipas

Minatitlan, Vearcruz

TABASCO STATEPEMEX SOUTH REGION25 KMS FROM VILLAHERMOSA CITY

Samaria

Cadereyta, NL

Project ExampleSamaria Oil Field

Praxair Scope� Turnkey project� Build / Own / Operate� Pipelines to injection wells� 24 month project schedule

PEMEX projects that N2 will double the ultimate recovery

� 190 MMcfd nitrogen at 3,000 psig� 15 year injection requirement� Remote location


Project Example - Samaria Oil Field

Project Management & Execution

� Design

� Engineering

� Equipment Construction

� Risk Mitigation


Advantages of Nitrogen Gas Displacement Recovery (GDR)

� Proven Oil Recovery Method

� Cost Effective

� On Site Nitrogen Plant

� Nitrogen– Can replace recycle hydrocarbon gas– Is inert– Is non-corrosive– Is dry– Is oxygen free


CO2 & N2 Well Stimulation Services

Benefit of Using Gas� Solubility and viscosity� Less damaging� Easier cleanup� Greater effective frac length� Foaming ability � Excellent surface tension

reduction

Praxair Services� Supply liquid CO2 & N2� Logistic services� Dedicated primary pressure pumping � Strategically located plants


Praxair N2/ CO2

Vessels

Praxair N2/ CO2

Vessels

Praxair Pump Trailer

Praxair Pump Trailer

Water TanksWater Tanks

Well HeadWell Head

ProppantTruck

ProppantTruck

Pump TrucksPump Trucks

N2 / CO2VesselsN2 / CO2Vessels

Well Stimulation Services

Gas Supply and Service Provider


� Identification of Potential Oil and Gas Fields for Gas Displacement Recovery

� Assist & Facilitate with Project Development– Reservoir engineering services– Selection of gas injectant– Recovery process simulation– Optimization of gas supply system

� Short Courses and Seminars on GDR

� Support EOR Pilot Projects

� Provide Gas Injection Requirements

Praxair EOR Services


Praxair – CO2 EOR Pilot ProjectsOn Site Storage Pumping and Heat Equipment

Injection Analysis


CO2 Sources for Capture and Purification

Praxair’s Approach: Choose a source with the cleanest gas stream possible which meets the supply needs.

Typical Sources� Refineries� Natural sources� Natural gas processing� Chemical plants� Ethanol plants� Ammonia fertilizer plants� Grain fermentation� Hydrocarbon combustion


Summary: N2 Reserve Growth

0.45-.53Pressure maintenanceAnschutz Ranch East

0.36Immiscible displacementField B*

0.19 – 0.46Pressure maintenanceFordoche Wilcox 5

0.195Miscible displacementFordoche Wilcox 8 & 12

0.19Pressure maintenanceLake Barre

0.13Miscible displacementJay/(LEC)

0.12N2 Pressure maintenanceSzeged Moravaros

0.6 (total) no secondaryMiscible displacementBlock 31

0.31Pressure maintenanceChunchula

Additional Recovery (fraction OHIP)EOR ApplicationField

* From Clancy


Conclusions

� Future Reserve Additions in Large, Light Oil, Mature Fields will Primarily come from GDR.

� Reserve Additions Will Occur Through:1. Pressure maintenance2. Miscible displacement3. Immiscible displacement4. Gas assisted gravity drainage 5. Mixed gas applications: driving agent/density control

� GDR Typically increases both Sweep and Displacement Efficiency in Oil and Gas Reservoirs.

� Reserve Growth Targets can range from 10 to 45 % of OOIP/OGIP


Praxair Contacts� Mark H. Holtz,

– Director, EOR Global Business Development– [email protected],

Cell 512-217-4833

� India– Atul Nagarkar,

[email protected]– Subhash Kaipa,

[email protected]

� Mexico– Arturo Garcia,

[email protected]– Amado Polo,

[email protected]

� South America– Marcelo Maron

[email protected]

� Argentina– Dario Bompani,

[email protected], Wk +541147366104

� Venezula– Antonio Chacin,

[email protected], Cell 584146450593

� Colombia– Alejandro Aldana,

[email protected]– Leonardo Pinzon,

[email protected]

� China – Jet Yang,

[email protected]

� Eastern Europe– Nevio Corna,

[email protected], Cell +393473922524

Upstream Oil and Gas Overview: Reserve Growth for Higher Recovery Efficiency (2009)

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