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Key Conclusions from Heavy Crude Oil – Analysis and Outlook
Figure 3: Global Liquid Production Outlook (million barrels per day)
Heavy oil entering world markets from the Americas and the rest of
the world is shown in Figure 4 (not including synthetic crude oil). The
120.0
increase in North American heavy oil production comes mainly from
100.0
Canada, although new projects in the US also come online in this
timeframe, while Mexican production is expected to decline. By
80.0
2025, heavy oil production outside of the Americas will be nearly as
60.0
high as in South America.
40.0
Conclusions
20.0
Total heavy crude oil production (API <22°) will double by 2025 and
0.0
will provide a significant share of future crude supplies. This
2006 2010 2015 2020 2025
projection is higher than other published forecasts because of the
Light/medium crude GTL/CTL
inclusion of probable projects in all regions of the world. Heavy oil
Conventional heavy crude Biofuels
refining capacity will increase by six million b/d by 2010 if
Non-conventional/bitumen Other (ether, chemicals)
announced projects go forward, though it will remain tight in the
Condensate and NGL
short term and may constrain new production. Heavy crude exports
will increase despite higher volumes processed internally.
Sources: IEA, OPEC, Hart analysis.
Figure 4: Heavy Oil Production by Region Potential constraints on heavy oil production include increasing
capital costs, although some of this pressure has been alleviated by
6
the recent economic downturn. Energy intensity of heavy oil
production is another factor; for example, 1,200 standard cubic feet
5 of natural gas is required to produce one barrel of oil under SAGD,
and steamflooding can be even higher depending on the steam-to-oil
4
ratio. Upgrading requires extra process energy and natural gas to
generate hydrogen; pipeline transport requires more energy to move
mmb/d
3
viscous oils. Existing enhanced oil recovery (EOR) technologies will not
work in offshore or deep reservoirs; primary recovery is low, and
2
steam injection is limited to shallow reservoirs. New upstream
1
technologies could open the potential to enhance oil recovery in deep
reservoirs and those located offshore.
0
North America South America Rest of world
Perhaps the most difficult hurdle will be pressure to reduce
2006 2015 2025
greenhouse gas emissions, which are on average about two times
higher than from conventional oil production and refining. California
from older fields on steam injection, though new heavy oil fields have has passed a low carbon fuel standard that would reduce greenhouse
recently started production in Bohai Bay. China’s heavy oil production is gas emissions from fuel production by 10% by 2020, and 11 north-
expected to increase in the future as they build refineries to process it. eastern states are developing similar legislation. The US climate
change bill, which is currently being debated in the House Energy and
Africa has very little heavy oil production today, but it has been found Commerce Committee, includes a measure modelled on California’s
and developed in Angola. Chad produces 150,000b/d of heavy oil, low-carbon fuel standard. Under the draft bill, refineries would be
nearly all of which is exported. There are large discovered bitumen required to reduce annual life-cycle emissions from their fuel to 2005
resources in Egypt, Congo and Madagascar, although development levels between 2014 and 2022, and then cut them by at least
beyond small-scale test programmes is unlikely in the near term. another 5% between 2023 and 2030.
In Europe, Norway produces heavy oil from the offshore Grane field. Thus, technologies that reduce energy consumption and emissions
Several have been discovered in the UK North Sea. Five fields were in will be important to the ongoing viability of many heavy oil projects.
production in 2006; these experience rapid decline rates and are Technologies that reduce energy consumption also reduce
expected to produce fewer than 100,000b/d by 2015. There are other greenhouse gas emissions. Integrated heavy oil production and
discovered, undeveloped fields that will require high oil prices and upgrading projects can reduce external energy requirements and
possibly new technology to be economical. greenhouse gas emissions.
Global Outlook However, 80–85% of vehicle greenhouse gas emissions come from
By 2025, heavy oil and synthetic crude oil derived from heavy oil will burning the fuel in a vehicle. Consequently, although there is
comprise 19% of total liquid supplies and 22% of global crude of considerable debate on this issue, the difference in life-cycle emissions
supplies, up from 11% of liquids and 12% of crude supplies today (calculated on a well-to-wheel basis) between the emissions from
(see Figure 3). Most of the synthetic oil will come from upgraded non- burning fuel derived from heavy and that from light oil is less than the
conventional oil in Canada and Venezuela. extra emissions due to production and refining alone. n
EXPLORATION & PRODUCTION – VOLUME 7 ISSUE 2
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