Athabasca Bitumen Test Results Confirm HTL(TM) Upgrading Parameters for Integrated Canadian Oilsands Project



    CDF Technical Tests Concluded

    Next Step: Full Commercial Facilities

    BAKERSFIELD, CA, Sept. 5 /CNW/ - Ivanhoe Energy Inc. (NASDAQ:   IVAN and
TSX: IE) President and CEO Joe Gasca and Chief Technology Officer Dr. Robert
Graham today announced that the company has completed the initial analysis of
the results of the recent Athabasca bitumen test run at its heavy oil
upgrading Commercial Demonstration Facility (CDF) in California. This has two
separate, but related, points of relevance for Ivanhoe Energy:

    
    a)  This analysis, together with additional accumulated CDF and pilot
        test data, confirms the competitive advantage of HTL upgrading,
        integrated with heavy oil production in the Athabasca region of
        Western Canada, and supports Ivanhoe Energy's plan, currently being
        pursued, to acquire an oilsands asset and establish an integrated HTL
        Athabasca oilsands project.

    b)  The Athabasca bitumen run is the capstone of the CDF testing program.
        This program has generated the necessary data for the design and
        construction of full-scale, commercial HTL plants.
    

    These results have led Ivanhoe Energy to accelerate its plans for an
integrated HTL project in the Athabasca oilsands. Target assets have been
identified and due diligence and discussions with the resource owners are
ongoing. Technical and financial advisors have been appointed and a heavy oil
team is being assembled, supported by Ivanhoe Energy's heavy oil and thermal
expertise from California.

    Confirmation of HTL(TM) Upgrading Parameters for Integrated Canadian
    Project

    Ivanhoe Energy has described the competitive advantages of integrated HTL
oilsands projects in numerous presentations and public releases, many of which
are available on the company's website. HTL offers four key benefits when
integrated with a thermal Athabasca oilsands project:

    
    -   HTL can be economically scaled to match the size of commercial steam
        assisted gravity drainage (SAGD) developments.

    -   By-products of the upgrading process are converted to on-site energy
        to displace natural gas requirements for steam production.

    -   HTL upgrading allows the producer to capture the majority of the
        heavy to light crude price differential.

    -   HTL field upgrading frees the producer from diluent needs for
        transport.
    

    The results of the recent Athabasca bitumen test, together with
accumulated data generated in previous runs, validates these specific benefits
and parameters, confirming the technical and economic assumptions underlying
Ivanhoe Energy's Athabasca oilsands operating and economic models.
    For integrated HTL Athabasca oilsands projects, Ivanhoe Energy would
operate in a "High Quality" configuration, in order to meet pipeline
specifications and generate enough by-product energy to allow the producer to
displace its need for natural gas.
    Ivanhoe Energy's accumulated tests demonstrate that it can operate HTL
within a relatively broad continuum of High Quality operating modes.
Operations within this continuum vary in terms of liquid yields, by-product
energy yields and product characteristics. This High Quality operating
flexibility allows Ivanhoe Energy to match the upgrading mode with field and
market requirements.
    This continuum of High Quality operating parameters includes the
following, on the basis of processing Athabasca bitumen with an API gravity of
8 degrees, and viscosity of 20,000 - 40,000 cSt at 40 degrees C:

    
    a)  Viscosity: At least 99% reduction, to less than 50cSt at 40 degrees C
        - within pipeline specifications.
    b)  Liquid yields: From 77-83%, depending on the quantity of on-site
        by-product energy required.
    c)  By-product energy: Inversely correlated to liquid yields, can offset
        typical target steam needs for SAGD in the range of 2.8 to 3.5
        barrels of steam per barrel of oil.
    d)  Residue conversion: Ability to produce a "bottomless" synthetic crude
        (ie. zero percent resid).
    e)  VGO content: Over 50% of the HTL product.
    f)  Metals reduction: Approximately 90%.
    g)  Acidity reduction (TAN): To under 0.5% KOH/g.
    h)  Density improvement: From 8 degrees API gravity to approximately
        20 degrees API gravity, meeting pipeline specifications.
    

    Ivanhoe Energy's "High Quality" upgraded product has been valued in
earlier studies at approximately 12-15% discount to WTI, as a result of the
high content of naphtha, distillate and gas oil, and absence of vacuum residue
in the upgraded product.

    CDF Correlation with Pilot is Complete - Next Step: Full Commercial
    Facilities

    The Athabasca bitumen run just completed is the capstone of the CDF
testing program, and provides the necessary data for the design and
construction of full-scale, commercial HTL plants. The goals of the testing
program were a) to confirm the key processing results generated in the 90+
pilot plant runs of heavy oil from the U.S. and Athabasca in a large facility,
and b) to provide the necessary data for the design and construction of
full-scale, commercial HTL plants. Both of these goals have now been achieved.
    The results of the 23-run testing program at the CDF, carried out from
2005 to mid-2007, were very consistent with the 90+ runs carried out at the
pilot plant in Canada during the period 1999-2001. These results are presented
in the table below.
    The tight correlation between the pilot plant tests and the CDF tests
provides strong validation to the entire body of pilot plant tests, and
provides strong technical support for the predictability of upgrading
performance in the planned full-scale commercial facilities.
    Ivanhoe Energy has confirmed with AMEC, its Tier 1 contractor, that the
testing program has generated sufficient data to allow for the design and
construction of full-scale commercial facilities. AMEC has completed certain
preliminary design work, and will be accelerating this work once a resource
deal has been completed.

    
    -------------------------------------------------------------------------
    Test        Processing      Characteristic          Pilot        CDF
    Crude          Goal                                 (1999-      (2005-
                                                         2001)       2007)
    -------------------------------------------------------------------------
                                         degrees API      8.2         8.5
                                         ------------------------------------
                             Feedstock   Viscosity
                                         (cSt@
                                         40(degrees)C)   40,000      20,000
    Athabasca       High     ------------------------------------------------
    Bitumen,      Quality                Liquid Yield
    Canada                               vol% (C5+)       81          83
                                         ------------------------------------
                             Upgraded    degrees API      20          18+
                               Oil       ------------------------------------
                                         Viscosity
                                         (cSt@
                                         40(degrees)C)    60          30
                                         ------------------------------------
                                         Viscosity
                                         Reduction %      99          99
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                         degrees API     13.4        12.9
                                         ------------------------------------
                             Feedstock   Viscosity
                                         (cSt@
                                         50(degrees)C)    404         657
    Belridge       High      ------------------------------------------------
    Heavy Oil,     Yield                 Liquid Yield
    California                           vol% (C4+)       92          95
                                         ------------------------------------
                             Upgraded    degrees API     16.1        16.9
                               Oil       ------------------------------------
                                         Viscosity
                                         (cSt@
                                         50(degrees)C)   75.4        59.3
                                         ------------------------------------
                                         Viscosity
                                         Reduction %      81          91
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                         degrees API     11.0        10.5
                                         ------------------------------------
                             Feedstock   Viscosity
                                         (cSt@
                                         50(degrees)C)  1,927       4,223
    Midway         High      ------------------------------------------------
    Sunset         Yield                 Liquid Yield
    Heavy Oil,                           vol% (C4+)       88          90
    California                           ------------------------------------
                             Upgraded    degrees API     15.2        15.7
                               Oil       ------------------------------------
                                         Viscosity
                                         (cSt@
                                         50(degrees)C)    97         125
                                         ------------------------------------
                                         Viscosity
                                         Reduction %      95          97
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Ivanhoe Energy's proprietary, patented heavy oil upgrading technology
(HTL(TM)) produces lighter, more valuable crude oil from heavy oil and bitumen
at lower costs and in smaller-sized plants than conventional technologies. The
process also produces by-product energy that can be used to generate steam or
electricity.

    Ivanhoe Energy is an independent international heavy oil development and
production company focused on pursuing long-term growth in its reserves and
production using advanced technologies, including its proprietary heavy oil
upgrading process (HTL(TM)). Core operations are in the United States and
China, with business development opportunities worldwide. Ivanhoe Energy
trades on the NASDAQ Capital Market with the ticker symbol IVAN and on the
Toronto Stock Exchange with the symbol IE.

    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 concerning the potential benefits
of Ivanhoe Energy's heavy oil upgrading technology, the potential for
commercialization and future application of the heavy oil upgrading
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 the HTL process to upgrade heavy oil and bitumen may not be
commercially viable, market acceptance of the HTL technology may not be as
anticipated, Ivanhoe Energy's lack of history in developing commercial HTL
opportunities, competition 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.





For further information:

For further information: Cindy Burnett, (604) 331-9830, Website:
www.ivanhoeenergy.com

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