 |
| |
Ivanhoe Energy's proprietary, patented heavy oil upgrading technology (HTL™)upgrades the quality of heavy oil and bitumen by producing lighter, more valuable crude oil, along with by-product energy which can be used to generate steam or electricity.
The HTL™ technology has the potential to substantially improve the economics and transportation of heavy oil. There are significant quantities of heavy oil throughout the world that have not been developed, much of it stranded or economically constrained as it is difficult to transport and expensive to upgrade. In remote parts of the world, the considerable reduction in viscosity of the heavy oil through the HTL™ process will allow the oil to be transported economically over long distances. In addition to a dramatic improvement in oil quality, an HTL™ facility can yield large amounts of surplus energy for production of the steam and electricity used in heavy oil production. The thermal energy from the HTL™ process would provide heavy oil producers with an alternative to increasingly volatile prices for natural gas that now is widely used to generate steam. Yields of the low-viscosity, upgraded product are greater than 85% by volume, and high conversion of the heavy residual fraction is achieved. In addition to the liquid upgraded oil product, a small amount of valuable by-product gas is produced, and usable excess heat is generated from the by-product coke.
HTL™ can virtually eliminate cost exposure to natural gas and diluent and capture the majority of the heavy to light oil price differential for oil producers. HTL™ accomplishes this at a much smaller scale and at lower per barrel capital costs compared with established competing technologies, using readily available plant and process components. As HTL™ facilities are designed for installation near the wellhead, they eliminate the need for diluent and make large, dedicated upgrading facilities unnecessary.
History
The HTL™ process represents the application of a commercially proven technology to a new feedstock. Ensyn Group, Inc. initially developed the technology in the early 1980s and has applied it commercially for over 15 years in the biomass (wood) industry. Seven commercial Ensyn biomass processing facilities are in operation in the United States and Canada.
In the late 1980s, Ensyn successfully demonstrated the ability of the technology to upgrade, at bench scale, heavy-grade petroleum. In 1998, having scaled up and commercialized the technology using biomass feedstocks, Ensyn returned to petroleum applications.
In 2005 Ivanhoe completed a merger with Ensyn Group, Inc. and now has full control of the patented, proprietary upgrading technology for the development of heavy oil fields around the world. Ensyn Group spun off its existing biomass processing business, Ensyn Renewables Inc., to its shareholders prior to closing of the merger with Ivanhoe Energy.
Technology Development
A 20-barrel-per-day petroleum pilot plant built in Canada by Ensyn in 1998 has been used for testing crude oil from around the world, completing more than 90 test runs on heavy oil.
In late-2004, Ensyn completed a 1,000-barrel-per-day demonstration plant in the Belridge Heavy Oil Field in southern California to further demonstrate the technology and test heavy oil produced from fields throughout the world. Performance testing at the demonstration plant is complete. The California facility, the first of its kind in the world, will continue to be used in the near term to test a range of crudes from potential projects around the world. A number of process and configuration alternatives that are expected to be required for various site-specific commercial applications have also been tested.
Commercial Initiatives
Ivanhoe intends to apply the HTL™ technology as a key tool in the implementation of our corporate strategy, which is to expand our oil and gas reserve base. Ivanhoe believes that the value of the HTL™ technology can be maximized by using it to create opportunities to acquire interests, and actively participate, in heavy oil development projects.
Ivanhoe has a non-binding agreement with Aera Energy LLC (Aera) to advance negotiations for a 15,000-barrel-per-day HTL™ plant in California. Aera, a California limited liability company owned by affiliates of Shell and ExxonMobil, is California's leading oil producer with about 250,000 barrels per day of oil production. Ivanhoe and Aera plan to negotiate a definitive agreement to build a processing facility that would yield upgraded crude oil and surplus energy. The plant, if completed, will be owned and operated by Ivanhoe. Additional projects with a combined heavy oil throughput of up to 45,000 barrels per day may be located on Aera properties if the performance of the initial plant meets expectations.
Ivanhoe also has an agreement with the Iraq Ministry of Oil to evaluate the Qaiyarah heavy oil field and is also in discussions with a number of other heavy oil resource owners for the potential commercial deployment of the HTL™ upgrading technology in heavy oil fields around the world.
| |
)
