AQUIFER USE AND MAINTENANCE
10 YEARS OF HISTORY
FORWARD-LOOKING STATEMENT
Certain statements in this presentation constitute “forward-looking statements” or “forward-looking information”. All of the forward-looking statements in this presentation are qualified by the assumptions that are stated or inherent in such forward-looking statements. Although Nexen believes these assumptions are reasonable, the reader should not place an undue reliance on these assumptions and such forward-looking statements.
The forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Except as required by law, Nexen undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained herein are expressly qualified by this cautionary statement. Readers should also refer to the risk factors and uncertainties contained in our 2012 Annual Information Form and to the quantitative disclosures about market risk and our forward-looking statements contained in our 2012 Management Discussion and Analysis available at www.nexeninc.com or www.sedar.com, or in CNOOC Limited’s Annual Report on Form 20-F, which is available at www.cnoocltd.com or www.sec.gov.
Any reserves estimates in this disclosure were prepared February 2013 with an effective date of December 31, 2012. The estimates of reserves and future net revenue have been prepared by an internal qualified reserves evaluator in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). Nexen’s estimates of reserves are prepared in accordance with SEC requirements and are attached to our 2012 Annual Information Form.
All financial information contained within this presentation is in Canadian dollars unless noted otherwise.
Nexen Energy ULC is a wholly-owned subsidiary of CNOOC Limited, which is listed on the NYSE, the Stock Exchange of Hong Kong and the TSX. Information regarding CNOOC Limited is available at www.cnoocltd.com.
2
3
CNOOC LIMITED: GLOBAL ASSETS
Nigeria
Cambodia
Indonesia
Australia
Congo
Myanmar Trinidad and Tobago
Algeria
Argentina
Uganda
Qatar
Iraq
Gulf of Mexico
USA
Production Development Exploration Nexen Assets
Equatorial Guinea
Canada
Papua New Guinea
Gabon
North Sea
Colombia
Yemen
Poland
Brazil
NEXEN OIL SANDS
• Nexen holds billions of barrels of contingent recoverable oil sands resource, including:
– Long Lake
– Kinosis
– Syncrude Canada – 7.23% WI
– Hangingstone – 25% WI
– Other projects
• Expected to produce decades of steady production, cash flow & value
• On behalf of CNOOC Limited, Nexen provides strategic oversight for an equity interest of 12.39 % in MEG Energy
4
*For information about our oil sands resource estimates, see our November 15 , 2010 news release, available at www.nexeninc.com or www.sedar.com
Long Lake Acreage Kinosis Acreage Hangingstone Future Phase Acreage Upgrader MEG Energy Syncrude
LONG LAKE
• In-situ oil sands extraction project 40 km south east of Fort McMurray
• Uses steam assisted gravity drainage and integrated upgrading on site
• OrCrude technology and hydrocracking/gasification used to produce Premium Synthetic Crude (PSCTM)
• Pilot (Pad 1) from March 2003 to August 2006
• Commercial production of bitumen in 2008, first PSCTM production in 2009
5
LONG LAKE – UNIQUE PROCESS
6
PRODUCED WATER TREATMENT
7
BFW TANK
ST
EA
M
GE
NS
POND
PRODUCED WATER
UPGRADER RECYCLE
SOURCE WELLS
PRODUCED WATER
UPGRADER RECYCLE
SOURCE WELLS
HLS A AFTER FILTERS A - E
WAC PRIMARIES A - E
HLS B AFTER FILTERS F - J
POLISHERS A - C
HLS C AFTER FILTERS K - N
WAC PRIMARIES F - G
POLISHERS D - E
BFW TANK
PRODUCED WATER
SOURCE WELLS
Water Usage Groundwater and pond water makeup to Hot Lime Softeners Reduced losses (near zero in 2013) in the reservoir have led to low use of brackish water (273 m3/day) and low recycle rate
PROCESS OVERVIEW
Fresh and Saline Water Source Wells
Upgrader & Cogens
LONG LAKE SAGD WELLS AND CENTRAL PROCESSING FACILITY
9
Local geology and hydrostratigraphy
11
SUB-REGIONAL FLOW
SW
NE
SW NE
Adapted from Rakhit 2002
Colorado Group
Drift
Grand Rapids
Clearwater
Wabiskaw-McMurray
Devonian formations
1. Topographically-driven system from hills to rivers 2. Groundwater flows: > vertically in aquitards (low k units) > laterally in aquifers 3. ‘Slow’ system: > vertical recharge = low 10s of mm/year (a few % of annual precipitation) > velocities in aquifers = a few to low 10s of m/year 4. Bedrock units are (severely) sub-hydrostatic > McMurray pressures are commonly 1000-1500 kPa sub-hydrostatic > Slow recharge combined with great horizontal k and deeply incised rivers
Gregoire Channel (Quaternary-age)
GROUNDWATER MONITORING NETWORK
• Water source and monitoring wells in various aquifers:
– Quaternary sediments
– Gregoire Channel
– Grand Rapids B
– Clearwater A
– McMurray
Map Reference: 2013 Annual Groundwater Use Report: Quaternary, Grand Rapids and Clearwater Source Wells, Long Lake Project (Water Act Licence No. 00235895-01-00) Matrix Solutions Inc., March 2014
GR 9-12
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18001800
1800
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1800
1800
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1800
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1500
2500
1000 1500
15000
0
2500
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1600
0
1000
1600
7500
5000
5500
0
1500
0
1800
1600
1500
1800
1000
1800
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1500
0
4500
2000
5000
5000
7500
2500
5000
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10000
1800
1800 1000
1500
1800
2500
5000
700
1600
1500
1600
0
1800
700
1600
00
2500
1800
1800
00
0
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1000 1500
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10001500
1500 1800
1800
1800 1800
1600
1800
1600
1800
1500
700
1800
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3500
5000
1500
1800
1500
4500
2500
1000
1800
2500
2500
1800
2200
1800
1600
1600 2500
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5500 3000
1800
1800
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5000
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1600
1500
1500
1800
1800
2500
2500
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0
10001000
1000
1000
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711 mg/L2350 mg/L
1050 mg/L
1470 mg/L
4280 mg/L
3630 mg/L
3620 mg/L
1450 mg/L
751 mg/L
1810 mg/L
1430 mg/L
5770 mg/L
6840 mg/L
1180 mg/L
1690 mg/L
15?? mg/L623 mg/L
1460 mg/L
1560 mg/L
1800 mg/L
3300 mg/L
5650 mg/L
2510 mg/L
696 mg/L
1180 mg/L
2140 mg/L
OO
O
O
O
O
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O
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O
O
O
OO
O
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O
O
O
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T84
T85
T86
T87
R6R7
Grand Rapids Salinity Mapping
000.0
070
00.00
8000
.0090
00.00
1000
0.00
1100
0.00
1200
0.00
TDS (mg/L)
14
*
Fresh Source Wells – Water Quality - TDS
G
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C
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T84
T85
T86
T87
R5R6R7
Clearwater A Salinity Mapping
7 8 9
TDS (mg/L)
16
Note: • Saline source wells have not been produced very much (yet) • Wells not sample in 2013 due to extreme cold and equipment malfunction
Saline Source Wells – Water Quality - TDS
Freshwater Use at Long Lake
17
GR 9-12
GR 6-14
• Use of Freshwater:
1. Demineralized water make-up (UPG and cogens)
2. Utility and plant use (UPG and SAGD) 3. SAGD steam make-up (HLS’s) 4. Potable 5. Others (incl. drilling)
Tho
usan
ds (
m3 )
18
Saline Water Use at Long Lake
0%
5%
10%
15%
20%
25%
0
50
100
150
200
250
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Th
ou
san
ds
m3
Saline Water % SW/FW
• Saline water make-up: • 99,777 m3 in 2013 for
steam make-up (HLS’s)
HISTORIC AQUIFER USE
Pilot Phase
Operating Phase
WELL AND AQUIFER PERFORMANCE
Reference: 2013 Annual Groundwater Use Report: Quaternary, Grand Rapids and Clearwater Source Wells, Long Lake Project (Water Act Licence No. 00235895-01-00). Matrix Solutions Inc., March 2014
21
COMPARISON 2012 TO 2013 DRAWDOWN
22
WATER USE REPORT REQUIREMENTS
• A requirement of Nexen Energy ULC’s License 00235895-01-00, as amended, is to
– “… develop and maintain a groundwater flow model to ensure the long term sustainability of the Grand Rapids Formation aquifer(s) and other aquifers, within the lease area, and in conjunction with the diversion of groundwater for industrial purposes by adjacent lease holders.”
• Further to this, the license specifies that the simulations are to be presented in a report every 2 years.
23
GROUNDWATER MODEL HISTORY
• Nexen and CPC developed independent models in in 2007
• Nexen and CPC retained Golder to construct and calibrate a Joint Regional Groundwater Flow Model in 2010 – 2011
• Model worked on by Matrix Solutions Inc. for 2013 Water Use report (minor modifications)
WELLS IN 2013 MODEL
• Model includes water source wells in:
• Grand Rapids
• Clearwater
• Quaternary
• Gregoire Channel
• Both non saline and saline water use
• Divided into 3 main areas
• West of GC
• Gregoire Channel (GC)
• East and South of GC
Reference: 2013 Annual Groundwater Use Report: Quaternary, Grand Rapids and Clearwater Source Wells, Long Lake Project (Water Act Licence No. 00235895-01-00). Matrix Solutions Inc., March 2014
GR WELLS WEST OF GREGOIRE CHANNEL
• Good match on trends but over predicts in some wells
• Furthest and most western well (closest to Anzac) has a very good match
Reference: 2013 Annual Groundwater Use Report: Quaternary, Grand Rapids and Clearwater Source Wells, Long Lake Project (Water Act Licence No. 00235895-01-00). Matrix Solutions Inc., March 2014
GREGOIRE CHANNEL WELL
GR WELLS EAST OF GREGOIRE CHANNEL
• Good match on trends but over predicts in some wells (but less than in wells west of GC)
• Some very good matches
Reference: 2013 Annual Groundwater Use Report: Quaternary, Grand Rapids and Clearwater Source Wells, Long Lake Project (Water Act Licence No. 00235895-01-00). Matrix Solutions Inc., March 2014
SOUTHERN AND KINOSIS WELLS
• Good to reasonable matches
• Drawdown in Clearwater wells is over predicted
Reference: 2013 Annual Groundwater Use Report: Quaternary, Grand Rapids and Clearwater Source Wells, Long Lake Project (Water Act Licence No. 00235895-01-00). Matrix Solutions Inc., March 2014
GRAND RAPIDS DRAWDOWN 2011 VS 2013
Reference: 2013 Annual Groundwater Use Report: Quaternary, Grand Rapids and Clearwater Source Wells, Long Lake Project (Water Act Licence No. 00235895-01-00). Matrix Solutions Inc., March 2014
30
COMPARISON TO MEASURED
Measured Simulated
Reference: 2013 Annual Groundwater Use Report: Quaternary, Grand Rapids and Clearwater Source Wells, Long Lake Project (Water Act Licence No. 00235895-01-00). Matrix Solutions Inc., March 2014
31
SUMMARY
• Nexen Long Lake uses steam assisted gravity drainage and integrated upgrading on site
• Freshwater Use for:
1. Demineralized water make-up (UPG and cogens) 2. Utility and plant use (UPG and SAGD) 3. SAGD steam make-up (HLS’s) 4. Potable 5. Others (incl. drilling)
• Saline water Make-up for SAGD steam (HLS’s)
• Groundwater model performs relatively well and shows good match on trends
• Nexen’s groundwater monitoring network capably measures the effects of groundwater diversion at Long Lake
32
THE END
• Acknowledgements
– Nexen would like to thank:
• Golder Associates
• Matrix Solutions Inc.
• Questions?
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