Enhanced Oil Recovery
In the second of three articles on enhanced oil recovery, research firm Visiongain looks at the prospects for chemical EOR, outlining why the least prominent of the enhanced oil recovery (EOR) methods is beginning to see significant growth.
Chemical EOR: A Checkered History
Chemical formulations act as a displacing fluid, thus lowering the interfacial tension or increasing the mobility ratio to enhance oil recovery. The use of chemical EOR methods hit its peak in the mid-1980s when a vast number of pilot projects were active, particularly in the United States. High levels of research and development (R&D) and rocketing oil prices encouraged abundant pilot projects focusing on a range of chemical formulations, including both polymer and surfactant testing. Yet, when oil prices plummeted in the 1980s' oil glut, the costs of implementing a chemical EOR project became economically unfeasible. After the resulting fall in the number of projects, the chemical EOR market struggled to recover over the following two decades.
While thermal and gas-based EOR solutions have begun to contribute significantly to global production over the past decade – driven by oil sands development in Canada and carbon dioxide (CO2) EOR projects in the United States respectively – chemical EOR lags behind. According to Visiongain, thermal EOR techniques account for just over two million barrels per day globally, while gas EOR methods supply around 750,000 barrels per day. By contrast, chemical EOR contributes only 375,000 barrels per day, with just over 300,000 barrels per day of this figure stemming from China.
High Costs Tapered by Technological Breakthroughs
Historically, the chemical EOR market has been restrained by the high costs of setting up and operating a project, which can run into the hundreds of millions of dollars range, depending on the scale. Projects taking place in more complex environments, such as offshore, are more expensive still. With projects also needing to be customized to the individual reservoir characteristics, many companies have seen chemical EOR development as both costly and risky.
However, technological developments have enabled a significant shift in the economic balance in recent years, which, along with high oil prices, has helped to usher in a wave of new projects. The three key developments that have facilitated a reduction in the cost of chemical EOR projects are:
Chemical cost reductions and efficiency improvements have ensured operating costs have fallen to sub-$10 per barrel in some regions. With increasing efforts being put into R&D – both by oil companies and universities – and a number of pilot projects currently in operation, costs are likely to reduce further as more knowledge and experience is gained.
A Shift in Regional Activity
Alongside attitude changes towards the economics of chemical EOR projects, a shift in regional activity has also been witnessed in recent years. Despite possessing a commanding stake in chemical EOR projects in the 1980s, United States now ceases to contribute any significant production. Instead, China has become the global leader, with large-scale projects taking place in Daqing and Shengli fields, operated by CNPC and Sinopec respectively. Though China will maintain its dominance of the chemical EOR market over the coming decade, there are now 60 active chemical EOR projects taking place in a range of countries, including pilot projects and a few larger field developments.
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