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The Coming Boom in Enhanced Oil Recovery Jim Letourneau, P. Geol. Big Picture Guy Las Vegas Hard Assets Investment Conference September 10, 2008

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Experience is something you don't get until just after you need it.

Steven Wright

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Jim Letourneau

B.Sc. In Geology 1985 from UofA Specializing in petroleum geology and geochemistry 2 CSPG Tracks Awards CSPG Link Award NEB Hearing expert witness Interviewed on CBC, CNBC Asia Energy TV

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Crude Oil Prices 1861-2006

Crude Oil Importers - 2005

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The coming boom

September 3 News Release - Nalco (NYSE:NCL) Commercializes BrightWater Enhanced Oil Recovery Technology September 4 News Release - Stepan (NYSE:SCL) and Nalco (NYSE:NCL) Create First Integrated Enhanced Oil Recovery Platform.

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Results

Reservoir Sweep Efficiency Technology after early applications demonstrated crude oil production increases of 25 to 80 percent in test wells. Powerwave led to a 83 percent increase in oil production from an Alberta oil field the field's production had been declining at the rate of 2.3 per cent per month.

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Active EOR Projects

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Concern

Special Interest Groups are Mobilizing

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Special Interest Groups

Politicians are looking for votes Airlines target oil speculators Pickens talks his book

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Schweitzer Speech

Petro-dictators!

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Schweitzer
Brian Schweitzer - Governor of Montana Right now, the United States imports about 70 percent of its oil from overseas. At the same time, billions of dollars that we spend on all that foreign oil seems to end up in the bank accounts of those around the world who are openly hostile to American values and our way of life. This costly reliance on fossil fuels threatens America and the world in other ways, too. CO2 emissions are increasing global temperatures, sea levels are rising and storms are getting worse.

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Palin Speech

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Palin

We cannot leave ourselves at the mercy of foreign suppliers. In a McCain-Palin administration, we're going to lay more pipelines, and build more nuclear plants, and create jobs with clean coal, and move forward on solar, wind, geothermal, and other alternative sources.

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SOS - Airline Funded

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Pickens Plan

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Pickens Plan

Transition to more wind power from 1-20% of electricity needs Use natural gas for transportation Easy oil has been produced Greenhouse gas emissions from natural gas are 23% lower than diesel and 30% lower than gasoline.

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Hubberts Peak?

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Hubbert Trivia

1940 - published The Theory of Ground-Water Motion Founded the Technocracy Incorporated in 1933 with Howard Scott - a movement which grew to 250,000 members Quote from a former student - Fred Meissner During my contact with Hubbert as a student, I found him to be arrogant, egotistical, dogmatic and intolerant of work he perceived to be incorrect.
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Hubbert Trivia

But above all, I judged him to be a great scientist dedicated to solving problems based on simple physical and mathematical principles. He told me that he had a limited lifetime in which to train and pass on what he knew, and that he couldn't waste his time with people that couldn't comprehend. He was a complex and fascinating person.
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Hubbert Trivia

Correct statement of Darcy's Law. Mathematical demonstration that rock in the Earth's crust is plastic, and that the Earth's crust deforms over time. Prediction of migration paths of hydrocarbons. Demonstration that the Earth's endowment of crude oil is finite, that the rate of oil production reaches a maximum (i.e., peaks) when approximately half of the original resource remains, and thereafter goes into irreversible decline.
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There is HOPE

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Salt Creek, Texas

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Weyburn, Saskatchewan

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The EOR Wedge

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66% Left Behind

The ability to rescue additional production from mature oilfields, many times without the need for further drilling, can have a positive impact on domestic oil production in the United States where the August 2006 issue of World Oil Magazine reports 374 Bbbl of oil, or approximately 66% of discovered oil remains stranded in reservoirs.

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US DOE Statistics

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Definitions

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Primary Recovery

The first stage of hydrocarbon production, in which natural reservoir energy, such as gasdrive, waterdrive or gravity drainage, displaces hydrocarbons from the reservoir, into the wellbore and up to surface. 10% recovery of Original Oil in Place

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Secondary Recovery

The second stage of hydrocarbon production during which an external fluid such as water or gas is injected into the reservoir through injection wells located in rock that has fluid communication with production wells. The purpose of secondary recovery is to maintain reservoir pressure and to displace hydrocarbons toward the wellbore. 15-40% of OOIP

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Primary + 15 to 40% Secondary Recovery Globally the average oil recovery factor (RF) is around 32% according to the SPE
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CO2 and EOR

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Enhanced Oil Recovery - EOR

The third stage of hydrocarbon production during which sophisticated techniques that alter the original properties of the oil are used. Enhanced oil recovery can begin after a secondary recovery process or at any time during the productive life of an oil reservoir. Its purpose is not only to restore formation pressure, but also to improve oil displacement or fluid flow in the reservoir.
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Main EOR Types

1) Chemical flooding (alkaline flooding or

micellar-polymer flooding). 2) Miscible displacement (carbon dioxide [CO2] injection or hydrocarbon injection). 3) Thermal recovery (steamflood or in- situ combustion) 4) Also IOR (improved injection), electrical methods etc.
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CO2 Flood History

First EOR project was in West Texas in 1972, and most of the EOR in the world today is concentrated there. Only about 1/4 of the CO2 used in EOR is derived from industrial sources (Hill, 2003, p. 25). Most extracted from natural CO2 formations. The value of CO2 for EOR has been sufficent to warrant the construction of several multihundred km CO2 pipelines, including one of 800 km from the McElmo Dome on SW Colorado to the Permian Basin oil fields in West Texas.
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Denbury Resources (NYSE:DNR)

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CO2 Flood

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Petrobank (TSE:PBG)

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THAI Process

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Leveraging Technology

Petrobank will take a 50-per-cent operating interest in Duvernay's Dawson property -- estimated to hold 100 million barrels of crude -- where it will use its Toe-to-Heel Air Injection system (THAI) to boost recovery rates and output.

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The Boom

Look for companies with new processes. Look for companies that embrace new technology CO2 sequestration angle Turning stranded or heavy oil into RESERVES triggers a re-pricing of the assets.
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A No Lose Proposition

Provide your email address or give me your business card. I will send you my 5 part Enhanced Oil Recovery Investing Course. Table in Speaker Area or go to

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www.jimletourneau.com

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