Post-Production Heavy Oil Operations: A Case For Partial Upgrading

Abstract

Abstract This paper investigates the economic viability of post-production partial upgrading, specifically visbreaking, of heavy oil. We evaluate the potential technical and economic advantages and disadvantages of using visbreaking as a tool for reducing diluent use. Additionally, we identify the cost and energy drivers affecting the economic performance of this partial upgrading operation through a probabilistic Net Present Value (NPV) analysis. We have created a screening tool that can be used for a preliminary evaluation of visbreaking for transportation of heavy-oil solvent systems. Partial upgrading at the wellsite can potentially reduce operational costs to producers and transportation companies. A comparative economic study offered by this test can be used to make decisions on whether to proceed to a more detailed investigation of the process. Importantly, we have created a first-pass standardization tool for the screening of heavy oils for partial upgrading. Visbreaking can prove to be an economically favorable addition or, perhaps, even an alternative to blending heavy oil prior to pipeline transportation. In fact, operational costs of visbreaking are offset by the reduced cost of diluent and capital expenditures that can be mitigated within a reasonable time frame. Finally, we conclude that the altered fluid properties of a visbroken product require less energy per barrel for transportation, which translates to a more attractive economic scenario for transportation for the two baseline cases presented. Introduction Post-production transportation of heavy oil through commercial pipelines requires the oil to conform to certain specifications. The specifications in question depend on the lease agreement between the producer and the transportation company. However, the typical lease agreement includes cutoffs on product viscosity, API gravity, and sulfur content. Generally, the viscosity, gravity, and sulfur content cutoffs for transportation purposes are in the range of 350 cSt, 19o API, and <2 % by weight, respectively (Rahimi 2009). Consequently, the problematic high viscosity and low gravity of heavy oils requires certain post-production operations that make the feedstock conform to transportation guidelines. Most common among these operations are blending with a diluent or upgrading/partial upgrading on site. The World Energy Council (2010) report on heavy oils states that, in Canada alone, about 40% of the heavy oil produced undergoes blending with diluent for transportation; worldwide, this figure is close to 60%. Conversely, post-production upgrading is mainly done on a scale of hundreds of thousands of barrels in Canada, where even the smaller facilities are able to handle over 30,000 B/D. This accounts for a majority of post-production operations in Canada (around 60%), but leaves a sizable percentage of operations, especially operators of facilities, that produce 10,000 B/D or less. The question we are investigating involves replacing diluent operations and/or lowering the diluent usage with small upgrading units at the wellsite. We analyze the economic ramifications of this decision to the producer, as well as along the heavy oil value chain, from wellhead to refinery. Given that there are 6,000 billion bbl of heavy oil in place worldwide (Clark et. al. 2007), there is an enormous potential, now and in the future, for these resources to be a vital part of the energy landscape. However, because of the litany of additional challenges faced in transporting these hydrocarbons to market and converting them into marketable products, the viability of development often depends on the crude oil prices. Table 1 shows some of the additional costs required to make heavy oils into a viable, saleable product.