Chapter 1(Overview)

8/11/2019 Chapter 1(Overview)

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Website:

www.petrol.unsw.edu.au

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INTRODUCTIONTO THE

PETROLEUM INDUSTRYCourse PTRL 1010 and CoursePTRL 5107

Presenters: Leigh Brooks

Course objectives- to learn the fundamentals of the oil and gas industry- in that process, obtain a proper perspective of the industry

and its place in society1


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Where does petroleum come from?

By common usage, includes both oil and gas Oil and gas is formed by the thermal alteration (heating) of organic

matter (remains of living things, chiefly plants) buried withsediments ie source rocks - in sedimentary basins. Some gas(methane) is also formed by bacteria at low temperatures

Conventional oil and gas is produced from porous and permeable

sediments/rock (reservoirs)where it has been trapped. The increasingly important unconventional Shale oil and gasis

produced from artificially fractured tight shales/siltstones/limestones(the source rocks themselves).

Large quantities of mainly methane are also present in coal seamsand can be produced by CSG(Coal seam Gas) developments

Details of how this happens and how it is trapped and then foundand produced are covered in the following lectures.


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Present day sedimentary basin example - NileDelta Basin. Prolific offshore gas province


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Nile Delta Basin. Prolific gas province


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Course outline

The role of Oil and Gas as our main source of energy The geology of our planet, sedimentary basins

The origin of oil and gas; generation and migration

Oil and gas traps and resources

Petroleum reservoirs Exploring for oil and gas

Drilling for oil and gas

Oil and gas completion and production techniques

Reservoir drive mechanisms, estimating reserves Introduction to Shale Oil and Gas, Coal seam Gas (CSG)


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Approx 2 hr lectures plus 1 hr tutorial/discussion, as required


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Lecture and

learning materialavailable on

myUNSW site

-Login, access Moodle,select PTRL1010/5015-lecture recordings on

Echo


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Chapter1

The roleof Oil and Gas

as our Main Source of

Energy

Presenter: LeighBrooks

1


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A new languageexamples of some terms used inIndustrythere are some good websites such as www.glossary.oilfield.slb.com

API (American Petroleum Institute)Barrels (159 litres)mbopd (million barrels oil per day)boe(barrels of oil equivalent)

MMCFD (millions cu ft gas/day)LNG(Liquefied Natural Gas)rig (derrick)(drilling) mud

fishinggross sand thicknessnet sand thicknessnet pay

OPEC (Organisation of thePetroleum Exporting Countries)NGL (natural gas liquids)condensatecoring

wireline loggingwell testingwell completioncasing

production tubingworkoverchokeChristmas tree


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One barrel of crude oil makes

approximately

74 litres of finished motor petrol

35 litres of diesel fuel

15.5 litres of kerosene-type jet fuel

8.7 litres residual fuel oil

14 litres liquefied and still gas

7 litres coke

5 litres asphalt Otherlubricants, petrochemical

feedstock (plastics etc)

(1 barrel = 42 US gallons/35Imperial gallons =159 litres)

Light oil

C


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Coresample of rock taken for analysis


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Wireline logging

operation

2


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Principles of Drillstem Testing: (a) Running in Hole(b) Setting Packer (c) Opening Flow Valve (d) Fluids to Surface

3


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Why is petroleum so important?

It is a ready supply of hydrocarbons which provide a concentratedand portable form of energy Main use of oil is for transport fuels and relatively minor

petrochemicals and power generation

Main use of gas is for power/electricity plus petrochemicalfeedstock

Hydrocarbons (mainly gas) used in the petrochemical industry tomake many things we use every dayplastics, textiles, buildingmaterials, fertilisers, explosives, pesticides, waxes etc

Supply influences national economies, so has great strategicvalue

Current reserves and supply is not spread evenly throughout the

worldthey are dominated by the Middle East


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Note 1 tonne ~ 7.3b

Global Trends: World energyusage Almost all

consumptiongrowth nonOEDC

Energyconsumptionto grow1.5%pa

Renewablesgrowing fasterbut stillrelatively smacontributor

(OECD isessentially the

developedwesterncountries ofEurope andNth Americaplus Japan,Korea, and afew others)

P i d d di t d t l b 2030


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Primary energy demand predicted to slow by ~2030as industrialisation and electrification of mainlyChina and India is substantially accomplished


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Strong growthin power generation continuesenergy use in transport grows much less and is mainly oil


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Prices affectchanges in thefuel mix

A desire to limitincreases in CO2emissionsfavours gas, ascombined cyclegas plants emit


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Total energy demand growth is matched by supply

High prices andnew technologiessupport expansionof supply

- conventional

- unconventional

- renewables

E ffi i i t ill h l


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Energy efficiency improvements will helpsustain projected economic growthwithout it wewould need to double energy supply in the next 20 years

Liquids (oil + NGL):


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Liquids (oil NGL):

demandgrowthdriven by non OECD transportlarge increasein vehicle numbers

Petrol, jetfuel, etc

Diesel,

heating

fuel etc

(Million b/d)

Liquids demand growth is matched by supply


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Note large recentdiscoveries inunderexplored Iraq

Liquids demand growth is matched by supply

OPEC

Ti h il ( Sh l il) i i


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Tight oil (or Shale oil) is an important new sourcemostly US to date

Ann report 2014

Liquids supply dominated by conventional, OPEC oil. Supply


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% global supply

Liquidssupply dominated by conventional, OPEC oil. Supplymeets/exceeds demandTight oil (from shale) is considered to be capable of supplying half ofthe global supply growthto 2030i f pr ices remain high , large

investment is mainta ined and OPEC mainta ins swing producerrole

Gl b l G C ti l ill till l h f th


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Global Gas: Conventional gas will still supply much of thegrowth (concentrated in non OECD) despite the growingimportance of Unconventional shale gas

10 Bcu m/d

LNG exports growing


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% global consumption

LNG exports growing


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Long term trends: falling oil, increasing gas share of

energy, increasing reserves (mainly OPEC)

1.6 Tbo Reserves ~ 44 yrs atcurrentproduction/consumption

200 Tcu m Reserve

~55 yrs at currentproduction/consumption

Gas: Unconventional gas is increasingly important


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Gas: Unconventional gas is increasingly important- a game changer in USA- significant growth in shale gas predicted in China

Gas: Evolution and success of shale gas in the US has changed its


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US becomes self sufficient in gas

Gas: Evolution and success of shale gas in the US has changed itsenergy outlook and has improved the competitiveness of industry

The effect of Shale Gas and Tight Oil/Shale Oil on the USA
http://e/EIA/What%20is%20shale%20gas%20and%20why%20is%20it%20important%20_files/nat_gas_production_1990-2040-(large).jpghttp://e/EIA/What%20is%20shale%20gas%20and%20why%20is%20it%20important%20_files/nat_gas_production_1990-2040-(large).jpghttp://e/EIA/What%20is%20shale%20gas%20and%20why%20is%20it%20important%20_files/nat_gas_production_1990-2040-(large).jpg


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Gas: Increasing unconventional mostly shale gas production


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Gas: Increasing unconventional, mostly shale gas productionhas reduced prices and shows how energy markets adapt

US pushing for massive

investment in Natural Gas

Vehicles and infrastructure

(cheaper, less emissions).

Iran, Pakistan, Argentina,

Brazil, China, India already

large users


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These are resourcesnot currently proven to be economic!-The definition of Reserves are those which can be economically extracted and which have an approved

development plan- Recoverable unconventional include shale gas and tight gas and CSG


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Another estimate of resources:

BP quote estimated technically recoverable resourcesof 240

billion barrels of tight oil ie Shale Oil(~ 8 years current globalconsumption) and 200 trillion cu m (Tcm) of shale gas(54 yearscurrent consumption) and equal to current proven conventionalreserves.

Asia has an estimated 50 bill b of tight oil and 57 Tcm of shalegas, while Nth America is estimated to have 70 Bb tight oil and 47Tcm shale gas (BP)


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The importance of non-conventional oil and gas reserves for our future


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CGG 2014

Peak oil and gas??


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Refers to production.Many individual producing areas are in production decline.

OOIP and GIP are fixed but reserves are elastic, depending on price,technology ....New concepts/plays may emerge eg shale gas and oil

Note that prodn since 2006 has increased due to tight oil butit is high decline oil

Impact ofShale oil

Peak oil and gas??


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Note progressive deferral of peak gas production in the US due to new areas,new plays, new technologies. Likely to be replicated elsewhere globally

Charles Hall ASPO Aug 2012Note difference in estimated unconventional reserves to those suggested by BP, IEA resources and to EIA production estimates. Reflects early stage of knowledge andhow rapidly the shale gas resource play is evolving

(13.5 tcm)

EIA estimateof total

production

Wh d t l th il? N ti l Oil


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Who owns and controls the oil?National OilCompanies (NOCs)

S ?


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Supply: who produces the oil? - ~60% controlled by NOCs

International

Oil Companies

Tax regimes applying to explorers and


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Tax regimes applying to explorers andproducers

- Quite variable: Determines where exploration and development $ are spentand how acreage is obtained

Range of government take


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Range of government takegenerally proportional to geologic and sovereign risk

Types of hydrocarbon resources


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Natural gas (conventional or tight reservoir) Coal Seam gas (CSG) or Coal Bed Methane

(CBM)

Shale Gas

Conventional oil Heavy oil

Shale oil

18

yp y

high level intro

Conventionaloil and gasis reservoired in porous and permeable rocks such as these fluvio-


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is reservoired in porous and permeable rocks such as these fluviodeltaic sands. Extracted by conventional methods; flows naturallyor is pumped

Oil is reservoired in pore space


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Oil is reservoired in pore space

Pore space inthin section of

sanstone

Trapped in structures such as these


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pp

Brute stack: Pup

Commonly defined by seismic data like this


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3.0

1.0

2.0

y y

Drilled by rigs and produced through platforms like these


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y g p g p

North Rankin A


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18

$

$

$

$

$

$

$

$$

$$

Perth

Adelaide

Melbourne

Hobart

Sydney

Brisbane

Darwin

AMADEUS BA SIN

OFFICER B ASIN

CANNING

BASIN

PERTH BASIN

BASS STRAIT

MURRAY BASIN

SYDNEY

BASIN

CARPENTARIA

BASIN

BONAPARTE

BASIN

ARAFURA BA SIN

COOPER BASIN

EROMANGA BASIN

GEORGINA B ASIN

BOWEN

BASIN

SURAT

BASIN

CAPRICORN BASIN

DUNTROON BASIN

CARNARVON

BASIN

BROWSE

BASIN

$

$

$

$

$

$

$

$$

$$

ustr li s

Sedimentary asins

WA and NTConventional natural gas

Converted to LNG for export:

Offshore NWS fields, Gorgon,

Pluto, Wheatstone etc

QUEENSLANDCoal Seam Gas (CSG)

converted into LNG for export

LNG(conventional reservoirs), North West Shelf,


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LNG DEALS SIGNED UP TO JULY 2011

LNG DEALS SIGNED BY JULY 2011

Australia

Liquified Natural Gas (LNG)


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Gas is portable to remote locations. It can be

liquified, transported and re-gasified at market

Upwards of 90% Methane

Natural gas has to be cooled to160Cto convert to LNG

Will stay at low temperature if kept at constantpressure

LNG occupies 1/600th

of volume of natural gas Weight is less than of weight of water

Odourless, colourless, non-corrosive, non-toxic28

Export of LNG


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The latest LNG carriers have 80% more capacity than early vessels.

Q-Max carriers are longer than three football fields, tower twenty stories tall

from keel to masthead, and are equipped with the largest membranecontainment tanks ever built. With a total capacity of up to 266,000 cubic

meters, each ship carries enough natural gas to meet the energy needs of

70,000 homes for one year.

Adriatic offshore LNG regasification terminal


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Huge scale: regasifies 775 million cf/d, 10% of Italysrequirements

LNG from CSG, Queensland


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18

$

$

$

$

$

$

$

$$

$$

Perth

Adelaide

Melbourne

Hobart

Sydney

Brisbane

Darwin

AMADEUS BASIN

OFFICER BASIN

CANNING

BASIN

PERTH BASIN

BASS STRAIT

MURRAY BASIN

SYDNEY

BASIN

CARPENTARIA

BASIN

BONAPARTE

BASIN

ARAFURA BA SIN

COOPER BASIN

EROMANGA BASIN

GEORGINA BASIN

BOWEN

BASIN

SURAT

BASIN

CAPRICORN BASIN

DUNTROON BASIN

CARNARVON

BASIN

BROWSE

BASIN

$

$

$

$

$

$

$

$$

$$

ustr li s

Sedimentary asins

QUEENSLANDCoal Seam Gas (CSG)

converted into LNG for export

Qld LNG from 3 large CSG Projects under construction on CurtisIsland, Gladstone.


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Queensland Curtis Liquefied Natural Gas project (QCLNG)

Operator BG Group through subsidiary QGC. First LNG cargo expected in late 2013.

The plant will have an initial capacity of 8.5 Mtpa with the potential to increaseproduction to 12 Mtpa. Gas is piped from QGC's CSG fields around Miles in the SuratBasin by a 540 km pipeline linking the fields to Gladstone.

Gladstone Liquefied Natural Gas (GLNG)

Santos Ltd,Petronas, Total and KOGAS joint venture. First LNG cargo expected in2014. The plant will have an initial capacity of 3.9 Mtpa with the potential to increaseproduction to 10 Mtpa.Gas is piped from Santos's gas fields in the Bowen and Surat basins by a 420 km gaspipeline linking the fields to Gladstone.

APLNG (Australia Pacific LNG project)

A joint venture between Origin, ConocoPhillips and Sinopec. First LNG cargo

scheduled for 2015. The plant will have an initial capacity of 4.5 Mtpa with thepotential to increase production to 18 Mtpa.Gas is piped from APLNG's CSG fields through a 400 km pipeline linking the fields toGladstone.


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CSG

Coal core : many coalsare brittle, fractured andpermeable at depths

< approx.1000m andcontain large amounts ofadsorbed gas

Change from peat to coal. Becomes more brittle, permeable

d h hi h t t


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and has higher gas content

CSG collects in underground coal seams bybonding to the surface of coal particles. The coalseams are generally filled with water and it is the


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seams are generally filled with water and it is thepressure of the water that keeps the gas as a thinfilm on the surface of the coal (adsorption).Thecoal seams generally contain more brackish(slightly salty) groundwater than aquifers that areusually used for agriculture.

This water needs to be produced (ie dewater thecoal) to lower the pressure within the coal seamand allow the gas to flow freely

The amount of gas that can be produced from acoal bed depends on the thickness of the coal, gascontent, permeability and the depth of the coalseam. In high quality CSG deposits the cleats orfractures in the coal bed are permeable enough to

allow gas and water to flow freely through them.

Coal seams that can produce CSG economicallyare usually 200 to 1,000 metres below the surface.

In some areas where the coals have low permeability (i.e. gas does not flow freelythrough natural fractures or pathways in the coals towards the well), fraccing isnecessary to enable a more effective flow of gas


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necessary to enable a more effective flow of gas.Fraccing can convert a non productive well into a productive one and can increasethe drainage area of each well. This means that fewer wells need to be drilled in orderto produce the same amount of gas.Most of the initial CSG production is in high permeability sweet spots (or high flowareas) where fraccing is not generally required. However, over time lower permeabilityareas where fraccing will be necessary will be produced. The APLNG project estimatethat over the life of our project they expect to fracc approximately 30% to 40% ofwells.

Drilling for CSG both vertical and horizontal wells are used.Both unstimulated and fracced
http://www.aplng.com.au/images/FraccingFluids_Chart.jpg


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Both unstimulated and fracced

What is Carbon Capture and Storage (CCS)?


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CCS is a method for reducing CO2emissions

to the atmosphere by capturing CO2from its source(eg coal fired power plant), transporting it to anunderground storage site (injecting it) and storing it

there securely and permanently.

Shale gas and oil


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Sediments with particles size of

Shale gas and oil


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33% clays fallunder the generic term Shale

Shales contain clay minerals, fine-size quartz and feldspars, plusorganic material

The permeability of the shales isextremely low and generallyreported in nanoDarcy (1nd= 10E-

09 Darcy)

Effective shales must have high

organic content and be

thermally mature

The shale requires extensive

fractures (both natural andinduced), which requires the rockto be brittle, to producecommercial quantities of gas


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US shale basins


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Horizontal drilling and fracturingto extract tight gas from shale


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Fracturing fluid from www.fracfocus.org


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~ 10 sq km

Large scale frac spread 2011


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The risks - potential environmental concerns associated with the production of shalegas.


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Fracturing of wells requires large amounts of water. In some areas of the country,significant use of water for shale gas production may affect the availability of water for

other uses and can affect aquatic habitats.If mismanaged, hydraulic fracturing fluid which may contain potentially hazardouschemicals can be released by spills, leaks, faulty well construction, or otherexposure pathways. Any such releases can contaminate surrounding areas.Fracturing also produces large amounts of wastewater, which may contain dissolvedchemicals and other contaminants that could require treatment before disposal orreuse. Because of the quantities of water used and the complexities inherent in treatingsome of the wastewater components, treatment and disposal is an important andchallenging issue.Finally, according to the United States Geological Survey, hydraulic fracturing "causessmall earthquakes, but they are almost always too small to be a safety concern

These issues can be managed by appropriate practices but sometimes were not,

particularly in the early days of the Shale gas revolution. Community opposition tofraccing has forced improved practices: well design, recycling water, minimising ventingand flaring, increased transparency and increased regulation and is still concernedabout damage to aquifers.
http://earthquake.usgs.gov/learn/faq/?faqID=357http://earthquake.usgs.gov/learn/faq/?faqID=357


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At US gas prices of ~ $3.50 / Gj, shale gas wells are noteconomic. Liquids yields (oil and condensatea lighthydrocarbon liquid that condenses out of gas at the surface)


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Illustration of the relationship between gas break-even priceand liquid content of shale resource.

Sourc e: Internat io nal Energy Agenc y (2012)

y q g )drive the industry.

Note current prices ~$100/b

Heavy oil & bitumen- major resources inCanada and Venezuela
http://www.worldenergyoutlook.org/http://www.worldenergyoutlook.org/


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Athabasca tar sands

in Canada


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Heavy oil - Orinoco Heavy Oil Belt, Venezuela:

R t t t f th k l b l f


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Represent a vast amount of the known global reserves ofextra heavy crude oil.

Mixture of sand, water, clay and bitumen Degraded from original crude oil by bacteria and erosion.

Less degraded than Athabasca heavy oil and at highertemperatures (>50oC) thus are easier to extract byconventional means.

Bitumen difficult to transport. It is emulsified with water (70%bitumen+30% water) to allow it to flow in pipelines.

Oil Shale (notShale Oil)

Uncommercial attempts to mine and retort oil (at very hightemperatures) from organic rich immature shale ie to


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Stage 1 Mining Pit, Stuart Oil Shale Project , Qland

temperatures) from organic rich immatureshale ie toessentially replicate the maturation process that occurs deepwithin the earth

This process is unlikely to be economically viable in themedium term


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Non fossil fuels


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Solarincreasing efficiencies.- residential solar electricity nearly cost competetive


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Solar


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AN ARRAY OF MIRRORS TO FOCUS SUNLIGHT TO CREATE HEAT.

Europes first commercial solar thermal plant, outside Sevillle (Spain),produces electricity for 6,000 homes from 624 moveable mirrors focusingthe suns rays on the top of a 115m, 40 storey solar tower in which a solarreceiver and steam turbine are housed.

All the solar power being converted to electricity worldwide only represents0.02% of the worlds total energy supply (2010).

Hot Rock or Geothermal Energy


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Wind


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NUCLEAR ENERGY - FISSION


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Alternative Sources of Energy - hydrocarbons

Biofuels


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- Ethanol.

From maize (corn) or sugar. Clean burning, high octane. lowEnergy Return on Investment (EROI). Distorts food market

and Celluloid Ethanol. From agricultural waste

- Biodiesel.

Mostly from soyabeans, cottonseed oil, pig manure. 1 acre ofsoyabeans yields over 200 litres of clean-burning biodiesel fuel.

Requires less capital than production of ethanol

Liquid Petroleum Gas (LPG)propane and butane stripped

from natural gas

Gas to Liquids (GTL)

Some potential topics for discussion Lecture 1

Peak oil? If so when?


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Peak oil? If so, when?

What will the oil price do over the next 15 years

Fraccing

Environmental issues of CSG, Shale gas developments

Chapter 1(Overview)

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