HTL Heavy Oil Production

Document Sample
HTL Heavy Oil Production Powered By Docstoc
					             IVAN H O E
                 Energy



     HTL Heavy Oil
      Production

     Insight Oilsands
       Conference

          Ed Koshka
VP Business Development Canada


      January 16-17 2008
                      FORWARD-LOOKING STATEMENTS
This document includes forward-looking statements, including forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, but are not limited to, statements relating to the potential for future
application, commercialization, costs, performance and the economics of Ivanhoe Energy’s
HTL technology and other statements which are not historical facts. When used in this
document, the words such as “could,” “plan,” “estimate,” “expect,” “intend,” “may,” “potential,”
“should,” and similar expressions relating to matters that are not historical facts are forward-
looking statements. Although Ivanhoe Energy believes that its expectations reflected in these
forward-looking statements are reasonable, such statements involve risks and uncertainties
and no assurance can be given that actual results will be consistent with these forward-looking
statements. Important factors that could cause actual results to differ from these forward-
looking statements include the potential that commercial installations of the HTL technology
will experience technological and mechanical problems or delays in receiving equipment and
services from suppliers, Ivanhoe Energy’s process to upgrade bitumen and heavy oil may not
be commercially viable, assumptions applied in drawing the conclusions in the comparative
cost analyses may be materially different from future market conditions, including the
assumptions made around Ivanhoe Energy’s anticipated capital and operating costs for and
HTL facility, environmental regulation could change resulting in design changes or increased
capital and operating costs, our ability to raise capital as and when required to complete a
commercial HTL facility, competition from emerging technologies and other risks disclosed in
Ivanhoe Energy’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange
Commission on EDGAR and the Canadian Securities Commissions on SEDAR.

           IVAN H O E
                Energy
                   Ivanhoe Energy Inc.

 Stock Exchange Listings:    TSX (IE) & NASDAQ (IVAN)
 Market Capitalization:      Approx US$400 million
 Shares Outstanding:         243 million
 Bd. & Mgmt Ownership:       26%
 Oil & Gas Reserves:         3.1 million bbls proved




       IVAN H O E
          Energy
               Ivanhoe Energy - Focus
 Growth in production and reserves through use of HTL
  upgrading technology
      Key focus: Western Canada
      Stranded heavy oil globally


 How will we accomplish this?
      Establish joint ventures / production sharing agreements
      Acquisitions of heavy oil assets




       IVAN H O E
          Energy
          HTL Value Proposition: Oilsands
 On site energy supports SAGD operations (SOR=3)
 Elimination of diluent for transportation
 Capture the majority of heavy to light price differential
 Significantly lower capital costs than conventional upgrading
 Dramatically lower minimum scale for economic operations
       10,000 - 30,000 bpd


   Approximately 5% IRR improvement in SAGD economics




         IVAN H O E
            Energy
                   HTL Petroleum Focus
   Technology developed in 1980’s by
    Ensyn for biomass processing

   Petroleum pilot built in 1998 with over 90
    tests of heavy crude

   December 2004: 1000 bbl/day
    demonstration plant (CDF) commissioned

   2006/2007: Process Design Package for
    full-scale plants completed for bitumen

   June 2007: Athabasca Bitumen run
    successfully completed at CDF confirming
    pilot plant data




         IVAN H O E
             Energy
Commercial Demonstration Facility (CDF)




  IVAN H O E
    Energy
           HTL Core Technology
                   Products
                              Energy




            Feed
                              Air




IVAN H O E
  Energy
HTL Technology: Hybrid of Existing
  Refining/Upgrading Processes




                  Similar to Fluid Catalytic
                   Cracking used in most
                   refineries and Fluid
                   Coking


IVAN H O E
  Energy
      Balance of Plant Design




IVAN H O E
  Energy
               HTL HQ Upgraded Product

 Captures large part of light                    Hardisty   HTL
  heavy price differentials                        Light     HQ
                                   API              28.8     19
 Valued at 12% discount to
  WTI, similar to Hardisty Light   % Sulfur         1.6      3.6
  Crude.
                                   % Naphtha        18.9     16.2
 Reduction in metals of up to
  90%                              % Distillate     29.0     30.8
 Reduction of TAN to less than
  0.5 mg KOH/g                     % VGO            31.1     53.0

                                   % Resid          21.0      0




        IVAN H O E
            Energy
 Cost Estimate for Commercial Plant
Capex for High Quality Basis:
       U$26,550 per daily barrel, Ft McMurray Basis, for 30,000B/D
        bitumen feed (Q3, 2007 update)
       Principal factors: location, configuration, oil quality, FGDSU
       Includes all upgrading facilities and associated offsites and
        utilities
       Does not include SAGD facilities

Opex
       US $4.30 /bbl bitumen (Fixed, Variable & Sustaining Capital)
       Principal factors: oil quality, location, configuration, FGDSU


Location : Ft McMurray Brownfield basis (+/- 40%) Updated to Q3 2007
Source: AMEC and Ivanhoe Energy




    IVAN H O E
          Energy
                                                      HTL Advantage over DilBit
                                                                       Full Cost Basis
                                     WTI = $70.00/bbl Nat. Gas = $8.75 MMBtu (8:1) HTL = 12% Disc to WTI
                                         DilBit = 68% WTI Diluent = 108% WTI SOR = 2.8 FX = 0.95 : 1

                            45.00


                            40.00
                                                                             $4.30
US$ / bbl (Bitumen Basis)




                            35.00
                                                                 $11.67                  $2.80
                            30.00
                                                                                                 $10.28
                            25.00


                            20.00                   $13.65

                                                                                                            $11.09
                            15.00


                            10.00

                                      $14.00
                             5.00                                                                                        $10.85


                             0.00
                                    Differential    Diluent    Natural Gas    HTL    Return of   12% AT   Liquid Yield    HTL
                                     Capture       Avoidance   Avoidance     OPEX     Capital      ROC       Loss        Benefit



                                    IVAN H O E
                                         Energy
             Significant Cash Flow Improvement
                                              30,000 BPD
                   WTI = $70.00/bbl Nat. Gas = $8.75 MMBtu (8:1) HTL = 12% Disc to WTI
                       DilBit = 68% WTI Diluent = 108% WTI SOR = 2.8 FX = 0.95 : 1



                                            Integrated HTL    Standalone SAGD

           1,600

           1,400

           1,200
AT PV 8%




           1,000

            800

            600

            400

            200

              0

            -200
                        $60         $65           $70           $75             $80      $85
                                                    WTI (US $ / bbl)

                   IVAN H O E
                      Energy
                        Summary

 Value proposition compelling
      Market need
      Competitive advantage

 Key technology milestones completed
 Implementation team in place
 Securing financial partners
 Resource acquisition and partnering


    IVAN H O E
        Energy
             HTL
Maximizing Value in the Oilsands




IVAN H O E
  Energy