Heavy Oil Mining Technical and Economic Analysis

Abstract

ABSTRACT U.S. Department of Energy studies have indicated that the United States has produced only about one-third of its estimated reserves of heavy oil, primarily because this oil is unrecoverable by conventional production methods. One technology that shows promise for recovering these reserves is oil raining. Of three fundamental mining methods, surface extractive mining, underground extractive mining and underground mining for access, the surface extractive mining and underground mining for access methods appear to be technically feasible for oil recovery. Two heavy oil reservoirs are used as the basis for an economic evaluation of the two technically feasible mining methods. These two reservoirs were selected from an extensive list of heavy oil reservoirs in the United States based on a favorable combination of physical characteristics including depth, net pay thickness, oil saturation in barrels per acre, reservoir area, and total estimated reserves. The Kern River Field, Kern County, California was used as the basis for an economic evaluation of oil production using surface extractive mining methods. The McKittrick Field, Kern County, California was used as the basis for an economic evaluation of oil production using underground mining for access methods. The economic evaluation of surface extractive mining was based on a mine plan capable of producing approximately 38,000 barrels of oil per day for a 20 year project life. The economic evaluation indicated that surface extractive mining would require an oil selling price of $27.26 per barrel to produce a 20 percent return on investment. This evaluation included capital and operating costs for mining, processing, and disposal of the processed oil sand ore. The economic evaluation of underground mining for access was based on a mine plan capable of producing between 10,000 and 20,000 barrels of oil per day for a nine year project life. The mining for access method was determined not to be economical without thermal assistance because capital and operating expenses were not fully recovered over the project life due to low oil mobility. The economic evaluation indicated that mining for access with thermal assistance would require an oil selling price of $43.25 per barrel to produce a 20 percent return on investment. This analysis indicates that lighter oils with higher mobility offer better potential for successful economic demonstration of mining for access technology.