Expert Viewpoint with Gordon Graves

Q. Why do you think that heavy oil has suddenly become of interest?

A. The biggest factor is the dramatic rise in the price of oil. Secondly, it appears that recently the majority of the new oil reserves coming on-stream are of heavier crudes than those previously being exploited. Thirdly, these deposits do not have the exploration costs or risks associated with conventional light oils because we know their locations; however, to date we have just ignored them in favor of lighter oils.

Q. How would you describe the current state of the heavy oil industry?

A. In Venezuela, Alberta and Saskatchewan (Canada), and California (United States), the heavy oil industry is very mature, while in the North Sea, where heavy oil’s have only recently been developed, the operators are still in the learning phase. However, in the Middle East, many heavy oil deposits have, until now, actually been disregarded because there is still so much light crude to be produced.

Q. What are the issues that are exercising the heavy oil industry?

A. One of the main issues is how to produce heavy oil offshore? Option one is to inject polymers into the formation to improve mobility ratios and waterflood sweep efficiency thus displacing the heavy oil to the borehole. Unfortunately, polymers are expensive.

Option two, is to heat up the heavy oil to a level where it will thin out sufficiently (reduce oil viscosity) to allow it to be produced in economic quantities. This is known as thermal stimulation and usually involves generating steam on the surface, which is then pumped into the reservoir.

Unfortunately, in an offshore environment this genre of stimulation has a number of drawbacks. Firstly, one needs to pump steam down a riser, which since it is surrounded by sea water, “steals” much of the heat from the steam; this reduces the method’s efficiency. Secondly, steam generation requires additional equipment, which needs to be housed on the offshore structure where space is already at a premium. Thirdly, there are serious concerns being raised by both the industry and the general public, concerning the amount of CO2 and other greenhouse gases that are created when generating the steam required for thermal stimulation.

A promising concept that addresses, in part, these concerns is the application of “downhole heaters”. This technology is aimed at sub-surface steam generation, which is then infused directly into the heavy oil reservoir but without any of the previously mentioned issues relating to heat loss, lack of space for equipment or the surface generation of greenhouse gases.

There are currently several industrial heating companies, previously involved with pipeline heating and combustion projects, working on the concept of downhole heaters.

Q. If these downhole heaters work, could it sound the death knell for the enhancement of heavy oil deposits using traditional surface generated steam methods?

A. No. What is being investigated is whether you could use these downhole heaters for generating sub-surface steam where surface generation is a problem. Steam flooding or cyclic steam stimulation is still the intention; it is just a question of where you create the steam.

Q. Do you think there is a silver bullet for the heavy oil sector which, once discovered, will allow the industry to "come-of-age" overnight?

A. Downhole heaters are a great innovation, but they are not the ultimate solution. A lot of people are talking about upgrading the heavy oil in the reservoir itself. I like science fiction, but I do not think this going to happen soon. Upgrading is a very controlled process, being able to do it “downhole” would be quite a development, but I simply do not see it as being the next step within the short- or medium-term.

Q. When you talk about downhole upgrading, what exactly do you mean?

A. To upgrade, you either need to break some of the long hydrocarbon chains, reject some components such as the heavy metals or even to add hydrogen. This is normally carried out in a refinery and would be difficult to do in an efficient effective way in the reservoir for a major portion of the heavy oil.

Q. Apart from the CO2 issue you mentioned, there are also a number of other environmental concerns: namely the production of vast amounts of sand and water. What is being done to address this?

A. Sand production is a local phenomenon. In Canada you tend to produce a lot of sand, while in Mexico, many heavy oil reservoirs yield virtually no sand. Where sand does occur it leads to disposal problems, excessive abrasion and wear on pumps and pipelines and also localized subsidence. However, much work has, and continues to be done, to develop downhole reduction tools that reduce sand production.

In at least 95% of oil reservoirs you end up producing water. In the light crude fields, you can produce both water and oil economically for extended periods of time, however, when you start to produce water from a heavy oil reservoir, the crude production falls off precipitously to almost nothing as the water is less viscous and is preferentially easier to produce. In addition, when water is produced, it needs to be cleaned-up and de-oiled before it can be discharged to surface water courses. Alternatively, it may need to be pumped back underground, but only if that is a possibility, and even then some pre-treatment or conditioning is still required to prevent formation plugging and erosion of pipes and pumps. Developments to reduce water production are on-going.

Q. Could environmental issues have the potential to stall heavy oil development in its tracks before it has even got properly going?

A. The heavy oil extraction and refining industry will continue as long as the world consumers demand oil—it is not about to be abandoned—as always, commercial considerations will prevail. The question is: “Why don’t we do something to reduce the environmental impact of oil?” For which the answer is: “We will, but who is going to pay for it? There needs to be incentives but who will provide them? Governments, oil companies or the paying public?” At the moment most of the hurdles are of an economic nature. Significant initiatives take a long time to implement and by the time they are, oil prices may well have dropped. So there has to be some approach that is both long-term and fair, and yet is sustainable at both high and low oil prices.

Q. You mentioned both thermal enhancement and downhole heaters…is there anything else that will enhance either recovery rates or percentage of oil-in-place being produced from a heavy oil reservoir?

A. There is a wide range of initiatives. The polymer approach has shown some successes in recent years when applied to conventional light oil reservoirs and even to some heavier crudes. Surfactants are also a possibility. I have certain doubts regarding CO2 gas injection as a plausible enhancement because CO2 tends to precipitate asphaltenes from the heavy oil; thereby, damaging productivity from the heavy oil formations. As for fire flooding, I don’t see any evidence of in-situ combustion development being a huge economic success, although I may be proved wrong.  Certainly there have been economic successes such as in the Bellvue Field in Louisiana. Finally there are efforts to develop  microbial downhole (enhanced oil recovery), when microbes are pumped into the reservoirs and the enzymes they produce either perform as surfactants or upgrade  the oil so it will more easily flow towards the well-bore.  The microbe techniques have also not been a huge economic success and usually create other problems such as leaving a microbial "sludge" of dead microbes downhole, which plugs up the formation.

Q. We all know about heavy oil in Canada and Venezuela…where else in the world are these resources likely to be as important?

A. There are many countries where heavy oils are found, and of these, I think that Russia and some of the former Soviet countries could become the next great heavy oil producers although, at the moment, they are still concentrating on their conventional light oil deposits.

Q.    What do you think is going to be the long-term trend in heavy oil?

A.     I do not see it accelerating at an extremely fast pace. I see it growing steadily; possibly at a higher rate than if crude oil had stayed at its historic low price of between 20 and 30/bbl.

Q. Do you think that heavy oil has made everyone begin to question the future of fossil fuels as a means of energy generation?

A. I have worked in the oil industry for over 30 years, and while we all accept that it is important to manage our heavy oil and conventional light oil resources responsibly, as far as power generation goes, I think it is equally important to begin to examine--with fresh eyes--other options. As far as nuclear is concerned, we should look at the excellent work that the French have done. There is no reason why this cannot be done elsewhere. There is a challenge to educate and convince the public that nuclear power is a safe option. I appreciate that this is probably not a typical oilman’s response, but there you have it!