When you combine these upstream concerns with the downstream challenges, discount variables, and lower-than-conventional-oil prices, it’s not hard to see why heavy oil has usually been considered the domain of specialist companies that develop methodologies somewhat off the beaten track.

Why start now?

Those who closely follow industry news will have noticed that heavy oil is receiving a lot of attention these days and this interest only seems to be growing in momentum. Why is this the case now? The answer is not simple, as you would expect with a question related to heavy oil. First, technology developments are moving quickly and many options exist to address complex production requirements. Second, long returns on production investment exist and, depending on your production method, recovery factors are approaching 70–80%. Third, new business models are emerging around the world as applications and refining capacity are increasing; combined with new transport and refining techniques, all these factors are helping to fuel interest in this unconventional resource.

Where do I start?

The viability of heavy oil averages at close to $25 a barrel. With prices for conventional oil now around $70 and predictions that such price levels are unlikely to drop in the next few years, the time has never been better to get involved. For new entrants though it can be a confusing and challenging puzzle. Thermal receives a lot of attention as the most effective of the three main production methods (primary, cold [EOR], and thermal), but financially and technically it is also the most challenging, and not every field is a suitable candidate for thermal production. If you’re new to the game, how do you work out which methodology best suits you and your reservoir?

Gaining in understanding

You may recognize that the road to success in heavy oil is paved with bitumen, but how do you avoid getting stuck along the way? Heavy oil is considered a leading opportunity within unconventional resources—and, as you may imagine, best practices for the future of heavy oil require unconventional strategies. In conventional resource development, relevant and accurate measurement and advanced modeling give you the understanding to be better prepared. When dealing with heavy oil, with its added complexities and potential cost pitfalls, having a detailed level of understanding about your reservoir is critical to every decision you make toward your production success.

Building the road

To start with the equivalent of a footpath toward your production targets (through primary recovery for example), your recovery factor is likely to be less than 20%. If your reservoir knowledge suggests that a (thermal recovery) highway will follow one day, taking your recovery closer to 70–80%, then ensuring the basic foundations are in place from the start will help you avoid adding unnecessary costs to your already major investment. This means a conventional production strategy won’t produce the right results. So you have to challenge conventional wisdom. With a good understanding of what services and technologies are available, what research reveals, and where gaps may be today, you are better placed to make the right decisions for your reservoir for the short and long term. Nothing is fixed in heavy oil, so you can adapt when you reach a fork in the road, when your requirements change, or when you decide they need to change.

Long-haul success

The biggest benefit enjoyed by heavy oil producers is the long-haul character of their reservoirs. Unlike lighter crude reservoirs, heavy oil fields produce at consistent rates for many years; various predictions estimate up to 20 years with no decline. Some of the oldest fields in California have been online for more than 100 years. So the investment pays off for a long time. These longer returns are what it’s all about, and many companies that previously discounted heavy oil as a viable option are now eager to road-test this unconventional resource.