An Innovative Approach to Oil An Innovative Approach to Oil Recovery--Lessons Learned From A Recovery--Lessons Learned From A

HundredHundredOrganic Oil Recovery TreatmentsOrganic Oil Recovery Treatments

Brian W.G. MarcottePresident and CEO-Titan Oil Recovery, Inc.

Unocal AlumniSeptember 8, 2011

Houston, Texas

We Have Learned a Great Deal from More than 100 Completed MEOR Well Treatments

• More than 106 individual well applications have been completed on US and Canadian oil producing and water injection wells from December 2007 through December 2010

• 127% average production increase on these 106 treatments • 89% Project Success Rate (based on wells treated)• 100% Waterflood Project Success Rate (oil rate increases on

adjacent producing wells)• Oil company clients achieve an ROI of over 400% when fully

implementing the treatment process on a field-wide basis

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An Old Idea with a Very New Approach to Oil Recovery

• On Average, the Industry Only Recovers about 35% of the Oil Discovered in Global Oil Fields

• Most Global Oil Fields Face 4-15% Production Declines Annually• A Successful MEOR Process Will Help Address the Recovery Issue• Globally 6.2 Trillion Barrels of Trapped Oil Exists in more than

70,000 Oil Fields – One of the Largest Natural Resources in the World

• Only 300 Enhanced Oil Recovery Projects Actively Underway Globally (Oil and Gas Journal, April 19, 2010)

• Of the More than 70,000 Global Oil Fields, it is Estimated that 50% are Likely to be Subjected to Waterflood as a Secondary Recovery Method. Based on the Physical Characteristics of These Fields, up to 50% may be Suitable for MEOR or Organic Oil Recovery (as many as 17,500 oil fields).

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The Titan Process – a Revolutionary, Proprietary and Proven Technology

• Titan’s Bio-flood™ process is a proven, proprietary and specific next generation form of enhanced oil recovery.

• Titan’s process increases both current production and ultimate recovery from existing oil fields

• Titan’s process is a low cost, effective approach to improving oil production that will be utilized broadly in one of the largest industries in the world

• Titan expects its Bio-flood™ process to become part of the normal development of oil fields around the world

MEOR Has Extremely Favorable Characteristics for Field Owners

• Increases current oil production and ultimate recovery from oil fields

• Low cost and effective (full-field applications from

$7-$10 per incremental barrel• Suitable for onshore and offshore fields• No new facilities are required for field owner

to deliver the desired results• Complex Science – Simple Application

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The Oil Release Mechanismis Organically Complex

• Stimulates the growth of specific types of microbes

• Microbes are induced to change from hydrophilic to hydrophobic

• Microbes interact at the oil-water-interface within the pore space of the reservoir acting as nano-particles to reduce interfacial tension

• Microbes allow the oil break up into micro-droplets that become more mobile allowing the oil to flow more freely

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How Oil is Produced

• Oil is mostly contained in sandstone and limestone porous rock layers, not in underground pools or lakes

• Oil recovery takes place by drilling into these rock layers—up to four miles below the earth’s surface

• Natural pressure and energy drives 20% (on average) of the contained oil fluids to the surface. This is called primary production

• Next, oil companies have to rely on “secondary recovery”, to recover another 15% (on average) of the contained oil. The most common secondary recovery method is called waterflooding

• Waterflooding pushes water into the porous rock layers from surface pumps in an attempt to create pressure and push oil to the surface in surrounding producing wells – pictured on next page

• Next, Enhanced Oil Recovery (EOR) is attempted. Such methods are considered tertiary recovery.

• EOR project applications globally are very limited – only 300 documented projects on 70,000 oil fields

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Waterfloods are the Most Common Type of Secondary Recovery

Original Oil Field: Primary production is caused by internal reservoir pressures that have built up over millions of years. This pressure forces a flow of liquids towards the well bore which acts like a release valve. Years of oil production takes place and approximately 20% of the original oil in place is recovered.

Oil Field After Several Years: The pressure of the reservoir abates and recovery now has to be aided by forcing water under very high pressure into the reservoir that will push oil towards the production well. This is called a “water flood” and is the most common secondary oil recovery method. The water, pushing through the porous carbonate or sandstone, recovers another 10-15% of the original oil in place.

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The Titan Process is Used With Waterflooding and Releases Oil “Trapped” After Primary and Secondary Recovery

Pre-Titan Oil Saturation(65% of the Oil is TrappedBetween sand grains)

Post-Titan Oil Saturation(Trapped-Oil is Released by biological action)

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The Microbial Response is Managed to Perform Desired Reservoir “Work” — This is a Biological Nano-technology

• Selected microbial-populations increase dramatically when selectively stimulated with Titan nutrients

• Microbes become larger and multiply rapidly

• Microbes become oil interactive when supplied with specifically designed nutrients

• Microbes attach to and surround trapped oil

• Microbes deform and break apart residual oil

– Smaller droplets can now move through pore throats and channels in the geologic formation

• Microbes create new mobility and activity in the static pore space of the reservoir rock formation

Oil Release Mechanism is Mechanically Simple and Does not Require Chemical Secretion

Hydrophobic ultra micro-bacteriaintact and lysed cells

Pore throatFlow 30 cm/day

Oil

BrineBrine

Process may recover up to an additional 10% of the OOIP by making oil more mobile in the reservoir.

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TITAN Provides a 21st Century Technology Using Time- and Field-Tested Science

• Uses anaerobic microbes living in the subsurface oil reservoirs

– Location-specific Biology is tested and analyzed from the target field

• Nutrients are reservoir-specific based on thousands of empirical tests on global fields of many diverse types of crude oil

– Biodegradable, microbe-free nutrients are formulated to direct “the work” of the microbes

– Specially-formulated non-glucose nutrients are injected into the reservoir using produced water and the existing water injection system

– In our experience, more than 95% of the fields we have tested have sufficient species of microbes for the Titan Process to be successful.

• Reactions and results in the reservoir are controlled by the Titan Process

– Resident microbes have a cellular change due to the Titan nutrients causing them to move to the water-oil interface to improve oil flow

– Trapped oil is surrounded and physically deformed

• Small droplets are formed and can escape from and through the pore space

• Trapped and irreducible oil is released from rock surfaces and immobile oil concentrations

• High permeability zones may be blocked by a temporary emulsion

• Oil volume increases while the percentage of water to total production decreases--a very desirable outcome

Reservoir Screening is Critical for MEOR Success

• Check the biological ecology of the reservoir fluids and microbial

communities of the specific reservoir• Check for Critical Reservoir

Physical Characteristics-Temperature-Salinity-Total Dissolved Solids-pH-Oil API Gravity

• Check If Oil is Movable -Past Water flood Response

-Recovery Factor (% OOIP)13

This Process has Been Successfully Applied to a Wide Range of Oil Gravities

• Highest oil gravity 41° API(up to 100% production

increase)

• Lowest oil gravity 16° API (up to 533% production increase)

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Plugging and Formation Damage are NO LONGER PROBLEMS

• Historically, MEOR was linked to reservoir plugging and formation damage

- Creation of biomass when bacteria growth is stimulated

- Problematic to injectors

• The NEW Process has caused NO plugging

• No production upsets

• No oil treating problems

• No change in oil characteristics

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The Nature of Microbes is Well-Suited for “Reservoir Work”

• Microbes reside in extreme conditions

• Microbes can be manipulated to perform valuable in-situ “work”

• MEOR has been successfully applied at

-High reservoir temperatures (200°F / 93°C)-High salinity values (140,000 ppm TDS)

• Successful in a wide range of Oil Gravity

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The Process Has Been Applied Successfully in Dual-Porosity Reservoirs

Application in Sparky reservoir, Canada, shows dual porosity

reservoirs can be treated (9 Injector well pilot)

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Saskatchewan Well Response Continued For Over a Year

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Canadian Injector Treatment Successfully Impacts Offset Producer

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Idle Well Returned to Production Responds to Treatment

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Fourfold Increase Seen in California Los Angeles Basin Well

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Reduction of Reservoir Souring is a Complementary Benefit

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A New MEOR Technology Has Been Successfully Applied on More than 100 well Treatments

Proven to be effective in increasing Oil production (127% average Production Increase)

High success rate (89%)

Viable in a variety of reservoirs

No reservoir damage or plugging

Economically beneficial for the field owner and operator

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Titan’s Expectations are Powerfully Simple

Titan believes the Titan Process will become a routine

part of the life-cycle of many oil fields around the world:• Natural Production (Primary)• Waterflooding (Secondary)• Titan Bio-flooding (Tertiary)

Titan’s Organic Oil Recovery will be considered as:

“a New Industry Practice”

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