U.S. Department of Energy National Energy Technology Laboratory

1. U.S. Department of EnergyNational Energy Technology Laboratory DOE Projects and Programs That Can Help Independents in Alaska February 26, 2003 William (Bill) F. Lawson National Petroleum Technology Office

2. DOE Goal • Assist Communities, Producers, State and Federal Government by providing Sound Science for Regulation and Development of Alaska’s Resources • Build Consensus • DOE Office of Fossil Energy has a long history of petroleum exploration and production research in Alaska, and has several ongoing projects in the state.

3. NETL Funding • $48 million of projects in place in Alaska • DOE Fossil Energy Oil and Gas Funds • DOE Energy Efficiency and Renewable Energy Funds • University of Alaska, Fairbanks

4. NETL Current Petroleum Projects • Five Current RD&D Projects - 3 upstream and 2 downstream • Alaska Oil & Gas Exploration: Development and Permitting Project • Development and Demonstration of Mobile Small Footprint Exploration and Development Well System for the Arctic Unconventional Gas Resources • Northeast National Petroleum Reserve-Alaska Reconnaissance Level Airborne Contaminants Study • PetroStar Conversion Extraction Desulfurization Process • PetroStar Biocatalyst Desulfurization • DOE Arctic Energy Office in Alaska • Best Practices Workshops • Alaskan Workshop Series – DOE as facilitator to help technology transfer and generate consensus among groups developing Alaska’s energy resources • Projects Outside Alaska with impact on Alaskan Independents • Drilling technologies • Environmental cleanup and waste management

5. Alaska Oil & Gas Exploration: Development and Permitting Project – by State of Alaska • Objective - eliminate three closely inter-related barriers to oil production in Alaska • Identification of oil potential form existing wells • Plan projects efficiently to avoid conflicts • Gain state approvals for exploration and development • Use Geographic Information system (GIS) • Combine oil exploration, development and permitting for an integrated information technology infrastructure for Alaska • Develop web-based, on-line system for public review of data and permitting

6. On-Line Oil and Gas Development and Permitting • Alaska Resources – one quarter of US crude oil - five billion barrels of proven reserves • Overcome barriers to efficient oil and gas development • Currently multiple, independent Alaska agencies • Develop Diagnostic Coastal Project Questionaire • To determine suite of permits required • Develop document templates for reviews and public notices • Use geography (GIS system) as the organizing principal to bring shared interests together logically • Integrate multiple agencies into one permitting system • Establish easier and faster application process • Improve efficiency of review process • Improve security of government information systems • Provide a means to handle permit fee payments electronically

7. Development and Demonstration of Mobile Small Footprint Exploration and Development Well System for the Arctic Unconventional Gas Resources by NANA Development Corp. • Provide an economic, local alternative fuel source for remote Arctic villages and industrial complexes • 3-in slimhole drill rig designed to explore and produce unconventional gas • Performers • NANA Development Corporation • Teck Cominco, Red Dog Mine • Advanced Resources International

8. NANA Slimhole Drilling • 1st slimhole (3 in) wells drilled in remote Arctic locations • Planned development of unconventional gas resource • Develop natural gas sites near where it will be used • Replace diesel fuel for engines and electric power generation • Significantly reduce emissions • Reduce fuel cost • Provide a lower cost, efficient fuel source to Native villages and mining facilities • Promoted technology transfer to Native American tribal groups • Design drilling program for unconventional gas • Mobile slimhole rig and equipment • Transportation via helicopter to avoid building roads over the tundra • Reduced volume of drilling muds • Reduced volume of cement for casing • Developed biodegradable antifreeze to maintain openhole in permafrost • Reduced volume of produced water • Significant cost savings compared to conventional oil rig • Feasible degasification of existing engines and turbines

9. Mobile Slimhole Rig and Tool

10. Research and Monitoring Team • Northeast National Petroleum Reserve –Alaska Integrated Activity Plan/Environmental Impact Statement • Plan establishes procedures and advisory bodies to address subsistence and research concerns. • Representatives from Federal, State, and North Slope Borough agencies, the oil industry, environmental groups, academia and other interested parties will be invited to participate on the research and monitoring team. • Team will coordinate research and monitoring projects in NE-NPR-Alaska

11. Northeast National Petroleum Reserve - Alaska Reconnaissance Level Airborne Contaminants Study by Bureau of Land Management • Funded by the DOE and operated under the Research and Monitoring Team • Air contaminant baseline study in Northeast NPR – 4, Alaska • Study effects if airborne contaminants of watersheds • Expand the number of index sites in Northeast Alaska • Determine the air contaminants as they currently exist and to provide a baseline to determine the fate and effect of future oilfield activities • Provide environmental quality baseline for the indigenous people of the Alaskan Arctic

12. Petro Star Refinery

13. Conversion Extraction Desulfurization Process and the Biocatalyst Desulfurization Project by Petro Star Inc. • 6 industry partners - fuels, processing and environmental • Aimed at meeting EPA requirements on sulfur content in fuel • Reduce sulfur as an air pollutant • Reduce sulfur in tailpipe emissions, associated with nitrogen oxides, carbon monoxide and particulate matter • Two strategies for desulfurization • Chemical Extraction - Conversion Chemical Desulfurization • Process can be affordable for medium and small refineries that produce low-sulfur diesel • Biocatalyst Desulfurization • Biologically removes sulfur from diesel fuel using log temperature and low pressure processing • Applicable to other small refiners who cannot afford current, high-pressure hydrotreater and hydrogen plant hydrodesulfurization process

14. Methane Hydrate Researchby Maurer Technology & Anadarko Petroleum • Objective: evaluate subsurface hydrate occurrence and production potential. • Hydrates resource in Arctic is estimated at 11,000 to 24,000 Tcf • Develop specialized drilling platform • Determine best practices for safe and economic drilling and production of methane hydrates in the Alaskan permafrost • Chilled drilling fluids to insure core recovery using hard rock mining rig in Kuparuk oil field. • 3 year, $10 million cost-shared with Anadarko Petroleum Corp, and DOE

15. Arctic Drilling/Production Platform(Maurer/Anadarko) • Good for environment (reduced footprint) • Good for industry (year round drilling) • 1/2 scale platform designed & built • Moved to AK in late December 2002

16. DOE Arctic Energy Office in Fairbanks • In FY 2001, DOE/NETL opened the Arctic Energy Office in Fairbanks, Alaska as a joint project of the Offices of Fossil Energy and EERE • Objectives • Create an in-state resource for the expansion and coordination of arctic-related RD&D in energy technology that will capitalize on the unique knowledge and experience of the people who live and work in the arctic. • Sponsor collaborative R&D by Alaska industry and the University of Alaska Fairbanks to address the E&P barriers to continued development of Alaska's energy resources.

17. Alaska Energy Office • This new office is located on the campus of the University of Alaska Fairbanks and has entered into a five-year cooperative agreement with the University to develop an in-state resource for expansion and coordination of arctic related RD&D in energy technology in two primary categories: • Fossil Energy - Promote research, development and deployment of oil recovery, gas-to-liquids and natural gas production and transportation. • Remote Power - Promote research, development and deployment of electric power in arctic climates, including fossil, wind, geothermal, fuel cells, and small hydroelectric facilities. Regarding the first part of its mission, the Office of Fossil Energy has a long history of petroleum exploration and production research in Alaska, and has several ongoing projects in the state. While the Arctic Energy Office has limited responsibilities concerning the established projects in the state, this new office is working closely with the established Oil and Gas programs to identify new opportunities for research.

18. Coal Bed Methane Studies – Lessons from other States • Best Practices Guidebook for Coalbed Methane – ALL Consulting • Effective low-cost methodologies • Selection of technology matched to specific local soil, water, climate, land and environmental conditions • Ground water monitoring and water quality protection -BLM

19. Coalbed Methane Potential in Alaska

20. Projects Outside Alaska that can be Beneficial to Alaskan Independents • Design and Development of Gas Liquid Cylindrical Cyclone Compact Separators for Three Phase Flow; Performer - University of Tulsa • Improved Oilfield Waste Injection Techniques; Performer – Terralog Technologies • Advanced Cuttings Transport Study; Performer – University of Tulsa • Simultaneous Injection Pilot Project: Phase I – Feasibility Study; Performer - Argonne National Laboratory

21. Gas Liquid Cylindrical Cyclone (GLCC) Objective: • Develop and improve a three-phase gas-liquid cylindrical cyclone (GLCC) separator Participants: • University of Tulsa, plus 15 industry JIP members Successes: • Reduced footprint and 3 fold cost savings over conventional separators • Field application demonstrated a savings of $3.2 million over conventional separators • Offshore non-producing oil well brought back to life at 1000 Bbls/day Next Milestone Event: • Initiate HP facility & complete 3-phase simulator design

22. Improved Oilfield Waste Injection Techniques by Terralog Technologies • Waste injection projects in Alaska, California, Louisiana and Canada • Develop a cost-effective waste injection technique • Containment of waste in target interval • Sequence of sands and shales, better than a single shale • Slurry mix of 10-40% by volume solids • Screening method eliminates larger material and handles it separately • Reduces cost of producing slurry, because the process does not grind unnecessary material • Develop software for prediction and control of fracture propagation in soft formations • Visualization of changes in fractures by injection invasion • New integrated rock mechanics and fluid flow models • Monitor injection rate daily to maintain episodic high rate injection

23. Improved Oilfield Waste Injection Techniques by Terralog Technologies

24. Improved Oilfield Waste Injection Techniques Mixing & Pumping Equipment Injection Well

25. Advanced Well Cuttingsby University of Tulsa • Joint Industry Study • Develop advanced cuttings transport and drilling fluid test facility • Design low-pressure, high-temperature flow loop • Develop flow tests for single, two-phase and three-phase flow (water, air and cuttings)