Energy

The energy sector module makes it possible to explore the social, economic, and ecological consequences of commodity production and footprints associated with exploration, extraction, production, and translocation of hydrocarbons (conventional oil, natural gas, bitumen (in-situ), mineable oilsand). Multiple energy sector trajectories can be identified, reflecting different possible commodity price scenarios. It is also possible to explore alternative hydrocarbon reserve discovery and exhaustion trajectories.
The general steps for energy and mining sector projections are:

1. Define the initial study area energy and mining sector footprints and landscapes.
2. Provide information to derive projections of future energy and mining sector production and associated footprints.
3. Provide information to describe size, lifespan, and reclamation rates of energy and mining sector footprints.
4. Provide information to relate production to employment, revenues, resource demand, and emissions.
5. Conduct simulations and explore what-if scenarios.
   

The energy sector in ALCES® guides the extraction of subsurface hydrocarbon reserves and the construction, maintenance, and reclamation of relevant surface footprint types (seismic lines, wellsites and wellpads, pipelines, processing and upgrader plants, and surface mines). Wellsites and mine sites are generally stratified into multiple subcategories. Wellsite examples include conventional oil, natural gas, coalbed methane, steam-assisted gravity drainage (SAGD), exploratory, and delineation.

To appropriately determining the spatial distribution of hydrocarbon footprints, an overlay of landscape types can be draped over underlying hydrocarbon deposits. This overlay matrix generates a 2-dimensional table that informs ALCES® as to the proper proportional distribution of seismic lines, wellsites, wellsite access roads, and mine sites across the various landscape types.

Model Inputs

To explore relationships involving the energy sector, ALCES® requires a suite of inputs including:

• original size and composition of the energy sector footprints quantified from spatial inventory according to the Footprint Type classification applied to the region;
• projected number of wells (stratified by well type, such as conventional oil, natural gas, in-situ, coal bed methane) to be drilled annually within the study area. It is also possible to express the annual variance (in standard deviation) of future development to simulate stochastic variation;
• spatial distribution of new developments (e.g., wellsites, pipelines, seismic lines, processing plants, mines) among Landscape Types in the study area. The distribution of new developments among landscape types may be the same as in the initial landbase, random, or user-defined;
• spatial distribution of reclaimed developments among landscape types in the study area. (Reclaimed developments features may return to their original landscape type or they may be directed to a new landscape type);
• area of mines (stratified by type, such as bitumen, coal, hardrock mineral, gravel) to be mined annually;
  amount of seismic line and pipeline associated with each well;
• amount of total and recoverable deposits for conventional oil, natural gas, in-situ bitumen, mineable oilsands,
• coal bed methane (CBM), coal, and gravel;
• future width and area of various energy sector footprints including seismic lines, pipelines, wellsites, facilities, and mines;
• lifespan of all energy sector footprints;
• annual amount of water, fuel, direct employment, royalties and other taxes per m3 hydrocarbon, gravel, hardrock mineral produced;
• emergency response zone (stratified by hydrocarbon type);
• air emissions ((Total Reduced Sulphur, Poly-Aromatic Hydrocarbons, Trace Metals, Volatile Organic Compounds, and Carbon Dioxide) per m3 hydrocarbon produced;
• amount of carbon re-injected into reservoirs

Model Outputs

Once appropriate energy and mining sector inputs have been entered, ALCES® is able to provide a suite of energy sector outputs including:

Output variables relating to the energy sector generated by ALCES® for each time step and in each landscape type, include:

• unproven hydrocarbon reserve volume (m3);
• discovery hydrocarbon volumes (m3/yr);
• proven hydrocarbon reserve volume (m3);
• annual hydrocarbon extraction (production) volumes (m3/yr);
• new annual construction (area, edge) of seismic lines, wellsites, pipelines, surface mines, and processing facilities);
• new annual reclamation (area, edge) of seismic lines, wellsites, pipelines, surface mines, and processing facilities);
• existing (area, edge) of seismic lines, wellsites, pipelines, surface mines, and processing facilities);
• annual direct jobs, indirect jobs, royalties, and revenues associated with the hydrocarbon sector;
• annual emissions (tonnes/year) of atmospheric compounds including NOX, SOX, VOC, particulates, etc.; and
• annual gross and net water requirements for each hydrocarbon type extracted from each of surface water (lentic, lakes, reservoirs) and aquifers.

Future Production and Footprint Projections

There are 2 options for extracting hydrocarbon reserves in ALCES®: the User-Defined Trajectory, and the Hubbert-Naill approach. Drawing on historical data on dynamics of reserve estimates and production curves, the Hubbert-Naill approach makes it possible to apply HN coefficients that guided the pace of the following:

1. Discovery of new reserves (moving hydrocarbons from unproven to proven reserves).
2. Extraction of hydrocarbons from proven reserves.
3. Construction of requisite seismic lines, wellsites, wellpads, and pipelines to ensure that both 1 and 2 occur as required.

Life Cycle Approach to Hydrocarbon Reserves

A simplified model of the exploration and production cycle of hydrocarbons has been incorporated into ALCES® as a means of generating relevant oil and gas activity inputs for future projections. This module was adapted from a model of the life-cycle of U.S. natural gas production, first described by Roger Naill (Naill 1973, and frequently referred to as the Hubbert – Naill approach). A recent review of the model described it in progressively more sophisticated levels or "cuts". It is the first cut that was the basis for the ALCES® data inputs. The first cut model does not include:

• oil, gas price cycles;
• overall economic cycles;
• effects of improved technologies or energy substitution or regulatory changes; and
• multiple discovery and production cycles.

However, this very simple model achieves a description of the full exploitation cycle of a finite resource and allows the model to generate time-based profiles for:

• number of wells;
• installed pipelines;
• seismic lines.

Future projections of oil wells, gas wells, etc. using the Hubbert – Naill life cycle approach are generated as follows:

1. Identify estimated ultimate potential reserves of oil and natural gas.
2. Using historical data or industry experts (e.g., Alberta Energy specialists), develop coefficients that relate well, pipeline, facility, and seismic line numbers to match current cumulative hydrocarbon discoveries and production.
3. History matching: adjust model parameters so that current initial conditions are matched from a surface impact.
4. Include coefficients that relate well, pipeline and seismic lines numbers to production rates and extend the model into the future for input into ALCES®.

Ultimate Potential

• Information on ultimate potential of oil and gas can be obtained from such organizations as energy managers and regulators (e.g., Alberta Energy Resources Conservation Board, Alberta Energy, National Energy Board, Natural Resources Canada), or industry associations (e.g., Canadian Association of Petroleum Producers).

Coefficients

• The coefficients that define new wells, pipelines, or seismic lines can be based on either the unproven reserves or the proven reserves. The relationships among the various parameters are described by the following equations (note that the time increment (dt) is one year as default):
• Discovery Rate (m3/yr) = Unproven Reserves*Discovery Coeff.
  (Since the discovery rate is a fraction of the unproven (i.e. undiscovered) reserves, the quantity of oil or gas discovered declines over time).
• Remaining Proven Reserves (m3) = dt*(Discovery Rate - Usage Rate) + Previous Proven Reserves [m3]. (Remaining reserves is simply the result of a material balance  - the reserves are simply the previously known reserves plus recent discoveries, minus production).
• Usage (Production) Rate (m3/yr) = Proven Reserves*Usage Coeff.
  (The rate of oil or gas consumption is assumed to be proportional to the remaining proven reserves).
• Remaining Unproven Reserves = Previous Remaining Unproven Reserves- dt*(DiscoveryRate)

Additional parameters are described by the following:

• (Gas, Oil) Well Rate (new wells per year) = Well Coeff. * Remaining Proven Reserves (m3).
  (The number of wells drilled in a year is assumed to be proportional to the remaining reserves. This causes a higher number of wells to be drilled at early stages of development; these early wells will discover more reserves than future wells).
• Wells = dt*(Well Rate) +Previous Wells.
• PNG Well Rate (wells/yr) = Oil Well Rate + Gas Well Rate.
  (This parameter is required to generate a profile for "other" wells. "Other" wells includes non-petroleum producers, such as: - water injection; water disposal; solvent injection; gas injection).
• PNG Wells = Oil Wells + Gas Wells.
• Other Well Rate (wells/yr) = Other Well Coeff * PNG Well Rate.
  (These wells are drilled to provide support to oil and gas operations and are assumed to be in proportion to PNG (Petroleum and Natural Gas) wells).
• Other Wells = dt*(Other Well Rate) +Previous Other Wells.

Without detailed information, the occurrence of pipelines and seismic lines can only be assumed to be a function of overall oil and gas activity. The proxy for this activity is the remaining proven reserves, expressed as barrels of oil equivalent (BOE).

On an energy equivalence basis, 6000 standard cubic feet of gas is reported as 1 BOE. In SI units this translates to about 1068 m3 gas per m3 oil equivalent.

• Remaining Proven BOE = Remaining Proven Oil + Remaining Proven Gas/1068 [m3].

Pipeline and seismic development rates are projected in a similar fashion as wells (i.e., related to either proven or unproven reserves). A typical approach is:

• Pipeline Rate (km/yr) = Pipeline Coeff. * Remaining Proven Reserves (m3)
• Seismic Rate (km/yr) = Seismic Coeff. * Remaining Unproven Reserves (m3)

History Matching

ALCES® projects energy footprints based on annual production rates using pre-defined coefficients. Since a key objective of the ALCES® model is to assess future surface impacts, it is important that the oil and gas activity model is "initialized" properly, i.e., it reflects the current actual number of wells, pipelines, and seismic lines and that footprint coefficients translate these to accurately match current cumulative values of discovery, production, oil wells, gas wells, "other" wells, pipelines and seismic lines .

Defining Size and Change to the Hydrocarbon Reserve

The size of hydrocarbon and mineral reserves will be depleted annually at a rate equivalent to the average production rates generated by wells and surface mines. Depletions to the recoverable hydrocarbon reserves can be offset through projected discoveries of new deposits. If the hydrocarbon reserve levels are exhausted through extraction activities, then ALCES® will terminate all new drilling activities until reserves recover to values above required extraction levels.

Projected Discoveries

Generally, trajectories of development (new wells, new area opened for mining) do not follow a constant line, but follow some curve (parabolic, sine wave, etc) illustrating how reserves are discovered, then proceed through preliminary development, enter into a phase of robust development and extraction, and conclude with a phase where investment and operating capital exceed production values, leading to abandonment of the reserve. As reserve volumes are depleted through extraction, the flow rates may decline significantly and the amount of resources required to recover the residual volumes may increase exponentially. It is therefore important to acquire information about what stage of development a given hydrocarbon reserve is in.

Hydrocarbon (well-based) discoveries

The volume (m3) of new hydrocarbon reserves discovered during each year of the simulation period may be constant or may vary over time. Reserves are depleted annually based on the production levels specified for a given simulation. Depletions may be offset by projected discoveries of new deposits. If a reserve becomes exhausted, then new drilling will cease, resuming only after the reserve recovers through new discoveries.

Mine discoveries

For each mine type (Oilsands, Gravel), the volume (m3) of new reserves discovered during each year of the simulation period is specified. Values may be constant or may vary over time. Reserves are depleted annually based on the production levels specified for a given simulation. Depletions may be offset by projected discoveries of new deposits. If a reserve becomes exhausted, then new drilling will cease, resuming only after the reserve recovers through new discoveries.

Defining Metrics of Energy Sector Footprints

Energy sector footprints (seismic lines, wellsites, and pipelines) can vary significantly in width and lifespan. Anticipated temporal trends in these metrics over the forecast or simulation period can be specified. Initial metrics correspond to actual metrics used in the industry for your study area today. These metrics (i.e., widths) can be varied to explore changes to landscape metrics, wildlife habitat quality, and cost to the industry.

Energy Sector Inputs and Outputs

By knowing annual production levels associated with each component of the energy sector, and the average direct and indirect employment associated with unit production volumes of hydrocarbons, ALCES® calculates the direct and indirect workforce employed by the energy sector.

By drawing on average wage incomes associated with the energy sector, ALCES® also calculates the amount of employment revenues associated with the energy sector.

Given defined royalties and other taxes ($/m3/year) paid by the energy sector to government agencies, ALCES® calculates the royalties and taxes contributed by the energy sector.