EOR Global Markets, Challenges, and Opportunities

Atlanta, Aug 5, 2011

Song Cao Global Synergy Corporation

www.GlobalSynergyCorp.com

Presentation Topics

EOR Concept/Terminology Review EOR Global Markets EOR Challenges/Opportunities

Discussion

EOR Concept/Terminology Review

EOR (Enhanced Oil Recovery) Terminology IOR - Improved Oil Recovery Tertiary Oil Recovery CO2-EOR Thermal EOR Chemical EOR (CEOR) Microbial EOR (MEOR) Pre-EOR (Conformance Control)

EOR Concept/Terminology Review

IOR and EOR

EOR Concept/Terminology Review

Field-Proven Solution - Chemical EOR
Chemical 1: Surfactant (to increase microscopic displacement efficiency) Chemical 2: Polymer (to increase volumetric sweep efficiency)

EOR Concept/Terminology Review

EOR Concept/Terminology Review

EOR Concept/Terminology Review

EOR Concept/Terminology Review

Summary of Polymer Technologies
Polymer Flood (P)

Basic chemical flood. (Mobility Controller to increase volumetric sweep efficiency)

Surfactant-Polymer Flood (SP)

Advanced Polymer flood. (To increase volumetric sweep efficiency and microscopic displacement efficiency)
Alkali-Surfactant-Polymer Flood (ASP)

Advanced SP flood. (Using alkali as sacrifice agent to reduce surfactant usage)

EOR Review (Pre-EOR)

Common Problems with Mature Oilfields (1)
Injector

Producer

Need secondary recovery (waterflood) after primary methods been exhausted Left oilfields with high water cut, low production rate, and depleted reservoirs In general, it only can remove ~20-30% of the original oil in place after waterflood

EOR Review (Pre-EOR)

Common Problems with Mature Oilfields (2)

Homogeneous Reservoir

EOR Review (Pre-EOR)

Common Problems with Mature Oilfields (3)

Heterogeneous Reservoir

EOR Review (Pre-EOR)

Common Problems with Mature Oilfields (4)

Heterogeneous Reservoir

EOR Review (Pre-EOR)

Common Problems with Mature Oilfields (5)

Solution: Conformance Control (or Pre-EOR)

EOR Global Markets

Immense EOR Market Potential (1) Worldwide unrecoverable oil about 2,000 billion barrels. Much of it is recoverable by Chemical EOR. Society of Petroleum Engineers 2,000 billion barrels Market value at $50/bbl

$100 Trillion
SPE ST200601

EOR Global Markets

Immense EOR Market Potential (2) Original Oil in Place (U.S.): 649 Billion Barrels

170 Billion Barrels Already Abandoned

Target for EOR

NETL-DOE, 2005

EOR Global Markets

Major EOR Applications and New Markets

New Market

EOR Global Markets

World EOR Market Summary
North America (Good Potential) o USA: slowly picking up o Canada: picking up Asia (Great Potential) o China: very active (hot!!!) o Indonesia: slow but moving forward o India: pushing forward, but small market size Middle East (Great Potential) o Oman: very aggressive o Other countries: considering it New Markets with Great Potential: South America, Russia, Africa

EOR Global Markets - USA

USA EOR Market Summary
Chem-EOR started in US in early70s and reached peak in early 1986, then decreased tremendously, primarily due to the oil price collapse. Currently accounting only about 1% of total oil production! Miscible Gas EOR (CO2, HC, N2) leading EOR, accounting about 10% of US oil production Chem-EOR recently picking up due to high oil price Majors are fully equipped with know-how and $, but invest large capital in high return projects such as deepwater, shale gas, outside of US Many old oilfields are in waterflood with high water cut and most of them are operated by middle-small size companies (easy to work with!)

EOR Global Markets - USA

USA EOR Market Summary

EOR Global Markets - USA

USA EOR Market Summary

EOR Global Markets - USA

EOR Is Very Sensitive to Oil Price

EOR Global Markets - USA

Major States with Chem-EOR Projects

Texas Oklahoma Wyoming California Illinois Kentucky New Mexico

EOR Global Markets

China EOR Market Summary
National policy to squeeze out every possible barrel of oil Largest fields in decline: o 85% of Chinas oil production - onshore mature fields o Major oilfields are over 40 years old with high water cut as high as 85-95% on average Improved on US Technology: o Commercial polymer flooding started in 90s o 46% of CNPC new reserves added by polymer flooding o New EOR technologies being continuously invented

RESULT: Over 60% Recovery Rate Being Reached

China Leads the World in Chemical EOR

EOR Global Markets - China

Major EOR Projects In China
Huabei
Zhongyuan Liaohe Daqing

Xinjiang Dagang
Henan Shengli

EOR Global Markets - China

Chemical EOR will be the Dominant EOR Method for Future EOR Reserves in China
AP 2% Polymer 24% ASP 50%

Thermal 11%

Immiscible 5%

Miscible 8%

Total 2 billion tons (14 billion barrels) recoverable EOR reserves in China

EOR Global Markets - China

EOR in Daqing Oilfield
The largest oil-producing field in China with a total cumulative oil production of 2 billion tons (14 billion barrels), accounting about 40% of China total onshore oil production Peak annual production of 50 million tons (1 mmbopd) for 27 years and currently about 40 million tons per year (0.85 mmbopd) About 90% water cut in main oil-producing reservoirs. About 25% of the total oil production from the application of EOR (polymer flooding, SP and ASP flooding) 50-60% recovery percentage in major oil producing reservoirs The world largest EOR application

EOR Global Markets - China

Daqing Polymer Flooding Process Optimization

EOR Challenges and Opportunities

Major Challenges in Gas/Waterflood (Pre-EOR)

Poor Conformance
Poor areal sweep by injected fluid and early breakthrough at offset producers
Uneven vertical sweep due to channeling of injected fluid through thief zones or fractures
We have to recondition the reservoir before doing EOR

EOR Challenges and Opportunities

Favorable Characteristics for Polymer Flooding High remaining oil saturation (>25%)
High permeability (>10 md) and porosity (>15%) Light oil with viscosities less than 500 cp? Good results in sandstones over carbonates Reservoir is not highly fractured Short project life due to favorable combination of small well spacing and/or high injectivity Fresh water and/or soft water (Salinity) Reservoir temperatures less than 250 F What or could you do EOR if the above conditions are not there?

EOR Challenges and Opportunities

Polymer Technology Comparison
Aspect Polymer Flood SurfactantPolymer Flood AlkaliSurfactantPolymer Flood

EOR Efficiency Chemical Cost Operation Cost Scaling Problem Economics

EOR Challenges and Opportunities

ASP Challenges
Scale in the producing well can form due to the alkali mixing with produced water from different zones or from reaction by-products due to the alkali reacting with the reservoir rock.
Because alkali shrinks the size of the polyacyrlamide polymer in solution, a higher concentration of polymer is needed compared to that required for a solution with no alkali. Alkaline agents are a hazardous material and must be handled with care when mixing. More difficult to treat the produced water (or fluids)

Contact Information
Dr. Song Cao President Global Synergy Corporation 6161 Savoy Drive, Suite 1030 Houston, TX 77036 713.822.0661 cell phone 713.785.9588 office phone 713.785.9588 fax Email: songcao@globalsynergycorp.com