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Key Conclusions from Heavy Crude Oil – Analysis and Outlook
a report by
Industry Outlook
Laura Atkins
Senior Consultant, Hart Energy Consulting
With light and medium crude oil supplies levelling off and reaching a Despite higher costs and other challenges, heavy oil is an important
production plateau in the next few years, heavy oil will be an source of crude supplies today and will become even more prevalent in
increasingly important source of global liquid supplies. Heavy oil the future as higher oil prices and improved technology open more
production will double over the next 20 years and will account for 22% resources to development.
of crude supplies by 2025.
Outlook in the Americas
The definition of heavy oil varies depending on the source; here it is Over half of the known conventional heavy oil resources are found in
defined generally as crude oil with American Petroleum Institute (API) the Americas. Substantial volumes are produced in the US, Canada,
gravity less than 22°. It can be further classified as conventional or non- Mexico, Venezuela, Brazil and other Latin American countries. Mexico
conventional, with the non-conventional consisting of bitumen (also is currently the largest producer, at about 2 million barrels per day (b/d),
referred to as tar sands or oilsands) and extra-heavy crude oil with API with Venezuela a close second. The US produces about 450,000b/d of
gravities less than 10º (see Figure 1). Oil between 10 and 22° API is heavy oil, mostly from mature oil fields in California. Advanced
considered conventional heavy oil. reservoir management technologies have increased recovery, reduced
costs (mainly by improving the efficiency of steam injection) and
Heavy oil and bitumen are widely distributed around the globe and extended the lives of many of these fields. In Alaska, the vast but
have been found on every continent except Antarctica. According to technically challenging heavy oil resources on the North Slope, which
the US Geological Survey, discovered original oil in place (OOIP) cannot be produced using steam injection because the wellbores are
includes 3.4 trillion barrels of conventional heavy oil (API gravities too cold, are being developed using a viscosity-reducing enriched gas
greater than 10°) and 4.5 trillion barrels of bitumen and extra-heavy oil. injection alternating with water injection process.
In general, less than 20% of OOIP in a conventional heavy-oil reservoir
is economically recoverable, although there is considerable upside with In South America, Brazil is rapidly becoming a major heavy oil producer.
the advance of new technologies. Of the discovered bitumen and Most of the heavy oil is located offshore in deepwater, adding another
extra-heavy oil, about 600 billion barrels are estimated to be level of technical complexity to its development. Optimal placement of
recoverable with today’s technologies. injection and production wells is critical because of the high cost of the
wells. Technologies such as accurate reservoir imaging using 3D seismic
Generally, the heavier the crude, the more it costs to develop and and ultra-long-reach horizontal wells are making these fields
produce. Operating costs are higher because additional energy is economical to develop. Columbia, Ecuador and Peru have substantial
necessary to heat the reservoir, usually using steam injection. Reservoirs undeveloped heavy oil resources in remote locations deep in the
that are deeper than 1,000m or located offshore or in the Arctic cannot rainforest where there is little infrastructure. This oil is often too heavy
be produced using steam injection because excessive heat loss in the to flow in a pipeline, roads and electricity are sparse and it is difficult to
injection wellbore makes the process ineffective. Figure 2 illustrates the transport the oil. Technologies such as remote field upgrading can
types of heavy oil resources and the level of upstream technology that make heavy oil developments in these locations feasible.
is required to produce them.
Non-conventional crude oil – bitumen and extra-heavy oil – is also
produced mainly in the Americas. Venezuela’s Orinoco Belt contains the
Laura Atkins is a Senior Consultant at Hart Energy
Consulting, where she conducts integrated analyses of
largest known extra-heavy oil deposit in the world. They plan to double
energy supply, demand, technologies and policies,
the current production rate of 600,000b/d by 2015. The development of
including oil and natural gas, renewable energy and
bitumen, or oilsands as they are called in Canada, in the province of
biofuels. She is the principal author of the 2008 report
‘Heavy Crude Oil: Analysis and Outlook’ published by Alberta has caused Canada’s proven reserves to jump to number two in
Hart Energy Consulting. Ms Atkins spent 20 years in
the world, just below Saudi Arabia. Total production is expected to
the oil industry as a petroleum engineer, where she
held positions in management and international new
increase from 1.3 million b/d in 2006 to over 5 million b/d by 2025,
business development. She worked for three years for the Organization of Petroleum although some projects could be delayed because of current low oil prices.
Exporting Countries (OPEC) in Vienna, where she examined how new energy technology
could affect future oil demand. She advised OPEC on energy-related topics, including
the energy policies of the US and China and the benefits of participation in carbon
Bitumen and extra-heavy oil, though they have about the same API
capture and storage research and development. Ms Atkins holds an MBA from the
gravities, require different production techniques. The extra-heavy oil in
Kennedy School of Government, Harvard University and a BSc in chemical engineering
from Tulane University.
some parts of the Orinoco Belt in Venezuela can be produced on
natural flow because it contains enough solution gas. Bitumen, by
E:
ljatkins@mindspring.com
definition, will not flow. In Canada, if it is less than 100m below the
surface, it is mined. Deeper deposits are produced in situ using a
© TOUCH BRIEFINGS 2009
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