saskatchewan petroleum research incentive project: 7405-34 ......jul 12, 2016 · production casing...

Saskatchewan Petroleum Research Incentive Project: 7405-34

Horizontal Well Hot Oil Treatment (HOWHOT)

Final Technical Report Jul 12, 2016

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Table of Contents

Summary .................................................................................................................................. 3

1. Project Background ..................................................................................................... 4

2. Pilot Site Overview ....................................................................................................... 6

2.1 Reservoir Parameters ........................................................................................ 6

2.2 Well Production History .................................................................................... 6

2.3 Wellbore Design ................................................................................................. 7

2.4 Surface Facilities ............................................................................................... 8

3. Field Test Results ......................................................................................................... 9

3.1 Operating Parameters for the Pilot ................................................................... 9

3.2 Start-up Attempts ............................................................................................... 9

3.3 Production Profile ............................................................................................ 11

3.4 Operational Challenges ................................................................................... 13

4. Cost ..............................................................................................................................14

5. Concluding Comments ...............................................................................................16

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List of Tables

Table 1 - Reservoir Data for Husky Aberfeldy HZ 1D14-21-1C15-20-049-26W3 ................... 6

Table 2 - Fluid Data for Husky Aberfeldy HZ 1D14-21-1C15-20-049-26W3 ........................... 6

Table 3 - Cost Summary .........................................................................................................14

List of Figures

Figure 1 - HOWHOT Technology Description ........................................................................ 5

Figure 2 - Aberfeldy 91/15-20 Primary Production Profile ..................................................... 7

Figure 3 - Aberfeldy 91/15-20 Well Schematic (Current)........................................................ 8

Figure 4 - HOWHOT Surface Facilities (Site Photo) ............................................................... 9

Figure 5 - Production Profile over HOWHOT Operations .....................................................11

Figure 6 - 91/15-20 Heel Temperature Profile ........................................................................12

Figure 7 - 91/15-20 Toe Temperature Profile .........................................................................13

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Summary In March 2015, Husky and the Government of Saskatchewan signed a project agreement under the Saskatchewan Petroleum Research Incentive (SPRI) program with the agreement number 7405-34. This is the final technical report submitted by Husky and will address SPRI contract agreement under which, a final technical report must be submitted and is subject to acceptance by THE MINISTER’s authorized representative by April 30, 2016. The project is to make use of a new technology named Horizontal Well Hot Oil Treatment (HOWHOT). The process heats an oil reservoir by conduction using a circulation of hot fluid and it requires very high performance insulation materials to minimize the thermal losses between the heat source above ground and the downhole production zone. Heating the oil reduces its viscosity and consequently reduces the pressure loss in the formation. The project pilot was located at 91/15-20-049-26W3/0. Construction was completed in October 2013, the heater was commissioned in December 2013, and circulation began in January 2014. The initial start-up encountered several operational issues. Modifications to the facilities were completed in order to overcome the deficiencies. Operation was successfully re-started on May 2015. The process was continuously optimized with the objective of achieving the design circulation rate of 50 m3/day. The well produced 771 m3 oil in total during the HOWHOT production phase from August 2013 to January 2016. The incremental oil production was not sufficient to prove HOWHOT process as an economically viable EOR technology at this time. Various operation scenarios were tested and analyzed, particularly increases in injection rate and injection temperature. Due to having a controlled situation to determine production response, only one parameter was changed at a time. Those learning practices also took us longer time to get the process optimized. Operating expenses were significantly higher under the current set up and the pilot of one individual well was not economic with the realized oil price. The fuel cost is expected to decrease if the pilot would be run by natural gas. In the meantime, additional spending was needed to implement design changes, safety and environmental requirements including extra piping insulations, replacement of heat medium fluid, heater expansion tank enlargement, etc. Such expenditures had compounded the challenges for improving (lowering) operating expenses. Detailed data and operational history are reported below in the Field Test Results section. Operation of the pilot is going to continue. In total, $4,811,054.55 was incurred for project expenses as opposed to the proposed budget of $4,053,500.00 in the application.

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1. Project Background Husky has an estimated 17 billion barrels of heavy crude left in its own leases in the Lloydminster area. Most of the production uses a process known as CHOPS (Cold Heavy Oil Production with Sand). The CHOPS process has allowed for greater economic production in the region. However, much of which is inaccessible using current technology. Shrinking reserves and future demand for oil makes it imperative that technically successful and economically viable enhanced oil recovery (EOR) methods are developed. As such Husky planned to implement a horizontal well hot oil circulation pilot to test the feasibility of utilizing a hot fluid circulation process where produced oil is heated at surface to be used as the circulation stream to extract incremental heavy oil from depleted horizontal wells. The theory is to heat the reservoir by conduction and decrease the heavy oil viscosity to allow incremental production. Heating a reservoir using steam through convection (SAGD or CSS) has proven to be successful for recovering oil from thick-pay heavy-oil reservoirs, but in thinner reservoirs there are some limitations and inefficiencies. This project is the first of its kind of using heated produced crude oil on thin-pay Saskatchewan heavy oil reservoirs that have already successfully produced. The Horizontal Well Hot Oil Treatment (HOWHOT) process is a thermal recovery technology which can be utilized in the Lloydminster heavy oil region. The scope of the project involves heating of existing crude oil production and circulating it in a horizontal heavy oil well through an insulated concentric coiled tubing string. The circulation of hot oil is intended to deliver heat by conduction/convection to the reservoir in the immediate wellbore region and reduce the viscosity of any inflowing heavy oil. The circulation of the hot oil is achieved by low pressure surface pump injection and the produced fluid is recovered by a downhole pumping system in a separate conventional coiled tubing string. The thermal energy raises the temperature of the stimulated zone and reduces the heavy oil viscosity thereby increasing ultimate oil recovery. A schematic of the HOWHOT process is shown in Figure 1.

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Figure 1 - HOWHOT Technology Description

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2. Pilot Site Overview

2.1 Reservoir Parameters The well that was selected for the testing of the HOWHOT technology is located at Husky Aberfeldy HZ 1D14-21-1C15-20-049-26W3 (91/15-20-049-26W3/0). The formation to which the technology was applied is the General Petroleum. Table 1 below details the reservoir parameters for this reservoir and Table 2 summarizes the fluid data.

Table 1 - Reservoir Data for Husky Aberfeldy HZ 1D14-21-1C15-20-049-26W3

Well 91/15-20-049-26W3/0 Formation General Petroleum Net Thickness 4-5 m Porosity 27% Sw 25% OOIP (64.74 Ha – Drainage Unit))

590,000 m3

Initial Reservoir Pressure 3,500 kPa – average for area

Table 2 - Fluid Data for Husky Aberfeldy HZ 1D14-21-1C15-20-049-26W3

Well 91/15-20-049-26W3/0 Formation General Petroleum Density @ 15 °C 974.7 kg/m3 Density - API 13.5° API Viscosity @ 20 °C 5,930 cP Viscosity @ 50 °C 485 cP

2.2 Well Production History The well 91/15-20-049-26W3 was rig released on December 20, 2000. It was completed in the G.P. formation with a slotted liner and began production in January 2001. The well produced 6,671 m3 oil and 2,547 m3 water prior to being shut-in due to low inflow in July 2004. A chemical soak and clean-out were performed in November/December 2007 and the well was placed back on production. Cumulative production is 14,116 m3 oil and 7,782 m3 water from the General Petroleum to the end of 2013. A plot of the primary production rates for the well is included in Figure 2 below.

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Figure 2 - Aberfeldy 91/15-20 Primary Production Profile

2.3 Wellbore Design One of the key goals for HOWHOT process is to utilize existing wells in a safe manner. To that end further modelling was conducted into using heat in standard horizontal wells. The grade of production casing of 91/15-20-049-26W3 is J-55. From previous work in a standard Lloydminster horizontal well the temperature limit for casing with H40 pin with J-55 coupling is 53°C. Additional measures were taken to protect the wellbore. The wellbore design included temperature sensors along the entire horizontal length of the wellbore. These sensors were used to ensure that the production casing does not see temperatures above 50°C. A wellbore diagram is shown in Figure 3.

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Figure 3 - Aberfeldy 91/15-20 Well Schematic (Current)

2.4 Surface Facilities Surface facilities consisted of insulated atmospheric crude oil storage, circulation tanks, line heater, variable speed circulation and production pumps, vacuum pump, metering devices, control instrumentation and safety equipment. The circulation pump initially circulated heated formation oil at a low rate to establish circulation and then increased in increments. The circulation temperature of the injected crude oil was kept below 250°C. There were no changes to the reservoir pressure as the oil was only circulated within the wellbore.

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The gas fired heater was designed to heat the crude oil over the designed range of flow rates. Gas from the well or propane supplied from a portable tank provided fuel. The heat transfer medium that was used in the bath is called Petro-therm. Petro-therm is a type of heat transfer oil (petroleum based) manufactured by Petro-Canada and distributed by Quadra Chemicals Ltd. A small vacuum pump was installed to maintain to maintain a vacuum on the annular insulation space of the circulation string. This maintains a vacuum on circulation tubing insulation and is intended to improve the thermal efficiency of the insulation during circulation operations. Crude oil storage consisted of an insulated tank. Accumulations of crude oil in the storage tank over the base volume required for circulation was transported by truck for further treatment. A photo of the facilities in the field is shown in Figure 4.

Figure 4 - HOWHOT Surface Facilities (Site Photo)

3. Field Test Results

3.1 Operating Parameters for the Pilot The maximum circulation rate for this pilot is expected to be 50 m3/d. This varied over time as it was a lower rate at start-up and depended on operating conditions. The oil was heated to a maximum temperature of 250°C at surface. Offset wells were not affected by this project. Although no specific observation wells were used for this project, offsetting production was monitored for increases in production rate and/or increases in casing pressure to determine if the hot oil circulation has affected other wells. This well was not tied into a natural gas system. The initial costs were high as this is a trial of a new technology, future applications of the HOWHOT technology are expected to have a reduced cost.

3.2 Start-up Attempts Construction of the HOWHOT facility was completed in October 2013. The heater was commissioned in December 2013. Several issues were encountered during start-up. Fuel source was not adequate therefore two more propane tanks and vaporizer were added on the

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site. Also more heating was required in the pump building otherwise the system would be knocked down due to low temperature. Circulation began in January 22, 2014 with rate being ramped up in increments. The line heater had to be drained during the initial heating cycle due to expanding Petro-therm fluid. The line heater end flange warped and was found to be leaking a few days after the initial start-up. A line heater gasket failure occurred when downhole temperature had reached to 85°C on February 2014. Repairs were attempted on site and the incident was caused by a welding failure. All the equipment was pulled and retuned to vendor for repair. The defective flange was replaced by the original equipment manufacturer in March 2014. Heat medium spilled out of the expansion tank through the thief hatch onto the lease in April 2014. Heater design and start-up procedures were reviewed and revised. In May 2014, heat medium (Petro-therm) spilled out of the expansion tank through the thief hatch onto the lease again. Operators noticed boiling/bubbling noises coming from the line heater before the incident occurred. The heater medium vendor advised of possible contamination due to oxidation of the product at operating temperatures in excess of 60°C, which could alter the performance of the heat medium fluid. Therefore a nitrogen gas blanket was used to eliminate the oxidation. Additional quantities of Petro-therm were ordered for attempting the start-up. A deficiency was identified that the expansion tank volume was inadequate for the service. The expansion tank was modified in August 2014 and re-installed in September 2014. Operations successfully started up the heater with the new expansion tank (the bath temperature reached 230 °C). A flex hose located at the wellhead failed in October 2014. Petro-therm boiled over again on November 6, 2014 when temperature reached to 190°C, facility was shut-down and lease was cleaned up. The old burner was replaced with a newer, lower and more evenly distributed burner and additional piping and tankage were installed to contain any future spillage. There were three start-up attempts in April 2015 and all failed due to either blockage in coil string or boil-over of the petro-therm fluid. Fluid analysis indicated water content in the petro-therm sealed container. Therefore a new start-up procedure was prepared in order to eliminate the existence of water in the heater. Restart of heater was accomplished on May 21/22, 2015 with no boil-off/spill-over. Downhole circulation was started on May 28, 2015. Initial heel temperature was 23°C and increased to 25°C within 8 hours at a flow rate of 15 m3/day. Performance of the facility has been generally steady with less downtime since May 2015. The line heater operated in a safe and consistent manner. Performance of the equipment setup was reviewed in detail. Also data was collected daily at each operating point to aid the performance evaluation of the entire facility.

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3.3 Production Profile The operational objectives are to achieve increased production if a sufficient temperature is maintained at the wellbore and also to minimize the heat losses between the heat source above ground and the downhole production zone. Injection volume, production volume, temperature profile, heat amount delivered, and ambient temperature data are acquired on a daily basis. Production volume was less than injection volume due to operational issues and repairs in certain months. After the start-up attempts and the fluctuation, production stabilized in August 2015. The maximum injection rate achieved was 25 m3/d with the maximum production rate of 33 m3/d in December 2015. From December 2013 to January 2016, the well has produced 771 m3 oil and 326 m3 water. The production profile of HOWHOT operations is shown at Figure 5. The heel temperature and toe temperature plots are shown at Figures 6 and 7.

Figure 5 - Production Profile over HOWHOT Operations

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Figure 6 - 91/15-20 Heel Temperature Profile

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Figure 7 - 91/15-20 Toe Temperature Profile

3.4 Operational Challenges (1) The main issue with not being able to increase the flow rate is pump rod float, which is occurring due to high oil viscosity. The problem may still plague the process unless the temperature can be increased successfully. (2) The burner approached its maximum output. In order to get more heat down the wellbore at the expected design rate of 50 m3/day, the size of the existing heater might be increased and the cost/benefit scenario needs to be analyzed. (3) The heat transfer fluid should be sampled periodically from the line heater and sent to a third party laboratory to search for thermal degradation or oxidation products in addition to general specification. (4) Production and temperature profile were significantly affected by ambient temperature during winter. Adequate insulation needs to be installed for all existing facilities in order to minimize the heat loss between the heat source above ground and the downhole production zone. A comprehensive review will be initiated to look into the existing design and to supply details for options of the approach, approximated costs and the risks of meeting the design capacity.

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4. Cost Capital expenditures and operating expenditures incurred for the project are summarized in Table 3 below.

Table 3 - Cost Summary

Category Cost ($) Initial Budget ($) Capital Equipment 1,508,491.27

3,453,500.00

Engineering/Travel 1,328,098.20 Materials & Supplies 206,253.27 Subcontracting 1,210,202.05 Truck/Freight/Courier 42,968.21

Sub-Total 4,296,013.00 Op-Cost (Jan 2014 to Jan 2016) 515,041.55 600,000.00

Total 4,811,054.55 4,053,500.00 Total royalty credits approved 1,216,050.00 1,216,050.00

Total royalty credit to claim 1,216,050.00 Notes:

1. Actual expenses incurred as proposed budget in the application. 2. The well relating to this pilot has already been drilled and drilling costs are not included

in this budget. 3. Changes of Project expenses from item to item will be accepted as per the Project

Agreement. 4. Samples of included expenses in different categories are given below:

4.1 Capital Equipment: Burner/line heater Subsurface pumps Surface pump and jack Tanks Well head equipment Non-office buildings

4.2 Engineering/Travel: Costs for preparing wells for injection (pump installation, etc.) Workover material and supply, and labour Labour cost of engineering design and drafting Travel

4.3 Material and Supplies: Electrical material and supply Chemicals Computer hardware Pipes, valves, regulators, brackets, etc.

4.4 Subcontracting: Electrical Remote monitoring and controls (SCADA) Pipeline construction and installation Inspection

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Surveying Site preparation

4.5 Truck/Freight/Courier: Transportation and off-loading of equipment and heavy materials like; line heater,

tanks, pipe, etc.

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5. Concluding Comments The intent of the project was to demonstrate that the HOWHOT project could recover sufficient incremental oil to be viewed as an economically viable EOR technique. Despite achieving the goal of producing oil of 771 m3, it was not sufficient volumes to proclaim the process economically viable at this time. A range of operational challenges delayed us from achieving the design circulation rate of 50 m3/day. The main issue with not being able to increase the flow rate is pump rod float. The size of the existing heater needs to be increased to get more heat down the wellbore. In the meantime heating efficiency was significantly affected by the ambient temperature during winter season. Various operation scenarios were tested and analyzed, particularly increases in injection rate and injection temperature. Due to having a controlled situation to determine production response, only one parameter was changed at a time. Those learning practices also took us longer time to get the process optimized. Running the pilot by propane had a negative impact on operating expenses. The average monthly propane cost was about $18,000 with the consumption being higher in winter months. Studies indicated propane costs 257% as much as natural gas for the same amount of heat output. Therefore the fuel cost is expected to decrease if the pilot/future project site would be run by natural gas. Operating expenses were significantly higher under the current set up and the pilot of one individual well was not economic with the realized oil price. The average realized heavy oil price was $35.89/bbl of year 2015. The operating cost of the pilot was averaged at $167.86/bbl of year 2015. In the meantime, additional spending was needed to implement design changes, safety and environmental requirements including extra piping insulations, replacement of heat medium fluid, heater expansion tank enlargement, etc. Such expenditures had compounded the challenges for improving (lowering) operating expenses. Husky Oil believes there may be potential in developing this technology. Continued innovation and refinement of the HOWHOT technology will be needed to take this to commerciality. We hope that the Government of Saskatchewan shares a similar opinion and will continue to lend support that has got this project to where it is today.

saskatchewan petroleum research incentive project: 7405-34 ......jul 12, 2016 · production casing...

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