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BAUQUIS Pierre-René
Paris La Défense, France

1. Introduction

Most assessments of the world's sources of oil tend to consider only the so called << conventional >> resources and exclude, among others, the extra heavy oil and bitumen resources (10° API specific gravity). However these resources are increasingly becoming commercially producible, since the early 80's in the Athabasca province of Alberta, Canada and, more recently, in the Orinoco province of Venezuela.

The purpose of this paper is to review the present status of the Orinoco bitumen development, and to evaluate the future contribution to worldwide oil reserves offered by these << non conventional >> resources of extra heavy oil and bitumen.

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2. The Orinoco oil belt : an historical perspective of the resources

Located in eastern Venezuela, the Orinoco oil belt (or Faja del Orinoco) is one of the largest known accumulation of bitumen in the world, estimated to be around 1,200 Gb of hydrocarbons in place. This accumulation is not accounted for in traditional << oil reserves >> evaluations as its production was not deemed to be commercially profitable, until recently, due to its adverse characteristics :

- very high gravity (8 to 10 ° API)
- high sulphur content (average 3.5 %)
- high metal contents (Vanadium, Nickel)
- deemed high production costs  

A first phase of evaluation of the physical resources in place occurred between 1936 and 1958 when around sixty exploration wells were drilled in these deposits (by Exxon, Shell, Socony, and others).

A second phase, from 1965 to the early seventies, saw the first systematic evaluation of these resources by the Venezuelan Ministry of Mines, which concluded in 1967 that the belt contained 693 Gb.

Finally during the 1978 - 1983 five year plan the national oil company PDVSA was given the responsibility for all works related to the Orinoco belt. Due to the size of the area (around 55,000 km2) and to the past involvement in different areas of the belt of the international oil companies, PDVSA divided the area in four << operating zones >> (see Figure N° 1) : Cerro Negro (to Lagoven), Hamaca (to Meneven), Zuata (to Maraven) and Machete (to Corpoven).

The resulting re-estimation of the hydrocarbons in place between 1979 and 1983 arrived at a new figure of 1,182 Gb, nearly double the 1967 estimate of 693 Gb. For purposes of this paper, in the observance of more recent estimates, the latter figure rounded to 1,200 Gb will be used.

3. Orinoco bitumen : how much could be economically recoverable ?

The first comprehensive evaluations studies of economically recoverable reserves which could be expected from the Orinoco belt were conducted by PDVSA in 1983. PDVSA concluded that 22 % of the 1,200 Gb in place resources could be recoverable and calculated a figure of 267 Gb of reserves for the whole Orinoco belt.

Estimating the long term recovery rate is central to the question of Orinoco reserves : today this rate is limited not directly by technology but by economic factors. The existing production schemes supplying the Orimulsion projects or proposed for the synthetic crude projects, all have rather low recovery factors, in the order of 5 to 10% of the hydrocarbons in place.

On a purely technical basis, schemes could be conceived today which would result in higher recovery factors (say 15 % or even 25 %) but these schemes would involve higher investments per unit of production, and would therefore have lower profitability than presently designed schemes. As the present schemes offer << average >> to << low >> profitabilities, the only possibility today is to develop those projects with a 5 to 10 % recovery factor : projects with higher recovery factors but with lower profitability are not economical today and in practical terms they would not be financeable.

The central issue of future possible recovery factors, which are evolving with technology progress and the related potential cost decreases, are addressed in the conclusions.

4. The present production projects

During the 1975 to 1995 period, having nationalised its oil industry, Venezuela decided to develop by itself its oil resources, including the Orinoco belt.

This situation created adverse conditions for the development of Orinoco belt bitumen : the financial resources of the national oil company (PDVSA) were limited and, facing such limitations, PDVSA logically placed a higher priority on exploration and development of its conventional oil resources.

Meanwhile PDVSA developed (jointly with BP) a new and simple technology to produce Orinoco bitumen, known as Orimulsion. In this proprietary process the bitumen is mixed with water and a surfactant chemical in order to produce a stable emulsion which can be transported by pipeline and by ship. This product, mainly dedicated to supply power plants as a replacement to coal (Orimulsion pricing is coal related), has seen its expansion limited by environmental considerations.

Figure N° 2 illustrates the changes in production expectations for Orimulsion. In 1988 it was expected that fifty million tons of Orimulsion could be produced by year 2000. This figure is now reduced to less than twenty million tons. PDVSA is seeking new partners to develop Orimulsion production, while new outlets continue to be evaluated. In fact a figure of ten million tons by year 2000 could be considered a major success.

The second method of monetizing Orinoco bitumen is by upgrading it : recognizing that raw bitumen, whether emulsified or diluted with a solvent, remains a low value fuel and feed stock with environmental limitations, the upgrading approach treats the bitumen locally in large upgrading -ie deep coking/cracking and hydrotreating- units. The main limitation in this approach is the initial capital required, as large upgraders are very expensive facilities.

A typical investment breakdown for a theoretical 200,000 b/d field production capacity installation (figures in million US dollars of year 1997) :

- field facilities and pipeline 1,000
- upgrading and port facilities 2,000
  3,000 (*)
(*) excluding taxes and financing costs)

As it can be seen from the above breakdown, two thirds of the investment are related to the downstream facilities, which generally have to be in place before start up of production.

Here again financial constraints explain partly why PDVSA was not able to fulfill its ambitious plans related to development of integrated upgrading schemes.

As illustrated in Figure N° 3 it was estimated in 1975 that such schemes could represent a production of 100 million tons per year by 1995, while they actually had not started by that date.

These projects have seen a spectacular revival after Venezuela modified in 1991-1992 its policies and decided to open the door to foreign partners in selected areas of the hydrocarbon sector, including heavy oil activity.

Today five or six projects can be considered as firm or semi firm, and their main characteristics are shown in the Figure N° 4.

There is an important factor distinguishing the various projects, which is their << degree of upgrading >>. This is the main strategic variable to be decided upon by the projects' promoters : the more the bitumen is << upgraded >>, the lighter will be the exported synthetic crude -ie the more valuable and the easier to refine into finished products - but the higher will be the investment. This subtle economic balance is not an easy choice and, as can be seen from Figure N° 4, each of the current projects have made different choices. Only the consortium led by the TOTAL Group has chosen to fully upgrade the bitumen in Venezuela, and export a 30° API sweet synthetic crude. All other projects have chosen a two step upgrading approach, with a partial upgrade in Venezuela and deep conversion refining in the importing country (ie the USA for the present projects).

This second family of projects aimed at the export of Orinoco belt bitumen in the form of fully or partially upgraded bitumen as synthetic crude, should allow the progressive transformation of large tonnages of bitumen from the status of << resource >>, to the status of << reserves >>.

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5. Conclusions : contribution of bitumen deposits to new reserves and related issues

A first order evaluation of the importance of bitumen and other non conventional crude oil potential reserves is possible. In order to assess the relative importance of these << new reserves >> in the overall problematic of crude oil ultimate reserves, the Orinoco belt bitumen is considered along with the other main potential sources of << new reserves >>, ie the Athabasca Tar Sands, the deep offshore and the conversion of natural gas to liquids.

Figures N° 5, 6 and 7 summarize the author's evaluations.

While many of the assumptions or evaluations used here are subject to debate, some important conclusions can be drawn :

Bitumen and extra heavy oils constitute the largest component of non conventional oil reserves that we can expect to add to the so called conventional ones in the coming decades (ie much more important than liquids synthetized from natural gas, and even much more important than reserves that could be expected from deep offshore basins).

  • Considering the other << non conventional >> expected new reserves, the figure of 100 Gb for the deep offshore could be revised upwards in the coming decade if totally new provinces, untested today, turn out to be as rich as the West African deep province. However the same figure of 100 Gb retained for oil products which could be synthetized from gas conversion probably represents a maximum evaluation, and various economic parameters could reduce this figure by half or even by a factor of ten.
  • The increase of recovery rates in bitumen and extra heavy oil deposits represents the most important challenge for these reserves to materialize. Since CO2 emissions reductions is most probably going to be a limiting factor, increasing recovery factors poses a major dilemma : the higher the recovery, the more energy could be required and therefore the more CO2 released whether directly or indirectly.
  • The question of present (Kyoto) and future international legislation related to greenhouse gas emissions should have a major impact on energy industries. Bitumen upgrading schemes could be the largest real application of the rather recent concept of << fuels decarbonization and carbon sequestration >>. There is however little other prospect than burning again the carbon extracted by the upgrader units as petroleum coke, and therefore << de-sequestrating >> the carbon as CO2 into the atmosphere.
  • Despite the environmental issues, and if the author's evaluations are directionally correct, by 2030-2040 the bitumen and extra heavy oil resources should have generated reserves more or less compensating for the oil consumption which has taken place between the early days of the oil industry and the present.

Figure N° 1 : Orinoco Oil Belt

Figure N° 2 : Evolution of Orimulsion production objectives since 1988

Figure N° 3 : Evolution of upgraded crude production objectives since 1975

Figure N° 4 : Orinoco projects as of 1.1.98

  API gravity Exported crude (b/d) Investments (G$)
Maraven/Total/Statoil/Norsk Hydro
(Sincor project)
32 180000 3.2
(Hamaca project)
25 185000 3.5
(Petrozuata project)
22 102000 2.2
Lagoven/Mobil/Veba Oel
(Cerro Negro project)
16 108000 2.5
Corpoven/Exxon (Phase 1) 12 75000 2.2
Maraven/Coastal / / 2

Nota: Exxon and Coastal projects have note yet received the approval of Venezuelan congress

Figure N° 5 : Extra heavy crudes ( 10° API) and bitumen estimated recovery rates

  Current projects recovery 2030 estimated
- Cold production 5 % - 10 % 25 %
- << Vertical >> steam flood 6 % - 7 %  
- Mining 80 % - 90 % 18 %
- In situ production (SAGD) 5 % - 15 %  

Figure N° 6 : Estimated reserves of extra heavy crudes ( 10° API) and bitumen (billion barrels)

  Estimated in place
1995 reserves
2030 reserves
ORINOCO 1200 100 300
ATHABASCA 1700 100 300

Illustration N° 7 : Conventional and unconventional oil reserves estimates (billion barrels)

Initially recoverable 1800 to 2400
Cumulative production 800   800
Remaining 1000   1600
(Mobilizable by 2030)      
Deep offshore and arctic areas 100   100
Gas to liquids conversion 100   100
Extra heavy crudes and bitumen 600   600
(1/2 Orinoco, 1/2 Athabasca) 800   800
Nota : excluded because too far away for the considered time horizon of 2030 :
- asphaltic limestone
- oil shale
- coal liquefaction or gasification

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Conventional oil reserves specifically exclude extra heavy oil and bitumen such as those from the Orinoco province in Venezuela.

However these non conventional resources are progressively reaching the status of commercial reserves and should constitute the major part of the new reserves we could expect to add to the ultimate recoverable reserves in the coming decades.

This view is based on an analysis of development projects related to Orinoco bitumen and, to a lesser extent, of the Athabasca Tar Sands in Canada.

A key to the full realization of the production potential of these ultra heavy oil reserves will be technology, and more precisely how to find methods allowing to improve recovery rates at acceptable costs and without excessive energy consumption, which would go against worldwide efforts to control the emissions of carbon dioxide.