As oil prices escalate in global markets, heavy oil and bitumen become attractive alternatives to satisfy the world's growing needs. However, difficult extraction prospects and stringent pre-refining requirements to upgrade these oils to meet refining specs affect the economics of their commercialization. Extremely high viscosity and abundant amount of contaminants such as sulfur, nitrogen and metals in the structure of heavy oil molecules are examples of the challenges in their transportation and processing. The search for more integrated approaches for “conventionalization” of bitumen and heavy oil has already started. Attempt to perform in situ upgrading during the production of oil is one of these activities. In this study, process simulations are conducted to produce a model for the down-hole (well-bore) upgrading of heavy oil as a first attempt to integrate exploitation with upgrading in-situ using nano-catalysts.

In this model, the oil whose temperature is already elevated by steam injection, through “Steam Assisted Gravity Drainage” method, is collected via the perforations on the surface of the well-bore's horizontal leg and directed towards surface. The hydrogen and hydrogen donors along with the ultra-dispersed catalyst are being injected into the body of the vertical section of the well, mixing with the oil. This section is heated up to around 300 oC to promote upgrading reactions, primarily hydrotreating. The catalyst will be regenerated upon arriving to surface, before reentering the well.

The optimum diameter of the well, the amount of heat introduced, the effect of presence of water in the system and the obtained API gravity of oil will be discussed in this study. Based on the results generated with this preliminary simulation, a partially upgraded crude oil with lower amounts of contaminants and enhanced transporting properties can be produced. Some of the main advantages of down-hole upgrading will be reduction in refinery and upgrading costs, in addition to reducing the size of upgrading facilities on the surface. Also, energy will be conserved using the in-situ temperature in the upgrading processes.