Heavy Oil: Catching the Wild Beast

Getty's formula has worked for American oil enthusiasts, yet oil is becoming increasingly difficult to find -- let alone recover. Among other concerns, peak oil theories and geopolitical agitations in OPEC nations have left operators scrambling to find inexpensive, more efficient methods of recovering nonconventional hydrocarbons, like heavy oil, that will satisfy the world’s demand for petroleum into the next century.

Heavy oil is, quite simply, any oil that does not readily flow to the surface. It is defined as any oil with a viscosity above 100 centipoise. As such, reservoirs with low permeability characteristics are not conducive to heavy oil recovery.

Some people believe that heavy oil could be produced at low-cost and high rates comparable to light oil extraction ... given time and technology.

"Just like anything else, the more you do it, the better you get at it," said American Petroleum Institute Exploration and Production Advisor Andy Radford. "We have been producing heavy oil for years out in California. As [heavy oil] becomes more mainstream, more new technologies will be developed and we will be better able to recover it."

The United States Geological Survey surmised that there are 434.3 billion barrels of heavy oil trapped in the earth, waiting to be recovered. This estimate includes 301 billion barrels of recoverable heavy oil in the Western Hemisphere, of which 35.3 billion are under North America. South America holds the majority of recoverable heavy oil with 265.7 billion barrels. Venezuela alone controls more than 200 billion barrels of the beefy black gold.

CIBC World Markets claim that higher crude prices and "tight worldwide oil supply" will transform Canada's oil sands into a hotbed of exploration and production activity, making the area "the single largest contributor to net new global supply by the end of the decade."

"All of the net increase in oil production this year is expected to come from non-conventional sources," said Jeff Rubin, chief economist at CIBC World Markets. "While deepwater oil is the primary source today, we forecast that the Canadian oil sands will become the single largest contributor to incremental global supply by 2010."

All evidence considered, it should be no surprise that the U.S. oil industry alone has invested more than $86 billion since 2000 to develop technologies that will allow oil wranglers to recover and convert heavy oil into a usable resource.

Teaching an Old Rig New Tricks
Despite the vast deposits of heavy oil that exist in the Western hemisphere, the corpulent cousin of light, sweet crude remains largely untouched because of operators' inability to lift it. Heavy oil production doesn't have to be new-fangled and fancy, but using conventional methods for the recovery of heavy oil has proven to be cost-prohibitive and time-consuming. Vertical wells, pumps, and pressure maintenance are highly inefficient.

While light crude remains in abundance, the cost-prohibitive recovery of heavy oil keeps operators from turning an eye to this nonconventional hydrocarbon. Methods used to pump light oil can only produce heavy oil at a fraction of the rate. Enter science and technology.

Vapor, Steam, and Heavy Oil Dreams
Steam-assisted gravity drainage (SAGD) is a thermal in-situ recovery method that involves drilling two horizontal wells. By injecting steam into the upper wellbore to soften the bitumen, the crude can be pumped from the lower wellbore where it drains. This method is ideal for oil sands.

Cyclic steam stimulation uses a thermal in situ recovery method. It is a three-stage process involving several weeks of steam injection followed by several weeks of "soaking." The production phase that follows produces the oil from the same wells in which the steam was injected. As production declines, the injection phase is restarted. The high-pressure steam not only makes the oil more mobile, but also creates cracks and channels through which the oil can flow to the wellbore.

VAPEX is a non-thermal recovery method that involves injecting vaporized solvents into heavy oil deposits. VAPEX creates a vapor-chamber that oil flows through due to gravity drainage. It has the potential to lower greenhouse gas emissions and significantly reduce water consumption and can be used to recover bitumen from zones too thin for traditional
thermal recovery.

Cold Heavy Oil Production with Sand (CHOPS)
CHOPS provides passage for sand into the wellbore along with the oil, improving well productivity. With free movement of sand into the wellbore, wells that formerly produced only 20 barrels/day are able to produce more than 200 barrels/day, according to Canada's Centre for Energy.

Still, it takes a ton of energy to produce all of that steam, and allowing sand into the wellbore creates a host of problems. Thus far, the technologies created to facilitate the recovery of heavy oil have been transitional methods. Some of the most recent methods to improve production of heavy oil include chemically lowering viscosity levels, which would allow the oil to be recovered more readily and without expensive steam and formation-endangering frac methods.

THAI Method is More than Hot Air
Toe-to-Heel Air Injection (THAI) is a new method developed at the University of Bath that involves injecting air into the ground, which is then ignited. The fired-up air heats the oil, allowing it to be more easily lifted. The heat generated in the reservoir reduces the viscosity of the heavy oil, allowing it to drain into a second, horizontal well from where it rises to the surface.

THAI creators claim that the method not only uses less energy than previous methods using natural gas and water, it also expands the percentage of oil recoverable from the field. The efficiency of the THAI method is immeasurable, recovering about 70% to 80% of the oil, compared to only 10% to 40% using other technologies.

"With light oil now hitting around $100 a barrel, it’s economic to think of using heavy oil, especially since THAI can produce oil for less than $10 a barrel," said Professor Malcolm Greaves, who developed the THAI method. "We’ve seen this project go from something that many people said would not work into something we can have confidence in, all in the space of the last 18 months."

Greaves said his method promises to turn heavy oil into light oil while it is still underground.

What Now?
While lowering the viscosity of heavy oil using chemical treatments is promising, API’s Radford said it is only a "catalyst that upgrades the in-situ" methods, and such recovery processes are not available for use in every situation.

But don't rule heavy oil recovery out of the production picture. The better the industry becomes at extracting heavy oil from the ground, the more it will increase its reserve capacity.

"Heavy oils are emerging in importance as our technology in producing them continues to develop," said Bill Bush, spokesman for the American Petroleum Institute (API). "Heavy oils, oil sands and potentially shale could contribute substantially to future U.S. and world oil supplies."

Compared to the production capabilities of 10 years ago, operators of today are capable of the extraordinary when it comes to recovery. Ten years from now, how will "extraordinary" be defined, and where will heavy oil fit into that definition?

Jean Paul Getty wrote, "Oil is like a wild animal. Whoever captures it has it." Heavy oil is no exception. The new hydrocarbon frontier is spotted with wild animals, such as heavy oil and tar, and more is being invested in capturing the wild and elusive, albeit slow-moving, animal called heavy oil.