Comments: Unconventional Growth
Authors: Donnelly John 
Published: February 2015

This year's SPE Annual Technical Conference and Exhibition (ATCE) in San Antonio features panel discussions on several critical issues facing the industry, including the classification of reserves, the development of young professionals, and the increasing importance of heavy oil in the global production equation. Plenary and panel sessions at ATCE offer a good temperature check of the industry. Five years ago, "e-business" was a hot topic, and 10 years ago, industry consolidation and emerging gas technology drew interest.
The Opening General Session at this year's ATCE—titled "Heavy Oil: From Rock Face to Fuel Pumps"—will feature a panel of experts discussing the challenges that heavy and ultra heavy oil present as well as comments on related technology development and R&D efforts. With global demand rising steadily, conventional reservoirs overtaxed, and oil prices buoyant, heavy oil, as Marathon President and Chief Executive Officer Clarence P. Cazalot points out, has grown from a marginal production play a few years ago to one of increasing importance (see page 24).
The conventional wisdom sees heavy oil accounting for a growing share of glob-al production. In a report issued last month, Cambridge Energy Research Assocs. contends that world oil production capacity could increase by as much as 25% over the next decade with unconventional supplies such as heavy oil, oil sands, and gas liquids accounting for a major portion of the increase. With high oil prices making development of once-marginal resources more economic, unconventional liquids could go from 25% of the world's oil supply today to almost 40% by 2015, the report said. Extra heavy production capacity is predicted to more than double from 1.9 million BOPD this year to 4.7 million BOPD in 2015.
Growth in unconventional supplies from Canada, primarily from oil sands, is booming. Total Canadian oil production is projected to increase from the current 2.5 million BOPD to 4.6 million BOPD in 2015 and to 4.9 million BOPD by 2020, according to the Canadian Assn. of Petroleum Producers. Oil sands output, now at more than 1 million BOPD, is forecast to rise to 3.5 million BOPD by 2015 and to 4 million BOPD by 2020, making up more than 80% of total Canadian production. That growth, along with the shift from conventional oil production to oil sands and synthetic crude, will have a major impact not only on pipeline capacity but also on refinery configurations. An article beginning on page 58 of this month's issue catalogs that heavy oil and oil sands growth and describes some of the accompanying technical challenges involved.
Canada's bright production outlook has led to a series of acquisitions by major companies as well as an increase in R&D in the region. Canadian Natural Resources, Husky Energy, and Nexen are funding a 3-year, U.S. $9.6 million project at the Petroleum Technology Research Center in Regina, Canada, to research vapor heavy oil extraction, which uses solvent gases such as butane or propane to reduce heavy oil's viscosity. And last month, Sonic Environmental Solutions created a subsidiary to focus on the application of sonic-generator technology there. Chevron recently scooped up several heavy oil leases in the Athabasca region of northern Alberta with an estimated 7.5 billion bbl of oil in place. Shell has been particularly active. It paid U.S. $400 million earlier this year for oil sands properties in northern Alberta, and in July, it acquired BlackRock Ventures Inc. of Calgary through a subsidiary. Last month, it began working with its joint-venture partners to expand its Athabasca Oil Sands project to increase output there to 550,000 BOPD.