[Pops]

Every news story now talks about unconventional oil. Depending on the source, unconventional oil can mean anything from what is extracted to how it's produced, everything from lightweight oil from tight shale and ultra-deep off-shore wells to the bitumen washed from "tar sand", to the liquids manufactured from from gas or coal and of course biofuels.

Personally, I think of "conventional oil" like this:



...land based, low tech, vertical wells into a big fat pool of pressurized, lightweight, low sulfur almost-unleaded. The cheap stuff our economy was built on and of course the kind that is going away. Unconventional to me has come to mean anything that is put forth as a substitute for cheap oil.

Here are some descriptions from UNDERSTANDING UNCONVENTIONAL OIL by Deborah Gordon, a good recent paper from Carnegie Endowment,

$this->bbcode_second_pass_quote('', 'T')he International Energy Agency defines conventional oil in its 2011 World Energy Outlook as “a mixture of hydrocarbons that exist in liquid phase under normal surface conditions.” Unconventional oils are defined as those oils obtained by unconventional production techniques because they cannot be recovered through pumping in their natural state from an ordinary production well without being heated or diluted.

The U.S. Department of Energy divides unconventional oil into four types: heavy oil, extra heavy oil, bitumen, and oil shale. Some analysts also include gas-to-liquids (GTL) processes for converting natural gas to oil and coal-to-liquids (CTL) processes for converting coal to oil in the unconventional oil category. These unconventional oil-processing techniques broaden the feedstock of unconventional oils to include unconventional natural gas, such as tight gas, shale gas, coal-bed methane, and methane hydrates.

GTL processing entails converting natural gas and other simple gaseous hydrocarbons into more complex petroleum products. Methane-rich gases are converted into liquid synthetic fuels through direct conversion or through syngas as an intermediate using the Fischer Tropsch or Mobil processes.

CTL processing entails liquefaction of solid coal. This can be done directly by dissolving coal in a solvent at high temperature and pressure and then refining these liquids to yield high-grade fuel characteristics. Indirect liquefaction gasifies the coal into a mixture of hydrogen and carbon monoxide (syngas), condensing this over a catalyst and using the GTL processes to produce liquid petroleum products.

[ROCKMAN]

Enlightening Pops. As I mentioned in another post there is no law governing how anything in the oil patch is defined (excluding what the SEC and regulatory agencies require). But there is some nomenclature that 99%+ of us ascribe to. Doesn’t make the other folks wrong…just different.

IEA: “Unconventional oils are defined as those oils obtained by unconventional production techniques because they cannot be recovered through pumping in their natural state from an ordinary production well without being heated or diluted.” OK so given that none of the Bakken, Eagle Ford Shale or any other shale reservoir has to be “heated or diluted” to produce the IEA doesn’t consider them UNCONVENTIONAL RESERVOIRS…or at least not “UNCONVENTIONAL OIL”. Now that’s different. Also kinda loose with “unconventional production techniques”…which are what exactly? There’s no lifting technique being used today to produce any of the reservoirs, unconventional or otherwise, that hasn’t been around for decades and isn't considered very conventional. Or do they mean horizontally drilling or frac’ng…both of which are rather conventional methods that have been around for a long time? About 20 years ago almost every well I was involved with was being drilled horizontally and frac’d. Rather conventional methods used to develop an UNCONVENTIONAL RESERVOIR...the Austin Chalk.

“The U.S. Department of Energy divides unconventional oil into four types: heavy oil, extra heavy oil, bitumen, and oil shale”. I’ve produced large amounts of heavy oil from CONVENTIONAL RESERVOIRS as most would classify them. And I’ve produced all of that UNCONVENTIONAL OIL without drilling it horizontally or frac’ng it. So there’s a bit of confusion: one can produce UNCONVENTIONAL OIL from CONVENTIONAL RESEVOIRS. One can also produce light sweet CONVENTIONAL OIL from UNCONVENTIONAL RESERVOIRS like the Eagle Ford Shale.

Even the “experts” at the Carnegie Endowment seem a tad confused: “New breeds of petroleum fuels are nothing like conventional oil. Unconventional oils tend to be heavy, complex…and locked up deep in the earth.” First, some of the earliest CONVENTIONAL RESERVOIRS in the US produced those “heavy” oils. And they weren’t “deep in the earth” but some of the shallowest major fields in the country. And thus they also would consider the production from the UNCONVENTIONAL RESERVOIR we call the Eagle Ford Shale as CONVENTIONAL OIL since it is neither "heavy, complex".

I think a lot of confusion comes from sloppiness. And trying to unify classifications of all hydrocarbons and reservoir types with a few simple buzz words. I personally don’t have a definition for “unconventional oil”…oil is oil and is characterized by its composition. When I sell oil my buyer doesn't determine the price based on what reservoir I produced it from or how I got it out the ground. The price is based upon the oil composition. I know of oil produced from UNCONVENTIONAL RESERVOIRS and CONVENTIONAL RESERVOIRS. And it’s all oil. I don’t know of a single unconventional METHOD of producing an oil well. Every technique used to day, be it horizontal drilling, frac’ng, pumping, gas lift, etc., to complete and produce a well have been around for decades. Drilling horizontally and frac’ng are mainstream methods that are as conventional to me as tighty whities. LOL.

[Oily Stuff]

Can someone enlighten me as to what SAGH or THAI stands for? When you are WOC do you order out THAI?

I live and breathe individual well performance and economics every day like my livelihood depends on it. My definition of conventional and unconventional is very simple: rate of return. Regardless of whether I have to heat it in the ground, set it on fire, soak it, blast it, tunnel into it, or hand dig it, deep, shallow, sandstone or carbonate, if all I can expect over the life of the well is a 2.75:1 rate of return on initial investment (lease acquisition, drilling and completion costs into the tanks); brother that's about as unconventional as well economics can get and I avoid a well like that the same way I do Houston traffic. How many tight oil, shale wells will reach 3:1 ROI in their life span?

Less than 25%.

[Plantagenet]

$this->bbcode_second_pass_quote('ROCKMAN', ' ')Every technique used to day, be it horizontal drilling, frac’ng, pumping, gas lift, etc., to complete and produce a well have been around for decades. Drilling horizontally and frac’ng are mainstream methods that are as conventional to me as tighty whities. LOL.

[Pops]

$this->bbcode_second_pass_quote('ROCKMAN', 'A')nd trying to unify classifications of all hydrocarbons and reservoir types with a few simple buzz words.

[ROCKMAN]

First, steam assisted production of heavy oil has been around for many decades. And horizontal wells have been around for decades. And yes…it is a decades old approach: The gravity drainage idea was originally conceived by Dr. Roger Butler in 1969. But it wasn't until 1975 when Imperial Oil made him head of the heavy oil research effort that he pursued the concept. He tested the concept with Imperial Oil in 1980, in a pilot at Cold Lake which featured one of the first horizontal wells in the industry, with vertical injectors. The latter were established to be inefficient by research at the Alberta Oil Sands Technology and Research Authority (AOSTRA) in the early '80s. This resulted in the first test of twin (horizontal) well SAGD, at their Underground Test Facility (UTF) in the Athabasca Oil Sands, which proved the feasibility of the concept, briefly achieving positive cash flow in 1992 at a production rate of about 2000 bbl/day from 3 well pairs. So, again, old technology being driven by higher oil prices. And what does J6P understand from all this spin: we’ve solved the energy problem with a new silver bullet and cheaper oil is just around the corner. No need to worry about that conservation BS or those stupid solar panels. LOL.

Second: “IEA: “Unconventional oils are defined as those oils obtained by unconventional production techniques because they cannot be recovered through pumping in their natural state from an ordinary production well without being heated or diluted.” Did Pops misstate their position? He’s usually pretty reliable so I took him at his word. Come on Pops…are you fibbin’? LOL. But, again, my point was that folks are mixing and matching conventional and unconventional terminology with oil types/sources vs. reservoir types. Given that J6P has trouble envisioning the moon circling the Earth while the Earth circles the Sun we really shouldn’t be confusing the energy conversation for them.

Nice picture Pops but I don’t see any oil wells. OTOH strip mining seems to be a rather time honoured and rather old method of recovering resources from Mother Earth.

And, as someone pointed out, what’s really important is the cost (both monetary and environmental) to exploit any hydrocarbon source. Tagging various and confusing names on all the moving parts doesn’t really get to the bottom line IMHO. And it’s also IMHO that the vast majority of the public can’t see the bottom line for all the tech rhetoric floating around. I really do know a lot of big words and complex technologies. But as an old teacher once told me it doesn't matter how well you understand something if you can't communicate in a manner that others can understand. Otherwise you're just showing off and ain't worth crap as a teacher. LOL.

[Tanada]

$this->bbcode_second_pass_quote('Oily Stuff', 'C')an someone enlighten me as to what SAGH or THAI stands for? When you are WOC do you order out THAI?

[Plantagenet]

The IEA glossary definition of unconventional oil clearly shows it has nothing to do with the drilling or production method---the IEA defines unconventional as any oil coming from an unconventional source:

unconventional oil

includes oil shale, oil sands-based extra heavy oil and bitumen, derivatives such as synthetic crude products, and liquids derived from natural gas – gas-to-liquid (GTL) or coal-to-liquid (CTL).

---------------------------

Synthetic oil chemically rendered from coal, oil mined from tar sands, or oil fracked from tight shale are all unconventional oil. The definition of unconventional oil has nothing to do with the drilling or production or refining method. It has to do with the unconventional source of the oil.

[ROCKMAN]

Tanada - The term for another old steam assisted production technique always tickled me: huff and puff. Steam is injected down the well, allowed to "soak" and then oil is pumped up from the well. BTW the THAI is just a modification of the “fire flood” or ISC (in situ combustion) technique that was all the rage 50 years ago. Though folks associate such heat assisted forms of EOR with CA but two of the most successful ISC projects were in S Texas and N Louisiana. About 10 years ago I almost got one started but my money guy had the audacity to die on me. A very viable approach at today’s prices IMHO but just too complicated for most companies to understand. There are fields in S Texas where I believe hundreds of millions of bbls of residual oil could be recovered very profitably with ISC.

[rockdoc123]

My own thoughts on this based on a long career of looking at both conventional and unconventional dependent on which way the wind was blowing at the time. Hopefully it can shed some light for some:

My own definition of conventional would not have a definition with respect to oil/gas quality but would be defined by whether or not the hydrocarbon in question was capable of cold flow. That might require artificial lift (pumps or gas lift) but would not require any additional heat generating energy source being put into play (eg. Steam), or stimulation of the potential reservoir through fraccing other than to clean up wellbore damage. One does have to be aware that definitions are limiting no matter what. As an example a field that might flow under its own power at some point in time might see a flip in wettability or complete loss of natural energy or perhaps a change in chemistry due to emulsions forming or some such thing. In that case you have to enter into a form of secondary/tertiary recovery that would require energy being put into the system. So no matter what definition you try to come up with there will be holes in it I think. One cautionary point is that the term "unconventional" should not be taken as meaning something new that has developed. I started out in the industry numerous decades ago working on a heavy oil project where the pilot involved a fire flood in carbonates.

Heavy oil, been around for decades and not all created equal. What is the unconventional aspect of this is when the viscosity gets quite high. As an example in Colombia there are oils with gravities in and around 14 to 20 API with viscosities of around 65 cp. These oils flow under their own power and the only issue you need to deal with is a price differential as a consequence of market fundamentals. In contrast heavy oil from the oil sands in Canada can have similar API but viscosities in the range of several thousand cp. In this case it is basically the consistency of tar and requires heat and energy to get it to flow.

Tight gas/ Tight oil. This has been developed for a long time, John Masters and Jim Grey at Canadian Hunter famously made the deep basin tight sandstone play very popular back in the early eighties. In this situation there is very little in the way of matrix permeability, the main contribution to flow is through naturally occurring fractures but it still requires the ability of matrix gas (or micro-cracks) to resupply the fractures albeit at low rates. There has been resurgence in interest in these plays (especially tight oil) with the advent of multi-stage fraccing. Note that some of what are now being pursued as shale reservoirs initially produced from vertical wells but the production was coming from tight fine-grained clastics rather than the shales themselves. The difference in permeability is what divides the two. Whereas the permeability of a truly tight sand might be in the tens of millidarcies permeability in shales is in the nano-darcy range and hence the need for the high level of technology that goes into shale. Note that the difference between tight gas/oil and shale gas/oil is that the former still requires a separate trap and hence there is risk for migration, trap and seal during the exploration and appraisal phase.

Oil shales. Often confused with Shale oil, Oil shale is something that has been discussed as a future resource for decades. Basically it is under-matured kerogen rich shales, kerogen being the precursor of oil. The idea here is that through heat treating the kerogen can be converted to oil, something that is commonly done in a laboratory in order to understand source rock quality and characteristics (pyrolysis). To do such a process at a commercial quantities has eluded an economic solution to this point in time. There have been pilot projects but nothing significant from what I can tell.

Coal Bed Methane. Received much attention in North America prior to the shale gas revolution. Coal miners from long ago were aware of the methane presence in some coals (hence the canary in the coal mine). The idea here is that coals bond methane and water into their structure. A well is drilled into the coal and water is produced for some period of time until a point at which the bonds holding in the methane are broken and free gas is released. Economics for this were always somewhat challenged given the amount of water production was more often than not unpredictable and resultant gas rates were very low. The upside was that most of the coals were quite shallow. Some coals such as from the San Juan basin work very well and have economics comparable with some of the shales. There are limited areas where this resource can be extracted economically, however.

Shale gas/ shale oil. Discussed quite a bit on this site so doesn’t need a lot of discussion here. Important to realize that there is a significant difference between the way shales were completed and produced a decade or more ago with how they are handled today. Analyses that are often conducted by people in think tanks make the common error of lumping together horizontal and non-horizontal completions, short horizontal completions with long horizontal completions, light single stage non-propped fracs with heavy multi-stage propped fracs. It is important to note that not all shales are created equal and there are better areas and areas that aren’t so good. It is likely, however, that the more marginal areas could become better with additional advances in technology. One of the more attractive issues with respect to shale hydrocarbons is there is no risk associated with trap, seal or migration as the reservoir/source is self-contained. This is why this piece of business is so attractive to the industry. In a normal exploration play you are doing very well to have a chance of success of finding anything above 50% and then you need to add on a risk of commercial rates if you do find something. In the case of shales it is really down to the risk of commercial rate. As an example I might chase a tight sand play that has a 40% chance of geologic success and if I find it a 75% chance of commercial rate. That means there is really only a 30% chance I will find something with a commercial rate. On the other hand a shale with a similar chance of commercial rate ends up have a much higher chance of making money. Cost control is the big issue affecting economics and companies spend an inordinate amount of time looking at ways to manage costs as this is really a marginal business, much like manufacturing.

Methane hydrates. Their presence has been known for decades but for the most part were looked at primarily from the perspective of drilling hazards rather than energy source. Although the vast potential has been talked about for decades no technology seems to have come close to solving the extraction issue. Of course the newly recycled television series Dallas has Bobby and JR Ewings sons involved in a business that is successfully extracting methane hydrates from the Gulf Coast….but again that is fiction, which kind of describes most of the discussion around this potential energy source to this point in time.

LNG/GTL. I don’t think these should be classified as unconventional but rather as fuel alternatives. In the example of GTL it was originally developed as a means of dealing with embargoes and is now being shopped around as an attractive energy alternative given it produces a diesel like product that burns clean and efficiently and would make a handy replacement in large diesel consumption areas such as North America and Australia. LNG is really there as a means of being able to monetize large stranded gas reserves. The gas utilized in both processes to this point in time is invariably conventional gas but going forward there is a possibility that you might see North American production and export of LNG from shale gas. Sasol signed a couple of deals in North America to pursue shale gas to GTL conversion as well.

[Oily Stuff]

Whatever the IEA or EIA or the CIA definitions of unconventional are, POPs is right, its conventional oil reservoirs with drive thru permeability and all that beautiful, virgin bottom hole pressure that made us. It will be the decline of those same reservoirs, and the inability to replace them, that will also break us.

Thank you, Tanada. And thank you Rockman for the more familiar terms. I operate an old field that was briefly fire flooded back in the early 60's; in situ combustion has been around a long time. Rock, yes sir...the San Miguel comes to mind. Lots of OOIP with zero mobility. Gazillions of barrels left behind.

[ROCKMAN]

Pstarr – Yep…been around for a while but not much application until oil prices boomed. That’s the point I keep harping on that I’m sure some are getting tired of hearing: there isn’t a lot of “new” going on in the oil patch. But a lot of “old” that is booming thanks to higher oil prices. And those applications are being tweaked as a result. But for many of us in the oil patch it’s just the same ole same ole…just X10.

I don’t have any numbers handy but I doubt all the thermal recoveries combined (except for CA) probably don’t add up to a large percentage. I suspect the Canadian oil sands will represent to biggest gains by far.

Fire floods can work very well. One project Texaco did in S Texas in the early 60’s increased the field’s production level above the highest rate achieved when it first began producing. There’s actually an ISC lab in the Petroleum Engineering Dept. at Texas A&M University named after the Texaco geologist that managed the project. That’s one aspect of ISC that separates it from all the other EOR methods: very high production rates are possible. I used this field as the model to do other similar fields in the trend. No luck: had one door after another slammed in my face. Just too complex a method that most did not understand and had no patience to learn about. The head of the TAMU lab was going to have his family invest in my project if I could raise the rest of the capex.

Went to one of my bankers at the time with the idea. He was a former Getty Oil engineer. Said no way he would get involved: as a young engineer he “almost blew up” a field one night that they were trying to fire flood. The problem was that solutions for those risks had been found but few knew about them…they just remembered the old horror stories. I truly do believe I could easily recover 50 to 100 million bbls of very profitable oil from those S Texas fields. But I’m too old and too busy to fight that sales battle again. And when I’m gone there won’t be many left around to chase the idea: most of the experts in this area are already dead. My files will likely end up as a pile of ashes…just like me. LOL.

Oily - Rodriquez Field, Zapata County, sound familiar?

[Oily Stuff]

Yes, Rockman, know it! Good idea. Was Chittim Ranch fire flooded?

[ROCKMAN]

OS - I don't think it was fire flooded. Not sure about other EOR efforts. I've been offered Chittim Ranch a couple of times but just couldn't get the numbers to work.

[Oily Stuff]

Pena Creek. It does not seem like too long ago a company in San Antonio bought a big chunk of that (Conoco) and tried to water flood it, or polymer flood it, something like that. They sold all that to an EF player who then tried something, maybe short radius, short laterals. It did not work either. Lots of oil left behind in Pena Creek too.

Neat geology out there around Chittim. Glen Rose pinnacle reefs that produce <100 mg/l chloride water...fascinating.

[Tanada]

$this->bbcode_second_pass_quote('ROCKMAN', 'T')anada - The term for another old steam assisted production technique always tickled me: huff and puff. Steam is injected down the well, allowed to "soak" and then oil is pumped up from the well. BTW the THAI is just a modification of the “fire flood” or ISC (in situ combustion) technique that was all the rage 50 years ago. Though folks associate such heat assisted forms of EOR with CA but two of the most successful ISC projects were in S Texas and N Louisiana. About 10 years ago I almost got one started but my money guy had the audacity to die on me. A very viable approach at today’s prices IMHO but just too complicated for most companies to understand. There are fields in S Texas where I believe hundreds of millions of bbls of residual oil could be recovered very profitably with ISC.

[Doly]

$this->bbcode_second_pass_quote('', 'I') have long argued we should be using the sugar case and beets for ethanol