Ivanhoe Energy announces major technical breakthrough in its HTL (Heavy-to-Light) heavy-oil upgrading process

<< New configuration lowers capital and operating costs for HTL heavy-oil projects >>

Dr. Michael A. Silverman, Executive Vice President, Technology, of Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN), today announced a major technical breakthrough in the ongoing enhancement of the company's proprietary HTL (Heavy-to-Light) technology.

The breakthrough was achieved through a new process configuration developed by Ivanhoe Energy's in-house technical team at the company's newly commissioned Feedstock Test Facility in San Antonio, Texas. It confirms that the HTL technology now enables the production of "bottomless" synthetic crude oil through a simplified operation that delivers lower capital and operating costs. The benefits of this breakthrough will be realized in all of Ivanhoe's HTL heavy-oil projects, including the Tamarack Project in Canada, the Pungarayacu Project in Ecuador and additional target opportunities that have been identified in the Middle East, Asia, Africa, Latin America and Canada.

Ivanhoe's HTL heavy-oil upgrading technology is capable of operating in a wide range of process configurations, depending on the characteristics of the crude oil and the degree of upgrading required in each application. A number of identified heavy-oil projects target the production of bottomless synthetic crude, which is synthetic crude that has less than approximately 5% residual oil. Residual oil is the heavy, viscous fraction of crude oil.

Prior to Ivanhoe's development breakthrough, bottomless synthetic crude produced by the HTL technology required recycling of a portion of the processed oil through the core of the HTL facility until the required level of upgrading was achieved. While this is an effective and economically attractive process, it also requires over-sizing of the HTL equipment and presents engineering and operational complexities.

Dr. Silverman said the Ivanhoe breakthrough reduces the amount of oil required to be recycled through an HTL plant by greater than 80%. "We now can produce bottomless synthetic crude with a minimum of recycling, which allows equipment to be downsized and provides for a simpler operating environment," he added.

"This breakthrough is very welcome news for a wide range of Ivanhoe Energy's existing and potential projects and further enhances the advantages of field-located, HTL integrated production of bitumen and extra-heavy-oil. We now are proceeding to incorporate these technical developments in the engineering and design of commercial HTL facilities, which is being carried out by AMEC, of London, England."

The HTL advantages: economics, logistics and environment

Ivanhoe Energy's field-located, integrated HTL upgrading process addresses the principal key economic and logistical challenges related to heavy-oil developments. HTL facilities convert heavy, viscous crude oil in the field to a lighter, transportable synthetic crude oil with an enhanced value in the marketplace. In addition, upgrading by-products are converted on-site into steam or power that can be used in field operations or for export.

HTL frees the producer from the need to buy a) large volumes of natural gas for steam generation; and b) light oil as a blend agent for transport. In addition, integrated HTL upgrading allows the producer to capture the majority of the value differential between light and heavy oil. All of this is carried out in HTL facilities that are cost effective at scales as low as 15,000-20,000 barrels per day.

Integrated HTL upgrading also provides several environmental advantages.

    <<
    HTL upgrading facilities have a significantly smaller footprint than
traditional upgraders, such as delayed cokers, for the following reasons:

    -   The HTL process is very fast, permitting large volumes to be
        processed in smaller facilities.
    -   The minimum economic scale for HTL upgrading is much smaller than is
        required by conventional upgraders.
    -   HTL upgrading does not generate and accumulate large volumes of coke
        by-products, as is the case with many conventional upgraders.
    >>

In terms of emissions, HTL efficiently converts the upgrading coke by-products to valuable energy in the oil field. This avoids the inefficient transport of non-upgraded heavy oil to distant refineries, where coke is removed and stockpiled for subsequent shipping to even more distant markets for eventual combustion. Integrated HTL heavy-oil production not only provides CO(2) savings by avoiding such unnecessary transport and materials handling costs, but also avoids the particulate emissions, as well as the methane, benzene and other volatile emissions related to coke stockpiles.

Additional technical information on the breakthrough

The HTL design basis that Ivanhoe Energy has been assuming for production of bottomless synthetic crude is exemplified by the basic engineering design work AMEC has carried out for the integrated SAGD/upgrading Tamarack Project in Athabasca, Canada. This design has been based on approximately 40% recycle of unconverted bottoms to achieve optimum quality, bottomless synthetic crude oil that contains less than 5% liquid volume yields of residual oil. The requirement to recycle approximately 40% of the processed oil back through the core process necessitated over-sizing equipment and required certain technical complexities to be addressed.

The breakthrough announced today includes the redesign of the feed injection system as well as the bottom of the riser mix-zone. This redesign has been thoroughly tested in the Feedstock Test Facility with multiple feedstocks, including whole bitumen and whole Belridge heavy oil. The results showed a dramatic increase in once-through conversion of residual oil (1000 deg F+ material) compared with previous once-through runs. Total synthetic crude oil on a once-through basis for the bitumen case now contains less than 7% liquid volume yield of residual oil as opposed to the previous 40% liquid volume yield at roughly the same total liquid yield, as well as better metals and sulphur reduction. These improved results are caused by improved short-residence-time contacting of residual oil with hot circulating sand. If any recycling is required to reach target residual oil levels it will be only to a very limited extent. These improvements will allow for a design with smaller equipment with a lower capital cost and will provide for an operating environment with additional ease of operations and reduced complexity.

Ivanhoe Energy will publish further details of this technical breakthrough in the near future. Capital cost implications related to these developments will be incorporated in the updated estimates in conjunction with Front End Engineering Design (FEED) work currently underway.

<< Conference Call --------------- >>

Ivanhoe Energy will host a conference call on Wednesday September 16, 2009 for investors and analysts at 4:30 pm EDT (1:30 pm PDT) to discuss the HTL technology developments that are the subject of this press release.

The conference call may be accessed by dialing 1-800-731-5319 in Canada and the United States, or 1-416-644-3426 in the Toronto area and internationally. A simultaneous webcast of the conference call will be provided through www.ivanhoeenergy.com and www.newswire.ca/webcast. If you are unable to participate in the call, it will be archived for later playback by dialing 1-416-640-1917 and entering the pass code 21314257 followed by number sign, or via www.ivanhoeenergy.com. The archived playback will be available until October 19, 2009.

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, the anticipated production capacity of proposed HTL plants. When used in this document, the words such as "could", "plan", "estimate", "anticipate", "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 possibility that the company will be unable to raise financing in the future for any of its projects or to repay acquisition financing interest or principal, the potential that the company's projects will experience technological and mechanical problems, new product development will not proceed as planned, the HTL technology to upgrade bitumen and heavy oil 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, geological conditions in reservoirs may not result in commercial levels of oil and gas production, the availability of drilling rigs and other support services, uncertainties about the estimates of the reserves, the risk associated with doing business in foreign countries, environmental risks, changes in product prices, our availability to generate cash flow and raise capital as and when required, the possibility that the benefits of the improvements to the HTL technology for the production of "bottomless" synthetic crude oil demonstrated at the company's Feedstock Test Facility will not be fully realized in a commercial-scale facility or create the anticipated capital and operating cost savings for the company's projects, 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.

SOURCE: Ivanhoe Energy Inc.

Investors Contact: Ian Barnett, (647) 203-6588; Bill Trenaman, (604) 688-8323; Media Contact: Bob Williamson, (604) 688-8323; Website: www.ivanhoeenergy.com