The Use of Saline Water at Devons SAGD Oil Sands Project

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The Use of Saline Water at Devons SAGD Oil
Sands Project
Presented by Will Yakymyshyn, Vice President,
Thermal Heavy Oil Devon Canada Corporation
CAETS 2009 Calgary, Alberta July 15, 2009
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Investor Notices

• Safe Harbor
• Information provided in this presentation
  includes forward-looking statements as defined
  by
• the Securities and Exchange Commission.
  Forward-looking statements are identified as
• forecasts, projections, estimates, plans,
  expectations, targets, etc. and are subject to a
• variety of risk factors. For representative risk
  factors that could cause Devons actual results
  to
• differ materially from the forward-looking
  statements contained herein, see Form 8-K filed
• February 4, 2009.
• Cautionary Note to U.S. Investors
• The United States Securities and Exchange
  Commission permits oil and gas companies, in
  their
• filings with the SEC, to disclose only proved
  reserves that a company has demonstrated by
• actual production or conclusive formation tests
  to be economically and legally producible under
• existing economic and operating conditions. In
  this presentation we may use certain terms,
• such as resource potential, reserve potential,
  probable resources, possible resources,
• contingent resources, prospective resources and
  exploration target size. The SEC guidelines
• strictly prohibit us from including these terms
  in filings with the SEC. U.S. investors are urged
  to
• consider closely the disclosure in our Form 8-K,
  File No. 001-32318, available from us at Devon
• Energy Corporation, Attn. Investor Relations, 20
  North Broadway, Oklahoma City, OK 73102. You
• can also obtain this form from the SEC by calling
  1-800-SEC-0330.

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Todays Presentation

• Devon Who We Are
• Canadas Oil Industry
• The Oil Sands
• Our Oil Sands Jackfish

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Devon Who We Are
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Devon Today
Proved reserves (12/31/08) ? 2.4 Billion
BOE Current production (Q1 2009) ? 685
MBOED Enterprise value ?
30 Billion
Largest U.S.-based independent oil and gas
producer
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North America Focus
Reserves
Production
International
International
North America
North America
685 MBOED
2.4 BBOE
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Resource Potential InventoryStrong Foundation
for Growth
(1) Includes 2,428 MMBOE of proved reserves.
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Devon Canada Overview
Reserve mix 61 gas / 39 liquids Current gross
production ? 207 MBOED (Q1 2009) (26 of Devon
Energy) Production mix 55 gas / 45
liquids Heavy oil production ? 58 MBOED (Q1
2009) (32 of Devon Canada)
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Canadas Oil Industry
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Canadas Oil and Gas Industry

• Canada is
• The worlds 3rd largest natural gas producer
• The worlds 7th largest crude oil producer
• The 5th largest energy producer in the world
• The largest supplier of energy to the United
  States

• Canadian energy production has almost doubled
  since 1980
• oil and gas accounted for 90 of the increase
• natural gas accounted for half of the increase

Source CAPP, Canadas Oil, Natural Gas and Oil
Sands Overview and Outlook, February 2009
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US Imports of Crude Oil Petroleum Products by
Country of Origin
(MBOD, After Royalty)
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Canada is the largest supplier of crude oil and
petroleum products to the US
Sources EIA, CAPP
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CAPP Refiner Survey and Market Outlook
(MBOED)
Imports to PADD II By Country
613
720
578
385
371
3,622
PADD IV
247
598
2,646
2,378
286
?
1,098
122
PADD II
280
PADD V
1,627
63
59
7,990
PADD I
PADD III
PADD II Imports from Canada 1.1 MMBOED Total
Imports - 1.5 MMBOED Total Refinery Capacity
3.6 MMBOED Total Consumption - 5.1 MMBOED
?
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2015 Potential Demand for W. Can crude
2007 Actual Demand for W. Can crude
Source CAPP
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Light and Bitumen Crude Oil Prices
(US/Bbl)
Light crude oil price quoted in media (West Texas
Intermediate)
Estimated bitumen price netback
Source CAPP
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Industry Capital Spending
(CDN Billions)
Oil Gas Investment Spending 2007 50 billion
(actual) 2008 50 billion (estimate) 2009 34
billion (forecast)
Northern Canada 07 08E 09F 0.3 0.5
0.5
Oil Sands 07 08E 09F 18 20 10
East Coast Offshore 07 08E 09F 1.0
1.0 1.5
WCSB 07 08E 09F 30 29
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Note Spending in Canada excludes spending
associated with mergers acquisitions
Source CAPP
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Global Crude Oil Reservesby Country
Includes 173 billion barrels of oil sands
reserves
Canada, with 173 billion barrels in oil sands
reserves, ranks 2nd only to Saudi Arabia in
global oil reserves
Source Oil Gas Journal/CAPP
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Western Canadian Oil Sands Conventional
Production
Moderate Growth - December 08 Update
Oil Sands Production 2007 1.2 million BOD 2013
2.0 million BOD 2018 3.0 million BOD 2020
3.3 million BOD
Source CAPP
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The Oil Sands
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Oil Sands Production Technologies
Mining oil sands less than 200 feet deep
Source Canadian Centre for Energy Information
In situ oil sands more than 200 feet deep
Cyclic Steam Process
Steam Assisted Gravity Drainage (SAGD)
Source CAPP
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Oil SandsMining and In Situ
Oil Sands Reserves
Oil Sands Land Use
In Situ 80
Source CAPP
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Steam Assisted Gravity Drainage

• Steam is continuously injected into the reservoir
  to heat and mobilize the bitumen
• Bitumen and condensed steam are collected and
  lifted to surface through a production well
• Gravity is the primary drive mechanism
• Gas is the lift mechanism
• Dual horizontal wells
• 2,500 ft long
• 15 ft vertical separation
• Fuel consumption of about 1.0 MCF/Bbl of bitumen

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Environmental Stewardship WaterIndustry

• About 1 of Athabasca River annual flow is used
  for oil sands
• Mining operations use 2 - 4 barrels of fresh
  water per barrel of oil produced
• In situ uses 0.25 0.5 barrels of fresh water
  per barrel of oil produced (none from Athabasca
  River)
• Current oil sands fresh water use is about 1/3
  the consumption for the City of Toronto

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Our Oil SandsJackfish
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Devons Jackfish SAGD Project

• 100 working interest
• 300 MMBbl resource
• First commercial SAGD to use only saline water
  for steam generation
• Construction cost CDN 730 MM (21,000/BOED)
• Peak production 35,000 BOD

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Jackfish Facilities
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Environmental Stewardship WaterJackfish

• Devon received the Presidents Award for
  Stewardship Excellence from CAPP in 2008 for its
  use of saline water in its steaming operations at
  Jackfish
• Jackfish utilizes 100 non-potable water and
  every barrel of water is used 9 times before it
  is re-injected back underground
• At full production, the facility is designed to
  circulate over 90,000 barrels per day of water in
  the production of 35,000 barrels per day of
  bitumen

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Challenges and ConsiderationsJackfish

• Finding a saline water source

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Regional Geology
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Challenges and ConsiderationsJackfish

• Finding a saline water source
• Facility design - providing flexibility

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Jackfish How Are We Doing?SAGD Project
Observed Well Curves (Feb 2009)
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The Future

• Devon committed to minimizing environmental
  impact
• Plan to maintain high recycle rates of
  non-potable water
• Monitor saline aquifer
• Application of new technology will assist in
  reducing footprint, water use and air emissions
• Continuous improvement by industry sharing best
  practices
• Applying similar principles at Jackfish 2
• Duplicate 35,000 BOD project located 10 km west
  of Jackfish
• Currently under construction
• Full production expected in 2012

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