Heavy Oil, Reserves, Industry Challenges Highlight ATCE

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Panel discussions on heavy oil technology, reserves classification, and changing industry demographics highlighted the 2006 SPE Annual Technical Conference and Exhibition ((ATCE) in San Antonio. More than 500 technical papers on innovative technologies, case studies, and best practices, along with an exhibition showcasing more than 400 companies, rounded out the event, which attracted approximately 99,300 industry professionals. The opening general session featured a wide-ranging discussion on a topic that high oil prices and rising global demand have pushed into the spotlight. "Heavy Oil—From Rock Face to Fuel Pumps" featured Vikram Rao, Vice President of Technology for Halliburton Energy Services; Robert Skinner, former Director of the Oxford Inst. for Energy Studies; Murray Smith, Minister-Counselor of the Government of Alberta, Canada; Sylvestre Calmon, Manager of Refining Technology at Brazil state oil company Petrobras; and Don Paul, Vice President and Chief Technology Officer for Chevron. Although heavy oil shows great promise to help satisfy growing global demand, its development is not without significant technical, financial, and environmental challenges, the panelists agreed. Panel moderator Rao noted that, unlike conventional oil production, heavy oil has closer links with lifting, transporting, and refining, which makes its development more complicated. Heavy oil is difficult to move, requires sophisticated refinery configurations for processing into consumer end products, and produces CO2 emissions. Skinner said that companies are putting more money into heavy oil development, especially in western Canada, because there is little geological risk, there are long-term predictable growth rates, there is a technology upside, and the projects are winning approval from financial markets. "But it's not all a rosy picture" in the Canadian oil sands, he said, because of the shortage of both technical and general labor, the high capital expenditure involved, and the operational risks of working in a northern environment. Venezuela's Orinoco belt actually offers better economics for heavy-oil production, but political risk deters investment there, he said. Offering a resource owner's point of view, Smith said he believes Canadian oil production may grow faster than OPEC output in the near future and will play an increasingly important role in meeting U.S. energy consumption. "Alberta will contribute significantly to U.S. imports over the next 20 years," he said. Oil-sands reserves total 174 billion bbl, of which approximately 20% are recoverable by mining and 80% by steam-assisted gravity drainage, he added. Western Canada is definitely experiencing the strain of increased activity and needs pipeline expansion, new refineries, retrofitting of existing refineries, and a larger labor pool. "We are really feeling the pinch of not training enough professionals" from the mid-1980s on, he said of the oil and gas industry.