Ivanhoe Resumes Tests at Heavy-to-Light Oil Facility

Ivanhoe Energy Inc. said that it has successfully resumed test runs at its heavy oil upgrading Commercial Demonstration Facility (CDF) near Bakersfield, Calif., following a series of upgrades to the plant.

A 26-hour run of California vacuum tower bottoms (VTBs) was completed this past weekend, which is approximately double the length of the longest VTB run carried out to date at the CDF. The run provided performance confirmation of the upgrades made in recent months and generated valuable data for future test runs.

The test run was primarily conducted in the "High Yield" or "once through" mode, which produces high liquid volume yields and is the configuration appropriate for heavy oil deposits when the key objective is to reduce viscosity levels to meet pipeline specifications. Toward the end of the run, operations were shifted into the "High Quality" mode to commission recent modifications. The High Quality or "recycle" configuration is appropriate for most heavy oil deposits in Western Canada, such as Athabasca, where a more fully upgraded product and higher levels of by-product on-site energy are required.

Ivanhoe will now proceed with data analysis of this run and prepare for upcoming tests. These tests will focus on the High Quality configuration and the processing of Athabasca bitumen that has been shipped from Western Canada and is currently at the CDF in onsite storage ready for processing. The timing of the upcoming runs will depend on the data analysis and equipment inspection, which is underway this week.

"This run validated the work we have carried out on the CDF in recent months and will advance the development of our HTL Technology", said Ed Veith, Ivanhoe Energy's vice president of HTL Technology. "We will now concentrate our efforts on preparing the CDF for the High Quality mode of operations and for processing Athabasca bitumen. Over the near term, the primary focus of our test program will be to generate upgraded HTL product for analysis and marketing studies and to satisfy due diligence efforts by third parties. This will be followed by additional long-term runs to generate data for 10,000- to 15,000-barrel-per-day commercial facilities."

Since plant startup at year-end 2004, 12 significant test runs have been carried out. Nine of them occurred in 2005 in a program of technical and operational enhancements during the commissioning phase of the CDF, culminating in a successful extended run in January 2006 that kicked off the commercial testing phase.

Ivanhoe Energy's heavy oil upgrading technology produces lighter, more valuable crude oil at lower costs and in smaller-sized plants than conventional technologies. The technology addresses the four key challenges to heavy oil development:

  • The facilities can be field-located and effective at a scale as low as 10,000 to 15,000 barrels per day.
  • The value of the upgraded heavy oil is substantially increased.
  • The viscosity of the upgraded product is dramatically reduced, allowing it to be transported by pipeline without the need for blend oils.
  • Significant amounts of by-product energy are produced as an on-site source for the production of the steam and/or power needed in heavy oil recovery.

Ivanhoe Energy is an independent international oil and gas exploration and development company focused on pursuing long-term growth in its reserve base and production using key technologies, including its proprietary heavy oil upgrading process (HTL), state-of-the-art drilling and enhanced oil recovery (EOR) techniques, and the conversion of natural gas to liquids (GTL). Core operations are in the United States and China, with business development opportunities worldwide.