U.S. Department of EnergyNational Energy Technology Laboratory

William (Bill) F. LawsonNational Petroleum Technology Office

DOE Projects and Programs That Can Help Independents in Alaska

February 26, 2003

DOE Goal

Assist Communities, Producers, State and Federal Government by providing Sound Science for Regulation and Development of Alaska’s Resources

Build Consensus DOE Office of Fossil Energy has a long history of petroleum

exploration and production research in Alaska, and has several ongoing projects in the state.

NETL Funding

$48 million of projects in place in Alaska DOE Fossil Energy Oil and Gas Funds DOE Energy Efficiency and Renewable Energy Funds University of Alaska, Fairbanks

NETL Current Petroleum Projects

Five Current RD&D Projects - 3 upstream and 2 downstream Alaska Oil & Gas Exploration: Development and Permitting Project Development and Demonstration of Mobile Small Footprint Exploration and

Development Well System for the Arctic Unconventional Gas Resources Northeast National Petroleum Reserve-Alaska Reconnaissance Level Airborne

Contaminants Study PetroStar Conversion Extraction Desulfurization Process PetroStar Biocatalyst Desulfurization

DOE Arctic Energy Office in Alaska Best Practices Workshops

Alaskan Workshop Series – DOE as facilitator to help technology transfer and generate consensus among groups developing Alaska’s energy resources

Projects Outside Alaska with impact on Alaskan Independents Drilling technologies Environmental cleanup and waste management

Alaska Oil & Gas Exploration: Development and Permitting Project – by State of Alaska

Objective - eliminate three closely inter-related barriers to oil production in Alaska Identification of oil potential form existing wells Plan projects efficiently to avoid conflicts Gain state approvals for exploration and development

Use Geographic Information system (GIS) Combine oil exploration, development and

permitting for an integrated information technology infrastructure for Alaska

Develop web-based, on-line system for public review of data and permitting

On-Line Oil and Gas Development and Permitting

Alaska Resources – one quarter of US crude oil - five billion barrels of proven reserves

Overcome barriers to efficient oil and gas development Currently multiple, independent Alaska agencies Develop Diagnostic Coastal Project Questionaire

To determine suite of permits required Develop document templates for reviews and public

notices Use geography (GIS system) as the organizing principal to

bring shared interests together logically Integrate multiple agencies into one permitting system

Establish easier and faster application process Improve efficiency of review process Improve security of government information systems Provide a means to handle permit fee payments

electronically

Development and Demonstration of Mobile Small Footprint Exploration and Development Well System

for the Arctic Unconventional Gas Resources by NANA Development Corp.

Provide an economic, local alternative fuel source for remote Arctic villages and industrial complexes

3-in slimhole drill rig designed to explore and produce unconventional gas

Performers NANA Development Corporation Teck Cominco, Red Dog Mine Advanced Resources International

NANA Slimhole Drilling

1st slimhole (3 in) wells drilled in remote Arctic locations Planned development of unconventional gas resource Develop natural gas sites near where it will be used Replace diesel fuel for engines and electric power generation Significantly reduce emissions Reduce fuel cost Provide a lower cost, efficient fuel source to Native villages and

mining facilities Promoted technology transfer to Native American tribal groups Design drilling program for unconventional gas

Mobile slimhole rig and equipment Transportation via helicopter to avoid building roads over the tundra Reduced volume of drilling muds Reduced volume of cement for casing Developed biodegradable antifreeze to maintain openhole in permafrost Reduced volume of produced water Significant cost savings compared to conventional oil rig Feasible degasification of existing engines and turbines

Mobile Slimhole Rig and Tool

Research and Monitoring Team

Northeast National Petroleum Reserve –Alaska Integrated Activity Plan/Environmental Impact Statement

Plan establishes procedures and advisory bodies to address subsistence and research concerns.

Representatives from Federal, State, and North Slope Borough agencies, the oil industry, environmental groups, academia and other interested parties will be invited to participate on the research and monitoring team.

Team will coordinate research and monitoring projects in NE-NPR-Alaska

Northeast National Petroleum Reserve - Alaska Reconnaissance Level Airborne Contaminants Study

by Bureau of Land Management

Funded by the DOE and operated under the Research and Monitoring Team

Air contaminant baseline study in Northeast NPR – 4, Alaska Study effects if airborne contaminants of watersheds Expand the number of index sites in Northeast Alaska

Determine the air contaminants as they currently exist and to provide a baseline to determine the fate and effect of future oilfield activities

Provide environmental quality baseline for the indigenous people of the Alaskan Arctic

Petro Star Refinery

Conversion Extraction Desulfurization Process and the Biocatalyst Desulfurization Project

by Petro Star Inc. 6 industry partners - fuels, processing and environmental Aimed at meeting EPA requirements on sulfur content in

fuel Reduce sulfur as an air pollutant Reduce sulfur in tailpipe emissions, associated with nitrogen

oxides, carbon monoxide and particulate matter Two strategies for desulfurization

Chemical Extraction - Conversion Chemical Desulfurization Process can be affordable for medium and small refineries

that produce low-sulfur diesel Biocatalyst Desulfurization

Biologically removes sulfur from diesel fuel using log temperature and low pressure processing

Applicable to other small refiners who cannot afford current, high-pressure hydrotreater and hydrogen plant hydrodesulfurization process

Methane Hydrate Researchby Maurer Technology & Anadarko Petroleum

Objective: evaluate subsurface hydrate occurrence and production potential.

Hydrates resource in Arctic is estimated at 11,000 to 24,000 Tcf

Develop specialized drilling platform Determine best practices for safe and economic

drilling and production of methane hydrates in the Alaskan permafrost

Chilled drilling fluids to insure core recovery using hard rock mining rig in Kuparuk oil field.

3 year, $10 million cost-shared with Anadarko Petroleum Corp, and DOE

Arctic Drilling/Production Platform(Maurer/Anadarko)

Good for environment (reduced footprint)

Good for industry (year round drilling)

1/2 scale platform designed & built

Moved to AK in late December 2002

DOE Arctic Energy Office in Fairbanks

In FY 2001, DOE/NETL opened the Arctic Energy Office in Fairbanks, Alaska as a joint project of the Offices of Fossil Energy and EERE

Objectives Create an in-state resource for

the expansion and coordination of arctic-related RD&D in energy technology that will capitalize on the unique knowledge and experience of the people who live and work in the arctic.

Sponsor collaborative R&D by Alaska industry and the University of Alaska Fairbanks to address the E&P barriers to continued development of Alaska's energy resources.

Alaska Energy Office

This new office is located on the campus of the University of Alaska Fairbanks and has entered into a five-year cooperative agreement with the University to develop an in-state resource for expansion and coordination of arctic related RD&D in energy technology in two primary categories: Fossil Energy - Promote research, development and

deployment of oil recovery, gas-to-liquids and natural gas production and transportation.

Remote Power - Promote research, development and deployment of electric power in arctic climates, including fossil, wind, geothermal, fuel cells, and small hydroelectric facilities. Regarding the first part of its mission, the Office of Fossil Energy has a long history of petroleum exploration and production research in Alaska, and has several ongoing projects in the state. While the Arctic Energy Office has limited responsibilities concerning the established projects in the state, this new office is working closely with the established Oil and Gas programs to identify new opportunities for research.

Coal Bed Methane Studies – Lessons from other States

Best Practices Guidebook for Coalbed Methane – ALL Consulting Effective low-cost methodologies Selection of technology matched to specific local soil,

water, climate, land and environmental conditions Ground water monitoring and water quality

protection -BLM

Coalbed Methane Potential in Alaska

Projects Outside Alaska that can be Beneficial to Alaskan Independents

Design and Development of Gas Liquid Cylindrical Cyclone Compact Separators for Three Phase Flow; Performer - University of Tulsa

Improved Oilfield Waste Injection Techniques; Performer – Terralog Technologies

Advanced Cuttings Transport Study; Performer – University of Tulsa

Simultaneous Injection Pilot Project: Phase I – Feasibility Study; Performer - Argonne National Laboratory

Gas Liquid Cylindrical Cyclone (GLCC)Objective: Develop and improve a three-phase gas-

liquid cylindrical cyclone (GLCC) separator

Participants: University of Tulsa, plus 15 industry JIP

membersSuccesses: Reduced footprint and 3 fold cost

savings over conventional separators Field application demonstrated a

savings of $3.2 million over conventional separators

Offshore non-producing oil well brought back to life at 1000 Bbls/day

Next Milestone Event: Initiate HP facility & complete 3-phase

simulator design

Improved Oilfield Waste Injection Techniques by Terralog Technologies

Waste injection projects in Alaska, California, Louisiana and Canada

Develop a cost-effective waste injection technique Containment of waste in target interval Sequence of sands and shales, better than a single shale Slurry mix of 10-40% by volume solids Screening method eliminates larger material and handles it

separately Reduces cost of producing slurry, because the process does

not grind unnecessary material Develop software for prediction and control of fracture

propagation in soft formations Visualization of changes in fractures by injection invasion New integrated rock mechanics and fluid flow models Monitor injection rate daily to maintain episodic high rate

injection

Improved Oilfield Waste Injection Techniques by Terralog Technologies

Mixing & Pumping Equipment

Injection Well

Improved Oilfield Waste Injection Techniques

Advanced Well Cuttingsby University of Tulsa

Joint Industry Study Develop advanced cuttings transport and drilling

fluid test facility Design low-pressure, high-temperature flow loop Develop flow tests for single, two-phase and

three-phase flow (water, air and cuttings)