1) The document proposes a new business model called "Oil to Power" that increases the value of oil by generating electricity from oil and gas production facilities. 2) This alternative revenue stream could make previously uneconomic fields and low productivity wells viable by selling power instead of crude oil. 3) The concept involves using the produced oil and gas as fuel to power generators onsite, transforming the electricity into a usable form like AC power for grids or DC for offshore, and selling the power locally.

1. Oil to Power – an Alternative
Marketing Concept
Simon Richards
EPConsult Ltd
…or how to get more bucks for your barrel!
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2. Summary of Presentation
A new business model that can make small oil
fields, “difficult” crudes and low rate wells
attractive by increasing the value of the oil.
This leads to improved economics, resource
management, field sustainability and reduced
emissions.
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3. Value
• What do we mean by “value”
• Neoclassical economics:
– Price = value, relative to supply-demand balance
– No market = no value
• Classical economics:
– Price ≠ value
– Value is the labour saved through use of good or
service
– Market and value are disconnected
• OG industry uses Neoclassical definition
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4. Background
• Crude oil is an intermediary product and so
the value remains relatively low
– Conventional wisdom to maximise production rate
and minimise the field life
• Increased value of crude oil could:-
– Extend field life.
– Allow lower rates from tight, fractured and thin
reservoirs and/ or low mobility fluids
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5. Revenue =
Production x Price ??
– CAPEX - OPEX
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6. Challenges
• An increasing proportion of the remaining
resources are heavy (viscous) and/ or sour
and/ or acidic.
– Often difficult to extract at a fast enough rate
– Price of these oils is often discounted
considerably from the benchmark crude
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7. Opportunity
• A new business model that :-
– Will increase the value of the crude oil
• Enables development of heavy, sour, acidic and/ or
viscous oils and low productivity wells
• Extend economic life of field and increase reserves
– Eliminate USD exchange risk
– May enable economic carbon capture and storage
as well as (im)miscible gas injection EOR
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8. Method
• Sell crude oil (energy) as power.
– Power is generated at the production facility.
– Oil and gas are not exported.
– No pipelines, tankers, pumps and compressors
etc.
– Cables, transformers and converters.
• Electricity is very versatile – crude oil can only
be sold to downstream companies
• Potential markets:-
– Offshore production facilities
– Onshore electricity grid
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9. Concept Description
• Conventional approach up to production
separator, including produced water system.
– Artificial lift by downhole pump – no gas lift.
– Water can be disposed or re-injected
– Oil and gas used to fuel reciprocating engine-
driven power generators.
– AC power transformed to HV for onshore
– Rectify to DC if required for offshore
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10. Oil to Power Schematic
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11. Reward
• Power price is:
– often more than crude oil;
– often more stable than oil;
– linked to local factors
• Oil price linked to global economic health.
• No exchange rate risk - revenue in local
currency.
• Carbon cost is driver for CO2 re-injection.
– £19.90 /Te (2009). Approx £12.75 /MWh.
• Climate Change Levy £4/ MWh
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12. Value of Power
$100
Brent
$90 Field A
$80 Electricity
Price ($ per bbl)
$70
$60
$50
$40
$30
$20
Low Medium High
Uncertainty Range of Oil and Electricity Price
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13. Applications
• Heavy/ extra-heavy crude oil have increased
energy content/ barrel and electricity yield.
• High sulphur and/ or acidic crude oil.
• Low rate wells/ fields
• Low reserves
• (Im)miscible gas EOR with CO2 or flue gas
• Stranded/ marginal oil and gas fields
• Onshore/ offshore
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14. Source: WoodMac 14

15. Power Generation Technology
• Diesel engines
• Fuel limitations:
– viscosity 2000 cSt @ 50 °C
– sulphur content 5%
• Fuel types - diesel, heavy fuel oil, crude oil
and gas;
• Electrical efficiency up to 47%
• CHP efficiency up to 90%
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16. Emissions Control
• Produced water treatment and disposal or
injection;
• Flue gas includes CO2, NOX, SOX, CO,
particulates & unburned hydro-carbons
– These can be controlled by:
• primary methods stop contaminants forming during
combustion (e.g. high efficiency, low sulphur fuel, low
combustion temperature);
• Secondary methods capture contaminants from the flue
gas afterwards (e.g. FGD, SCR, CCS);
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17. Source: Wartsila 17

18. Cost
• Cost is field specific and depends on output and location
• Onshore rule of thumb USD1.4MM/ MWh
Offshore
FPSO Lifecycle Oil to Power
Reserves Cost USD/ bbl
MMbbl High Low Power Lifecycle
Rate Rate MW USD/ bbl
16 56 158 35 102
40 27 72 88 56
73 19 42 158 39
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19. Contact Information
Simon Richards
EPConsult Ltd
www.ep-consult.com
simon.richards@ep-consult.com
+44 20 7582 5555
Final Thought
Our role is not so much to produce barrels
but to turn our assets into cash….
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