Skip to main content Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp Investor Presentation | Shale Experts
Loading...
Pm

Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp

Devon Energy Corp · Jun 28, 2011 · 88 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 1
    2011 Capital and Operational Update & Thermal Oil Sands School June 28, 2011
  2. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 2
    NYSE: DVN www.devonenergy.com Slide 3 Agenda John Richels Chris Seasons Chris Seasons Cal Watson Vice President, Thermal Operations Chris Seasons President, Devon Canada John Richels John Richels President & CEO Dave Hager…
  3. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 3
    NYSE: DVN www.devonenergy.com Slide 5 Devon Today Proved reserves: ? 2.9 billion BOE (12/31/10) Current production: ? 629 MBOED (Q1 2011) Sales revenue mix: 56% liquids 44% gas (Q1 2011) Significant midstream business 2011e…
  4. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 4
    NYSE: DVN www.devonenergy.com Slide 6 Repositioning Announcement November 16, 2009 Devon announces plan to strategically reposition company as a high-growth, onshore North American exploration and production company.
  5. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 5
    NYSE: DVN www.devonenergy.com Slide 7 Repositioning Proceeds BP - Brazil $3.2 Q2 2011 BP ? Deepwater GOM $1.8 Q2 2010 Apache ? GOM Shelf $1.1 Q2 2010 CNOOC, CVX, BP ? China $0.6 Q2 & Q3 2010 Maersk - Deepwater GOM $1.3 Q1 2010 BP -…
  6. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 8 Organizational focus on per share results Capital Allocation Criteria Optimize per share returns on a debt-adjusted basis through: ? E&P capital projects ? Debt reduction ? Share repurchases
  7. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 9 Share Repurchase Plan Announced May 2010 Plan: Repurchase $3.5 billion of outstanding shares Expected completion: Year-end 2011 Progress to date: 32.9 million shares for $2.4 billion (Through…
  8. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com Slide 10 Financial Strength & Flexibility Net debt-to-cap ratio: 4% Cash and short-term investments: $6.4 billion Senior unsecured ratings: ? Fitch: BBB+ ? Moody?s: Baa1 ? S&P: BBB+ Note: Includes a…
  9. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 11 2011 Capital Update What?s Changed? Acceleration of Canadian and Permian exploration drilling Expanded acreage capture and accelerated testing of new venture opportunities Increased…
  10. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 12 2011 E&P Capital Budget Other Canada $4.5 ? $4.9 Billion 14% 86% Other Canada 20% 80% Development Original Budget Revised Budget $5.5 ? $5.9 Billion > 90% of capital allocated towards…
  11. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 13 2011 Capital Reconciliation Revised 2011 E&P budget $5.5 ? $5.9 Total increase $1.0 Inflation & foreign exchange $0.3 External factors: Barnett & Cana efficiency/working interest $0.3…
  12. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 14 Canada Exploration Oil & Liquids-Rich Opportunities Deep Basin - Cardium (light oil) - Lower Cretaceous zones (liquids-rich gas) Ferrier Area - Cardium (light oil) Kindersly Area - Viking…
  13. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 15 Permian Basin Exploration Oil & Liquids-Rich Opportunities Net risked resource: > 1 BBOE Proved Reserves: 167 MMBOE 2011 capital: ? $900 million 2011 plans: Drill 310 wells (19 operated rigs)…
  14. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 16 New Ventures Activity 2011 capital: ? $350 million Targeting oil and liquids-rich gas 2011 plans: ? Continue to add to positions ? Acquire seismic data ? Drill/participate in > 30 wells…
  15. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 15
    NYSE: DVN www.devonenergy.com Slide 18 Cana & Barnett Capital Increase Liquids-Rich Gas Developments Cana Woodford Shale Higher OBO activity Increased working interest Accelerated delineation of NW acreage Improved drilling…
  16. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 16
    NYSE: DVN www.devonenergy.com Slide 19 Continuous Drilling Improvement Barnett Shale Spud To Rig Release 14.4 13.4 12.0 16.7 17.3 33.4 23.9 18.2 5 0 10 15 20 25 30 35 40 45 50 2004 2005 2006 2007 2008 2009 2010 2011…
  17. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 17
    NYSE: DVN www.devonenergy.com Slide 20 Cana Plant Update Following May 24, 2011 Tornado Plant and major vessels structurally sound Increased electrical and foundation repairs Insured for damage and business interruption Estimated…
  18. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 18
    NYSE: DVN www.devonenergy.com Slide 21 2011 Production Outlook External events impacting 2011 production: ? Tornado damage to Cana plant in second quarter ? 2.0 MMBOE ? Severe winter weather in first quarter ? 0.5 MMBOE Maintaining…
  19. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 19
    NYSE: DVN www.devonenergy.com Slide 22 2011 F&D Target Capitalized G&A and interest $0.3 - 0.4 E&P capital $5.5 - 5.9 billion Reserve replacement(1) ? 160% Drill-bit reserve additions(1) 370 - 390 MMBOE F&D(1) ? $15 - $17/BOE…
  20. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 20
    NYSE: DVN www.devonenergy.com Slide 23 2011 Update Summary Acceleration of Canadian and Permian exploration drilling Expanded capture and accelerated testing of new venture opportunities Increased efficiency/working interest in the…
  21. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 21
    NYSE: DVN www.devonenergy.com Slide 26 Global Crude Oil Resource 44 36 30 21 60 102 99 92 115 136 175* 264 0 50 100 150 200 250 300 Saudi Arabia Canada Iran Iraq Kuwait Venezuela Abu Dhabi Russia Libya Nigeria…
  22. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 22
    NYSE: DVN www.devonenergy.com Slide 27 Canadian Oil Sands A Significant & Accessible Resource Jackfish Other Canada 78% 22% Non-State Controlled World Oil Resource 52% 48% Non-State Controlled Resource Canadian Oil Sands…
  23. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 23
    NYSE: DVN www.devonenergy.com Slide 28 What is Bitumen? Bitumen is the result of biodegradation of lighter oil (heavy remnants) Oil sands are an unconsolidated mixture of sand, water and bitumen Immobile at reservoir conditions…
  24. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 24
    NYSE: DVN www.devonenergy.com Slide 29 Bitumen ? Resistance to Flow 1 10 100 1,000 10,000 100,000 1,000,000 Water Olive Oil Pancake Syrup Honey Ketchup Cold Lake Bitumen Peanut Butter Athabasca Bitumen Light Crude…
  25. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 25
    NYSE: DVN www.devonenergy.com Slide 30 Canadian Oil Sands Overview Contains large deposits of bitumen or heavy oil ? ? 170 billion recoverable barrels of oil ? Potential for over 100 years of production Current activity: ? > 20…
  26. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 31 Canadian Oil Sands Development Projects In Situ Projects Mining Projects Project Type Peace River Athabasca Cold Lake Oil Sands Region Fort Hills Horizon Joslyn Creek Syncrude Suncor…
  27. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 32 Oil Sands Production Technologies Mining Mining ? oil sands less than 200 feet deep Source: Canadian Center for Energy Information
  28. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 33 Oil Sands Production Technologies Cyclic Steam Process In situ recovery ? oil sands more than 200 feet deep Cyclic Steam Process Source: Canadian Center for Energy Information
  29. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 29
    NYSE: DVN www.devonenergy.com Slide 34 Oil Sands Production Technologies Steam Assisted Gravity Drainage (SAGD) Source: Canadian Center for Energy Information In situ recovery ? oil sands more than 200 feet deep Steam Assisted…
  30. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 35 Canadian Oil Sands Mining and In Situ 20% 80% Oil Sands Resource Mining In Situ Source: Canadian Association of Petroleum Producers
  31. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 37 Devon?s SAGD History 1997 Acquired underground test facility at Dover 2001 Acquired Jackfish leases 2005 Sold Dover facility 2008 First production from Jackfish 1 2009 Began construction at…
  32. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 38 Devon?s SAGD Today Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Devon?s SAGD characteristics: ? Low F&D ? Low geologic risk ? High reservoir quality ? Flat…
  33. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 39 Jackfish Projects Overview Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Each Jackfish project: ?…
  34. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 34
    NYSE: DVN www.devonenergy.com Slide 40 Jackfish 1 Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Jackfish 1 1 Mile Capital through…
  35. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 41 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 Foster Creek MacKay River Firebag Christina…
  36. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 36
    NYSE: DVN www.devonenergy.com Slide 42 Jackfish 1 Performance Steam Oil Ratio (SOR) 9 8 7 6 5 4 3 2 1 0 10 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 SAGD Project Comparison (Cumulative SOR) Cumulative SOR Jackfish Long…
  37. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 37
    NYSE: DVN www.devonenergy.com Slide 43 0 10 20 30 40 50 60 70 80 90 100 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 Jackfish 1 Performance Capacity Utilization % of Project Capacity Utilized…
  38. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 38
    NYSE: DVN www.devonenergy.com Slide 44 Jackfish 2 Project Approach Same basic facility design as Jackfish 1 Minor process improvements Internal project management rather than 3rd party
  39. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 39
    NYSE: DVN www.devonenergy.com Slide 45 Jackfish 2 Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay 1 Mile 2008 2009 2010 2011 2012 Plant…
  40. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 40
    NYSE: DVN www.devonenergy.com Slide 46 Jackfish 3 Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay 2011 2012 2013 2014 2015 Plant…
  41. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 41
    NYSE: DVN www.devonenergy.com Slide 47 Jackfish East Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike 1 Mile Jackfish 3 Jackfish East 2015…
  42. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 42
    NYSE: DVN www.devonenergy.com Slide 48 Pike Joint Venture 50% working interest Devon operated Completed 2010/2011 winter appraisal drilling Up to 5 SAGD development phases Ft. McMurray Edmonton Calgary ALBERTA BRITISH…
  43. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 49 Existing well control data and seismic Thick and continuous reservoir (McMurray formation) Minimal depositional shale Good cap rock Good oil saturation and porosity levels Minimal water issues…
  44. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 44
    NYSE: DVN www.devonenergy.com Slide 50 Pike 2010/11 Winter Delineation Program Existing well data: > 250 wells 2010/11 winter program: ? Drilled 135 stratigraphic wells ? Acquired 59 square miles of seismic ? Delineated two of…
  45. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 51 Pike 2010/11 Drilling Confirms High-Quality Reservoir Pike Jackfish Depth (Ft, TVD) 1,400 ? 1,560 1,320 ? 1,380 Pay Thickness (Ft) 49 - 144 49 ? 164 Porosity (%) 30 ? 35 30 - 33 Permeability…
  46. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 46
    NYSE: DVN www.devonenergy.com Slide 52 Pike 1A, 1B & 1C Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Expect 2011/12 winter delineation program to confirm a third Jackfish sized project Potential…
  47. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 47
    NYSE: DVN www.devonenergy.com Slide 53 Proposed Timeline Timing Range of Expected Plant Start-Up Jackfish 1 (35 MBOD) Jackfish 2 (35 MBOD) Jackfish 3 (35 MBOD) Jackfish East (20-25 MBOD) Pike 1A (35 MBOD) Pike 1B (35 MBOD) Pike…
  48. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 48
    NYSE: DVN www.devonenergy.com Slide 54 Devon?s Thermal Resource Potential Strong Foundation for Growth Less: Royalties (1) (103) (226) (329) Total gross resource 543 1,186 1,729 Total net resource 440 960 1,400 729 457 Unbooked…
  49. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 49
    NYSE: DVN www.devonenergy.com Slide 55 Thermal Oil Production Growth Outlook Net Barrels Per Day 33,000 June 2011 2020 150,000 175,000 17% CAGR 19% CAGR Net risked resource: ? 1.4 BBO
  50. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 50
    NYSE: DVN www.devonenergy.com Slide 57 Regional Geology Limestone McMurray Oil Sands Gravels, Sands, Muds & Clays Sands Pad Site / SAGD Well Brackish Source Well Source Potable Water Disposal Well into McMurray Wet Zone
  51. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 51
    NYSE: DVN www.devonenergy.com Slide 58 Steam Assisted Gravity Drainage Continuous steam injection Dual horizontal wells ? 2,500 ft long ? 15 ft vertical separation Gravity is the primary drive mechanism Gas is the lift mechanism
  52. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 52
    NYSE: DVN www.devonenergy.com Slide 59 10?C Steam From Generators Injection Well Production Well SAGD Process
  53. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 53
    NYSE: DVN www.devonenergy.com Slide 60 10?C Steam From Generators Injection Well Production Well SAGD Process Circulation Phase
  54. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 54
    NYSE: DVN www.devonenergy.com Slide 61 10?C Steam From Generators Steam Chamber Injection Well Production Well SAGD Process Partial SAGD
  55. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 55
    NYSE: DVN www.devonenergy.com Slide 62 10?C Steam From Generators Steam Chamber Injection Well Production Well SAGD Process Full SAGD
  56. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 56
    NYSE: DVN www.devonenergy.com Slide 63 Steam Chamber Development Steam Chamber Oil Surface Well Heads Interbedded Shale Steam
  57. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 57
    NYSE: DVN www.devonenergy.com Slide 64 McMurray cap rock provides primary steam containment Core Cap rock Typical Well Log Excellent Cap Rock Integrity Clearwater-Wabiskaw cap rock provides secondary barrier to steam Cap rock…
  58. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 58
    NYSE: DVN www.devonenergy.com Slide 65 Seismic Surveys Steam Chamber Growth Seismic shot over 3 years illustrates steam chamber growth at Jackfish 1 3 Months Steam 27 Months Steam 39 Months Steam 2008 2010 2011
  59. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 59
    NYSE: DVN www.devonenergy.com Slide 66 Seismic Surveys Steam Chamber Growth Cross-section of Steam Chambers (Jackfish 1 Pad A) Height of Steam Chamber Growth 25 meters 300 meters . . I I I I I I I Injector well Production well…
  60. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 60
    Jackfish Overall Plant Schematic
  61. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 61
    Jackfish Overall Plant Schematic Process Area Emulsion From Well Pads Diluent from Access P/L Emulsion (Bitumen, Water) Diluent
  62. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 62
    NYSE: DVN www.devonenergy.com Slide 69 Jackfish Overall Plant Schematic Process Area Emulsion (Bitumen, Water) Diluent Heavy Blend Oil Storage Tanks Emulsion From Well Pads Diluent from Access P/L Sales via Access P/L
  63. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 63
    NYSE: DVN www.devonenergy.com Slide 70 Jackfish Overall Plant Schematic Process Area Water Treatment Emulsion (Bitumen, Water) Diluent Heavy Blend Oil Produced Water Produced Water Storage Tanks Emulsion From Well Pads…
  64. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 64
    NYSE: DVN www.devonenergy.com Slide 73 SAGD Pad Development A new well pad will be drilled every 1 - 2 years per project ? Each well pad contains 7 well pairs ? The EUR per well pair is ? 2 million barrels ? A typical well pair is…
  65. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 65
    NYSE: DVN www.devonenergy.com Slide 74 SAGD - Continuous Improvement Fuel efficiency will continue to improve Solvents could further improve SOR Technology should improve future recovery rates Additional exploitation through small…
  66. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 66
    NYSE: DVN www.devonenergy.com Slide 76 What is Blended Oil? Bitumen ? 70% Condensate ? 30% Bitumen has low viscosity ? >100,000 cP ? Will not flow in natural state through pipelines Bitumen is ?blended? with a diluent ? Diluent…
  67. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 67
    NYSE: DVN www.devonenergy.com Slide 77 Heavy Oil Midstream Infrastructure Access Pipeline EDMONTON HARDISTY Enbridge P/L To Midwest Express P/L To U.S. Rockies Terasen P/L To Pacific NW ACCESS PIPELINE Athabasca Enbridge…
  68. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 68
    NYSE: DVN www.devonenergy.com Slide 78 Marketing Options Upgrading Versus Blending Upgrading Requires multi-billion up-front capital costs Produces a light, sweet crude Principal risk is overall oil price variability Blending…
  69. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 69
    NYSE: DVN www.devonenergy.com Slide 79 Heavy Oil Blend Planned Refinery Expansions Marathon Detroit, Michigan 2012 80,000 Total 550,000 Northwest Edmonton, Alberta 2014 80,000 Upgrading BP Whiting, Indiana 2013 260,000…
  70. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 70
    NYSE: DVN www.devonenergy.com Slide 80 U.S. Gulf Coast (USGC) Cushing Hardisty Edmonton Enbridge Montreal Chicago Detroit Steele City Keystone Vancouver TMPL Heavy Oil Blend Pipeline Expansions Wood River Existing…
  71. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 71
    NYSE: DVN www.devonenergy.com Slide 81 Incremental Heavy Oil Blend Supply/Demand Growth Summary Heavy Blend Growth Refinery Expansions Keystone XL Capacity Cushing USGC Pipeline MMBOD 0.2 0.4 0.6 0.8 1.0 2011 2012 2015 2016…
  72. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 72
    NYSE: DVN www.devonenergy.com Slide 82 Heavy Oil Blend Historical & Forecasted Prices 64% 78% 84% 82% 77% 69% 70 - 80% 68% 68% 50% 55% 60% 65% 70% 75% 80% 85% 90% 2004a 2005a 2006a 2007a 2008a 2009a 2010a 2011-…
  73. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 73
    NYSE: DVN www.devonenergy.com Slide 84 Alberta?s Land Use Framework Announced in 2008 to develop regional land use plans in Alberta Lower Athabasca Regional Plan draft plan released April 2011 Devon actively engaged with…
  74. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 74
    NYSE: DVN www.devonenergy.com Slide 85 Environmental Concerns Water usage Surface footprint Greenhouse gas emissions
  75. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 75
    NYSE: DVN www.devonenergy.com Slide 86 Devon?s Thermal Heavy Oil Projects Water Usage No fresh water use ? Jackfish utilizes 100% saline water ? Recycle rates of water >95% ? Continue to reduce water usage ? Move to higher salinity…
  76. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 76
    NYSE: DVN www.devonenergy.com Slide 87…
  77. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 77
    NYSE: DVN www.devonenergy.com Slide 88 Greenhouse Gas (GHG) Emissions Wells to Wheels Approx 55% of 2008 oil sands production Approx 40% of 2008 oil sands production Approx 5% of 2008 oil sands production No current production…
  78. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 78
    NYSE: DVN www.devonenergy.com Slide 89 Jackfish project top quartile within industry Continue to optimize steam oil ratio Energy efficiency through waste heat utilization Solvent steam co-injection technology Greenhouse gas emissions…
  79. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 79
    NYSE: DVN www.devonenergy.com Slide 91 How We Report Our Results Reported production is bitumen, no diluent Production is net of royalties Oil revenue is only bitumen, no diluent Fuel and transportation costs are recorded in lease…
  80. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 80
    NYSE: DVN www.devonenergy.com Slide 92 Key Drivers of SAGD Economics Capital costs ? Facility construction ? Future development capital Bitumen realizations Operating expenses ? Natural gas prices ? Non-fuel operating costs…
  81. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 81
    NYSE: DVN www.devonenergy.com Slide 93 Key Economic Drivers Facility Construction & Future Development Capital $28,500 $17,700 $ per flowing barrel $1.0 $0.6 $ in billions Jackfish 2 Jackfish 1 Future Development Capital:…
  82. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 82
    NYSE: DVN www.devonenergy.com Slide 94 Key Economic Drivers Bitumen Realizations Divided by: 0.7 barrels Bitumen realization $57.14 1 barrel of bitumen production Bitumen realization $40.00 0.7 barrels of bitumen production Price…
  83. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 83
    NYSE: DVN www.devonenergy.com Slide 95 Key Economic Drivers Operating Costs & Royalties Operating Costs Non-fuel operating expenses ? ? $7.00 per barrel Fuel operating expenses ? Plant steam-to-oil ratio (SOR) is designed at 2.6 ?…
  84. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 84
    NYSE: DVN www.devonenergy.com Slide 96 Cash Margin Per Barrel $41.90 ($3.74) ($4.50) ($7.00) $57.14 Pre-Payout Cash operating margin $31.57 Non-fuel operating costs ($7.00) Fuel operating costs ($4.50) Royalties ($14.07)…
  85. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 85
    NYSE: DVN www.devonenergy.com Slide 97 Rate of Return Matrix Jackfish 1 WTI-NYMEX Price 18% 20% 22% $60.00 $4.00 28% 34% 37% $6.00 27% 33% 37% 37% $120.00 32% $100.00 $8.00 27% Natural Gas Price $80.00 Assumptions: 1)…
  86. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 86
    NYSE: DVN www.devonenergy.com Slide 98 Rate of Return Matrix Jackfish 2 WTI-NYMEX Price 12% 13% 15% $60.00 $4.00 21% 25% 28% $6.00 20% 24% 28% 27% $120.00 24% $100.00 $8.00 19% Natural Gas Price $80.00 Assumptions: 1)…
  87. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 87
    NYSE: DVN www.devonenergy.com Slide 99 Upside to Economics Technology should improve future recovery rates Fuel efficiency will continue to improve Solvents could improve SOR More efficient facility design for future phases…
  88. Capital and Operational Update Thermal Oil Sands School – Devon Energy Corp – slide 88
    NYSE: DVN www.devonenergy.com Slide 100 Devon?s Thermal Position Summary Experienced SAGD management team Top-tier oil sands position Approximately 1.4 billion net recoverable barrels Jackfish project: Industry-leading project…

From the store

Browse maps, data & reports in the Shale Experts store