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Vol. 16, No. 12 Week of March 20, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

BP starting heavy oil facility to test production feasibility

It has been nearly a year since BP completed construction of its $100 million heavy oil test facility on Alaska’s North Slope, but the company has finally completed commissioning of the facility and is about to start operations at the plant, Eric West, manager of BP’s Alaska renewal team, told a group of state legislators at a “lunch and learn” session in Juneau on March 10.

“It’s essentially ready to go,” West said.

The facility, on S-pad, the most southerly well pad in the BP-operated Milne Point field, will try extracting heavy oil from the relatively shallow Ugnu formation using a technique called cold heavy oil production with sand, or CHOPS. In this system, a device called a progressive cavity pump, a kind of Archimedes screw that spins at high speed at the bottom of a well, sucks a mixture of sand and oil to the surface from an unconsolidated sand reservoir, such as the Ugnu. The slurry of sand and oil reaching the wellhead is pumped to a heated separation tank, where the sand sinks out of the oil for removal and disposal.

Successful test

In 2008 BP successfully tested the CHOPS technique in a single well at S-pad, using standard oilfield equipment to process the produced material. But the new facility represents a considerable scaling up of that initial test, with the installation of custom-built heavy-oil production equipment. That equipment includes a system for minimizing fire risks by heating the facility’s separation tanks indirectly using a closed loop of circulating fluid.

BP had hoped to bring the facility into operation in May 2010 but it has taken until now to bring everything together, BP spokesman Steve Rinehart told Petroleum News March 14. The company expects to bring the first CHOPS well on line in mid-April, Rinehart said.

BP has drilled four wells for the testing at the new facility, with two of the wells being horizontal, West said. BP will put processed oil into the flow line for the Milne Point field, with waste sand being trucked to the Prudhoe Bay grind-and-inject facility for disposal.

The purpose of operating the pilot facility is to test the technical viability of heavy oil production, with the eventual aim of assessing the commercial feasibility of a future full-scale plant.

“We’re not quite sure what it is going to take commercially to make this work,” West said. “What we are focused on right now is proving technical viability.”

Needs light oil

Heavy oil, with a consistency of molasses, cannot flow unaided down a pipeline for transportation to market. And, although it might be possible to flow the product either by upgrading the oil in a North Slope refinery or by heating the transportation pipeline, BP does not view these options as commercially feasible, thus leaving the dilution of heavy oil production with light oil as the only commercial option for shipping the heavy oil from the Slope.

“Because of that linkage (with light oil), the time to look at heavy oil is now,” West said. “And in fact the longer we wait to look at it, the more the light oil declines, and at some point we’re going to curtail the amount of heavy oil that we can get off the Slope.”

And the prize is huge, given the estimated 20 billion barrels of heavy oil in place on the North Slope. Added to the estimated 10 billion barrels or so in place of viscous oil, the slightly lighter oil that BP and ConocoPhillips already produce from West Sak-Schrader Bluff formation below the Ugnu, a recovery factor of just 10 percent would result in 3 billion barrels of recoverable oil, West said.

In fact, one purpose of operating the new Milne Point test facility is to determine what that recovery factor would be, although BP anticipates recovery percentages somewhere in the low teens using the CHOPS technique, West said.

Steam inappropriate

Recovery techniques involving the use of steam, in particular a technique called steam assisted gravity drainage, in operation in Canada, have been reported to have achieved recoveries in excess of 50 percent, but these techniques are not appropriate to the reservoir and oil characteristics in the Ugnu reservoir at Milne Point, West said.

And with techniques involving steam it is necessary to evaluate the overall energy balance, determining whether more energy is delivered in the produced oil than is used in producing and injecting the steam required for production.

On the other hand the characteristics of the North Slope heavy oil deposits vary east to west in the Ugnu, so that, if heavy oil proves commercial, a variety of different production techniques would likely come into play, with initial production centered on a ramp up of heavy oil drilling around Milne Point S pad — development could involve the drilling of multiple horizontal wells from single, surface well bores, to minimize the surface footprint, West said.

Significant challenges

But commercial production of heavy oil will face some significant challenges. Heavy oil has less of the light, high-hydrogen components, valued for refining into high-value products such as gasoline, than does light oil, thus giving the heavy oil a lower market value than its lighter cousin. In addition, the production and usage of heavy oil would involve the use of the same value chain of pipelines, oil tankers, refineries and so on as light oil, but with new (and costly) technology bolted on — heavy oil is unlikely to ever be more economic than light oil, West said.

“Heavy oil is not light oil that happens to weigh more,” West said. “It is in fact a different commodity. It has different technical challenges.”

And although BP’s test facility should this year provide some clarity over whether the physics of heavy oil production from the Ugnu works, it will likely take another couple of years, and perhaps another pilot project, to flesh out the production characteristics of the heavy oil resource, he said.

On the other hand, the heavy oil production, at its peak, could add 250,000 barrels per day to overall North Slope production.

“Should we be able to deliver that, it represents a renaissance and rejuvenation of the Alaska North Slope fluids business,” West said. “It’s a really large resource and we are committed to making it work.”

—Alan Bailey



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Those pesky oil bacteria at work

Heavy oil, such as that found in the Ugnu formation on Alaska’s North Slope, is formed when bacteria gobble up the lighter, hydrogen-intense components of regular light oil, leaving behind a residue of the heavier oil components and producing large volumes of methane in the process, Eric West, manager of BP’s Alaska renewal team, told a group of state legislators during a presentation on heavy oil on March 10 in Juneau.

The bacteria cannot survive the relatively high temperatures encountered in the deeply buried reservoir rocks of oil fields such as Prudhoe Bay and Kuparuk, so that the oil in these fields has remained relatively light, flowing easily up oil wells and through pipeline systems.

But over time, some oil has spilled from these deep field reservoirs, percolating upwards through the rock strata into relatively shallow rock formations such as the West Sak-Schrader Bluff and the Ugnu, West said. And the shallower the resulting oil pools, the cooler the oil becomes. Conversely, the cooler the oil, the more active and abundant the bacteria become in chomping at the light oil components.

The West Sak-Schrader Bluff formation now hosts what BP refers to as viscous oil, oil with a consistency of maple syrup that can be produced, especially through horizontal wells that access large sections of reservoir. Heavy oil, with the consistency of molasses and unable to flow unaided, is found in the shallower Ugnu formation.

The methane from the bacterial flows upwards to the base of the permafrost, where it combines with water to form methane hydrate, a potential future source of commercial natural gas.

—Alan Bailey