Introduction to north american oil geography
Oil industry started in Canada in 1857 when James Miller Williams discovered oil in a well in Enniskillen canton near a town which will become Oil Springs. This well called Williams no.1 originates from a boom of the oil drilling. Thanks to this, Southwest Ontario became an important oil production region at the end of XIX century. In 1880, 16 producing and refining companies built the Imperial Oil Company.
In 1898, Standard Oil Trust, John D. Rockefeller property, takes the control of the Imperial Oil Company for an amount of 350 000 dollars. The Imperial Co remains a subsidiary of Standard Oil of New Jersey until the dissolution of the trust by American Authorities in 1911. Standard Oil of New Jersey, which will become Exxon later, is still the most important oil company in the world and still owns 69 % of Imperial Co shares.
On 13th February 1947, the Imperial Co discovered an important oil field in Leduc, Alberta. It is the beginning of modern era of oil production in west Canada.
From 1950 till 1970 multinational foreign companies take hand on Canadian oil companies. At the beginning of the years 70, over half the Canadian oil industry belongs to subsidiaries of the 7 great multinational companies, the “seven sisters” : Exxon, Royal Dutch Shell, British Petroleum, Mobil, Texaco, Gulf and Standard Oil of California.
In 1973 foreign companies cash approx 90 % oil incomes in Canada.
These companies allowed the development of Canadian oil production thanks to their financial provisions, i.e. thanks to technological requirements required for handling bitumen sands. These companies still pay a great part of the amounts dedicated to research and development, costs which might be too high for the only Canadian state.
Canada, first oil resource in the world:
Nowadays, Canada and more particularly Alberta region, becomes the new oil emirate of the XXI century. In effect, in the north of this province, the second biggest oil field in the world was discovered, behind that of Saudi Arabia.
Alberta proved oil reserves increased from a conventional total of approx 5 billion barrels to a level of approx 178.2 billion barrels (including then bitumen sands) ranging Canada at the first place before Saudi Arabia in terms of proved resources.
Although Alberta takes possession of almost 75 % Canadian conventional oil reserves, most other provinces and territories (especially Saskatchewan and territorial waters off-shore Terra Nova) hold an important part of reserves being mined.
Canadian oil resources are located in the seven major sedimentary basins of the country. The basin producing most part of oil is then the sedimentary Basin of West Canada (BSOC) which spreads from the Canadian Shield (Bouclier) to Rocky Mountains crossing Manitoba, Saskatchewan, Alberta and northeast of British Columbia. This region is very rich in bitumen sands spreading over 77 000 square kilometers in north Alberta on 3 major regions : Peace River (northwest), Athabasca (northeast) and Cold Lake (southwest Athabasca region).
Other basins also produce oil: south Ontario, off-shore Terra Nova and Labrador and New Scottish Plateau (regions located at east of the country, Atlantic coast). We consider that 30 % conventional oil reserves are located Eastern Canada.
In 2010, Canada produced a total of 3.5 millions oil barrels/day approximately.
The first Canadian oil production region is Alberta with 65 % domestic production approx. In this province, 42 % out of the crude oil production was extracted from rich reserves of bitumen sands.
Saskatchewan ranked second, far behind, with a supply amounting to 18 % out of the totality of Canada crude oil production.
Third rank, we find oil drilling units offshore Terra Nova and Labrador. At 386 kilometers far offshore southeast Terra Nova and Labrador, the oil field Hibernia produced 3.8 million cubic meters oil during its first entire operating year 1997. At that time, the province produced 3.2 % only out of the production of domestic crude oil. Oil drilling platforms offshore Terra Nova and White Rose were added respectively in 2003 and by the end of 2005, allowing to this province to produce now every year by 20 million cubic meters crude oil, i.e. 13.0% of the total Canadian production.
Completing the Canadian production, Ontario, Manitoba, British Columbia and Northwestern Territories contributed together for approximately 5 million cubic meters crude oil, i.e. 5 % domestic production.
Alberta is then the biggest producing region of crude oil followed by Saskatchewan and Terra Nova and Labrador. These three provinces export the major part of its crude oil to the United States.
The operating cost of bitumen sands:
A geological feature: bitumen sands.
Bitumen sands are a mixture of crude bitumen, which is a semi-solid form of crude oil, sand, mineral clay and water. Otherwise, it is sand coated with a coat of water on which the film of bitumen is deposited.
4 ton sand is necessary to produce one barrel of crude oil (i.e. 25 kg sand/liter). The process consists in placing the bitumen sand into great tanks of boiling water, so that the crude oil gets separated from the sand. This concerns low deep deposits. However, only 20 % not conventional oil deposits from Alberta may be extracted by means of surface mining techniques. The rest lies too deep under the surface and cannot be open-cast mined. So, oil has to be collected following techniques in situ. With drilling technology, steam has to be directly injected into the deposit to heat the bitumen sands and therefore viscosity of bitumen has to be reduced, so that it does not come to the surface.
The bitumen from oil sands has to be used as light oil or to be treated by high conversion units especially designed for bitumen or conventional heavy oil. Most refineries find difficult to process bitumen because it is thick and moves with difficulty in pipelines, except diluted with condensates. The bitumen of oil sands is usually extracted and upgraded or diluted close to the site itself (which is the case for Athabasca region) then sent by pipeline.
So, Canada owns 173 billion oil barrels as bitumen sands, minable over 141 000 square kilometers of boreal forest.
Crude oil from Alberta, firmly mixed to sand, is onerous to produce : 15–20 dollars/barrel, compared to 5 for Saudi oil. But technical improvements made prices lower down. In 1984, 32 dollars had to be spent to extract one barrel of oil.
Before, mining these bitumen sands was not profitable enough, due to severe treatments to obtain crude oil. The increase in oil price from 2004 till 2006 at over 75 dollars/barrel was sufficient to allow planning and starting-up of mining projects of bitumen sands amounting to over 100 billion dollars. The production of bitumen sands from Alberta in 2005 amounted to 0.4 billion barrels/year. In 2010, it amounted to 0.7 billion barrels/year, i.e. 67 % Canadian production. Canadian Association of Petroleum Producers forecasts that, up to 2020, Canada oil production will amount to 1.75 billion barrels/year, 10 % only of which will be conventional light or medium crude oil.
Bitumen sands have been mined in Great North Canada for 10 years approximately. All major oil companies of the planet (Exxon, Chevron, Shell, BP, Total, and even Chinese of CNOC and Sinopec) arrived, searching for new concessions. For example, Total has forecast to invest 7-10 billion euro up to 10 years, to produce 250 000 crude barrels/day (i.e. 10 % total production of the group) up to 2020. In 2010, by 20 billion were invested, and the tendency is up.
Oil companies now produce over one million oil barrels/day from bitumen sands and this production increases constantly.
During the next two decades, the oil sands production is expected to rise from 1.5 to 3.5 million barrels/day produced in the world (essentially in Canada and Venezuela).
Worldwide, bitumen shale represents a theoretical potential amounting to 2600 billion barrels of oil.
United States proved oil reserves amount to 19,2 billion barrels in 2011, i.e. a drop of almost 50 % compared to 39 billion barrels that they had in 1970 when the very huge Alaska North Slope (ANS) reserves were registered.
Oil production reached over 9 million barrels a day at the end of the years 1970 but dropped to under 5 million barrels a day in 2010. The American consumption of oil products overtook 20 million barrels a day.
Oil reserves on United States land are mainly located in Texas and in Alaska, and in a minor extent in California. Of course, there is a big part of the production offshore, in Mexico Gulf, in the territorial waters of the United States, on Texas coast.
In the Permian, 280 million years ago approx, Ouachita Mountains were bordered with inland seas west. Deep in these inland seas, micro-organisms, minerals and sediments from erosion deposited. These deposits were then covered by sedimentary layers to become oil (Permian basin in Midland and Odessa region).
On 10th January 1901, Texas started a period of economical development with the discovery of the first important oil well, Spindletop, located south Beaumont. Other deposits were discovered later east and west this State, and under Mexico gulf waters. The average production was at best 3 million barrels a day in 1972.
Texas owns approx one quarter of known reserves in the United States. The main producing regions are the shore of Mexico gulf (offshore) and the Parmian basin. Quotes increasing, numerous small wells became profitable and have been mined recently. The Texan oil (West Texas Intermediate, WTI) is considered as one of the best in America.
Texas counts 27 refineries representing one quarter of the refining capacity of the country. They are concentrated in industrial-port zones of the coast. The total capacity of oil refining is 4.7 million barrels a day. Products refined are then sent by pipelines throughout the country, or exported by ship from Port Arthur, Texas City, Galveston, Freeport, Port Lavaca or Corpus Christi. The headquarters of several oil companies are in Texas, as ExxonMobil, ConocoPhillips or Halliburton.
This State is then the leader concerning crude oil production and refining of the country. The production onshore in Texas represents 20 % of the country approx.
Onshore, main wells are located 10 km around Goldsmith, city situated far west of the State, close to New Mexico. However, the whole State is full of wells, as you can see on the following cartography:
Offshore, it is the same, in Mexico Gulf over than 60 fields mined or being mined by the United States can be observed:
Appaloosa, Auger, Baldpate, Blind Faith, Brutus, Bullwinkle, Cameron, Cantarell, Cascade & Chinook, Clipper, Constitution & Ticonderoga, Cotton Wood, Droshky, Genesis, Genghis Khan, Glider, Gyrfalcon, Hickory, Holstein, Hoover Diana, Gotcha, Great White, Horn Mountain, Independance, Jack & St. Malo, K2, King, Knotty Head, Kaskida, Ku-Maloob-Zap (KMZ), Llano, Macondo, Mad Dog, Magnolia, Manatee, Marco Polo, Mardi Gras, Mars, Matterhorn, Mensa, Morpeth, Na-Kika, Neptune, Perdido, Petronius, Phoenix & Typhoon, Puma, Ram Powell, Red Hawk, Rusa, Serrano & Oregano, Silvertip, Shenzi, Tahiti, Tahoe, Tanzanite, Telemark, Thunder Hawk, Thunder Horse, Trident, Troika, Ursa, and so on.
In a general way, most of them were formed in the Permian, are located in deep sea, between 2000 and 5000 m (even in extra deep sea, up to over 7000 m), are mainly mined by Chevron and BHP Billiton (as well as Statoil, BP, Total, Petrobras, and so on), dispose of reserves located between 100 and 300 million barrels oil equivalent, produce from 50 to 100 000 barrels a day and are either already mined, or will be mined soon (deadline 2013 approx).
Offshore production in Mexico Gulf represents approx 30 % the total American production.
Remember that today in the world approx 1 million barrels a day are extracted in extra deep waters and that this figure tends to increase with the improvement of the technology and the increase of the barrel price.
In 1968, in northeast State was discovered the great deposit of Prudhoe Bay, 13 billion barrels in the region of North Slope in Alaska. It is the greatest deposit discovered in the United States. Oil has a good quality over there (29°API, 1 % sulfur). This discovery led to build a pipeline 1264 km long reaching Prudhoe Bay, located on north coast Alaska, opening to Beaufort Sea, in Valdez, located south the State, on the coast opening to Alaska Gulf. Mining and exportation of this deposit via trans-Alaska oil pipeline started in 1977. Production was developed rapidly, reaching a plateau of 1.6 million barrels a day in 1980. Prudhoe Bay deposit filled by itself 80 % oil pipeline.
This production level was maintained till 1988, date on which a progressive decline started. The deposit produces in 2009 400 000 barrels a day, including the five satellites (small size deposits attached to its infrastructure). It ensures half total production of Alaska and 8 % American production. In 2009, there are less than 2 billion barrels of reserves in the deposit of Prudhoe Bay.
So, oil in Alaska is located north State : in the National Petroleum Reserve in Alaska (NPRA), mined, among others, by several companies such as British Petroleum, ExxonMobil and Arco, and offshore in Beaufort sea. There should be 30 billion barrels located off Alaska as per the United States Geological Survey (USGS). There are also important oil reserves in northeast which were discovered forty years ago but which have not be mined because of Militant Associations for the biodiversity preservation located in this region. However, it is still discussed at the beginning of 2011.
Then, Alaska is, behind Texas, the second most important American State in terms of oil production. It provides by itself with 17 % oil American production, even though this production has been lowering down since the years 1970. The income of this State is mainly issued from hydrocarbons : 90 %.
The difference is essentially due to imports, the main supplier being Canada, which increased its exports of crude oil and refined products to the United States by over one billion barrels a year in 2010.
The United States, next oil source?
In effect, although the depletion of their wells started already 25 years ago, the United States have oil resources which have not been mined yet. Indeed, out of the conventional oil (which is far from running dry), the not conventional oil, as you know, is mined, i.e. the so famous “bitumen sands” (most of them are present in Canada and Venezuela), they have been really mined for 5 years and enjoy a great recovery thanks to the higher price of barrel as well as to extraction techniques and mainly processing techniques which evolved and are still evolving right now. However, in the classification of not conventional oil, we can also find bitumen shale.
Bitumen shale has been mined since the Middle Age as a combustible. They are sedimentary granular rocks containing organic substances, kerogen, in sufficient quantity to supply with oil.
Bitumen shale differs from bitumen rocks (bitumen sands and oil reservoir rocks). While bitumen sands come from oil biodegradation, kerogen contained in bitumen shale has not reached a sufficient temperature and pressure to get processed into oil.
Kerogen present in bitumen shale may be converted into oil through pyrolysis chemical process. If you heat the bitumen shale at a sufficient high temperature (450-500° C) in an airless enclosure, the generated steam will be distillated into shale oil, i.e. a form of not conventional oil.
The increase in barrel price and the search for independence compared to energy external suppliers drew the attention on bitumen shale as energy resource. However, its mining and its processing concern environment such as oil use, waste disposal, water use, waste waters management, greenhouse gas emissions (GHG) and air pollution.
Presently, some countries use bitumen shale to produce energy. The best example is Estonia which, via its central unit based in Narva, exclusively supplied in bitumen shale, produces 95 % electricity of the country. However, other countries, such as Brazil, China or Russia use bitumen shale today to produce energy.
Bitumen shale reserves in the United States:
The United States enjoy the highest concentration of bitumen shale in the world. They own, in bitumen shale, approx the equivalent of 1000 billion barrels of oil, i.e. enough to satisfy the oil domestic demand of the United States during 110 years (at constant demand and at present level).
The development of bitumen shale is possible because oil prices are sufficiently high and the technique to process bitumen shale into oil is simple.
The world reserves in bitumen shale are estimated between 2 800 and 3 100 billion barrels of oil. One third of these reserves are in the United States.
However, bitumen shale processing, at present technology, to process it into oil, costs approx 80 dollars/barrel. Then, it is not profitable whilst oil quote is not high. However, what costs most is the settlement of infrastructures at the beginning of mining. Indeed, one barrel of oil should cost approx 40 dollars after 12 years mining. After producing one billion barrels, the cost should reduce by less than 40 dollars, almost 30 dollars, and this with the present technology.
Bitumen shales process:
Some analysts compare bitumen shale industry to that of Athabasca bitumen sands, considering that the first generation installation is most difficult technically and economically speaking.
However, the main constraint towards the development of bitumen shale mining is that Alberta bitumen sands, in Canada, cost half less to produce and that the United States have entire desired access to the production of bitumen sands with the North American Free-Trade Agreement (NAFTA).
Therefore, bitumen shale will not probably be developed before that bitumen sands production is well engaged and that the barrel quote is higher.
Mexico oil fields are mainly located in the States of Veracruz, Tabasco, Chiapas and Campeche (70 % domestic mining). Since governed by President Lazaro Cardenas who decided oil nationalization, the State Company Pemex has the monopole for mining, producing, transporting and marketing oil on the Mexican territory. Mexico is the 5th world oil producer and the 9th exporter. Almost the totality of Mexican oil exports goes to the United States, the third supplier of which it is. However, the decline of the main deposit, Cantarell, lets foresee a reduction of the production in the country in the future years.
Mexico Constitution gives to the State oil company, PEMEX, the monopole of oil production and the Mexican government uses it as the main source of incomes, withdrawing 60 % of its incomes as taxes. Therefore, it does not have enough capital to develop resources by itself and has to count on foreign partners to supply with money and technology which it does not have.
Since 1979, Mexico has been producing the major part of its oil from its super giant Cantarell field, which is the second biggest field in the world (in terms of production). However in 2005 it reached its production peak and started to decline. So, they are now considering Chicontepec field which, as per the American government, disposes of almost 140 billion barrels of crude.
Cantarell complex designates the biggest oil field in Mexico. It is located offshore at 80 km away from Campeche Bay. The complex includes in fact four big fields : Akal, Nohocj, Chac and Kutz. The first field was discovered in 1976. You have to add that of Sihil discovered later.
In 1981, the complex produced 1.16 million barrels a day. Then the production lowered down to reach 1 million barrels a day in 1995. PEMEX (Petroleos Mexicanos) started to inject nitrogen from 1997, so allowing the production to rise to 1.6 million barrels a day in 2002 and to 2.2 million barrels a day in 2004. So, it became the second biggest world producer, behind the biggest deposit in the world, Ghawar, located, as everybody knows, in Saudi Arabia.
In May 2006, the yield had decreased to 1.8 million barrels a day and it suffers a high drop since that time. In February 2007, the production reached 1.5 million barrels a day and in 2008 it only reached 973 000 barrels a day.
Now, in 2011, the production hardly reaches 400 000 barrels a day.
It is then overtaken by Ku-Maloob-Zaap deposit, located slightly northwest Cantarell complex.
Ku-Mallob-Zaap field (KMZ) now has in 2011 a production amounting to 900 000 barrels a day approximately.
PEMEX produced in 2008 2.8 million barrels a day.
In 2011, the production of the domestic Mexican company PEMEX is almost stable at approx 2.5 million barrels a day.
Oil zones offshore Mexico being in general depletion, the attention is towards Chicontepec field, discovered in 1926, which had remained till now not mined due to the fact that oil is held in an impermeable rock. Then, it remained low developed as it contains mainly extra-heavy oil, which was not profitable until then.
The price of the barrel having increased since that time, Chicontepec basin is now mineable.
Chicontepec basin is located northeast Mexico City. Its surface amounts to 3 800 km², it is located south Veracruz, Puebla and Hidalgo states.
Chicontepec basin contains the biggest oil field in Mexico (19 billion barrels as per official sources, not yet included in the proved reserves of the country). This is then constituted in the major part in extra heavy oil ; however, it also contains light and super light oil.
In March 2006, President Vicente Fox announced that Pemex was going to invest 37.5 billion US dollars over a 20 year-period. At that time, a production of one million barrels a day was forecast (i.e. 160 000 m3 a day).
In February 2009, the famous consultancy firm DeGolyer and MacNaughton certified that Chicontepec field owned 139 billion barrels, ranking Mexico to the fourth place of countries classification in terms of oil reserves, behind Venezuela, Saudi Arabia and Canada. However, Mexico does not dispose of the necessary technology to extract this oil (mainly extra heavy). Furthermore, this field is located under strongly populated zones.
Presently, beginning of 2011, the production of Chicontepec reaches 50 000 barrels a day. As per PEMEX, it should reach 700 000 barrels a day up to 2017.
Let us remember that it is imperative for Mexico that this new deposit takes over from Cantarell complex.
The rest of Mexico fields are far smaller, far more onerous to develop and mainly contain extra heavy oil.
In 2010, Mexico produces over 3 million barrels a day, ranking it 7 in world classification.
In terms of proved reserves, it reaches 10.4 billion barrels (Chicontepec deposit not considered).
So, Mexico remains one of the biggest oil actors in the world.
Its exposure to its natural resources is highly strong, but not excessive yet : profits from oil industry represent 10 % Mexican PIB.