Enhanced Oil Recovery
In the final of three articles focused on enhanced oil recovery, research firm Visiongain looks at the prospects for thermal enhanced oil recovery (EOR), highlighting the opportunities for using heat to improve oil recovery in regions that have not traditionally used the technique.
Thermal EOR: A Strong Record of Success
Thermal methods of enhanced oil recovery entail the application of heat to the oil well. This acts to lower the viscosity of the oil and thus increase the mobility ratio. These methods are typically employed in relatively shallow oil wells with higher viscosity such as oil sands and heavy oil, with steam assisted gravity drainage (SAGD) and cyclic steam stimulation (CSS) –the two primary technologies currently in operation. Thermal methods of EOR have been highly successful in the United States, Canada, Venezuela, Oman, China and Indonesia, with major projects having been in operation for several decades.
Looking forward to the next ten years, the primary opportunities will not stem from the older, established production areas, but instead from the new projects being set up in the Canadian oil sands and, potentially, from the use of solar EOR technology in the Middle East. Given the high-cost nature of thermal EOR development, the main threat will be posed by the potential for low oil prices making projects uneconomic.
Thermal Oil Sands: Canada Leads a Wave of New Projects
Within the Canadian oil sands, thermal EOR techniques are used when reserves are too deep to mine. Thermal processes overtook mining as the dominant production method in 2012, and with around 80 percent of the remaining oil sands reserves in Alberta more than 200 meters (650 feet) below the surface and thus deemed too deep to mine, EOR techniques will play an increasingly dominant role in the oil sands market over next ten years. SAGD is the leading technology, used at 75 percent of currently operational projects, with CSS used at most other locations.
The thermal oil sands market is about to experience a period of rapid expansion as a wave of new projects come online in 2015 and 2016. However, the increased production that this creates may lead to transportation and refinery bottlenecks. Moreover, slowing Chinese investment, at the behest of the Canadian federal government, along with the potential for lower oil prices could also restrain the market, with projects likely to be delayed or cancelled. Nonetheless, with more than 160 projects under construction, approved or announced, the thermal oil sands market will see fairly substantial production growth even if just a fraction of these projects are completed.
Solar EOR: An Opportunity for Growth
Outside of the Canadian oil sands, the prospects for thermal EOR production growth are unspectacular. In the United States, the use of thermal EOR production hit its peak in the 1980s and is now in terminal decline, while other large-scale thermal EOR projects – such as Mukhaizna in Oman, Duri in Indonesia and Shengli in China – are likely to see only steady production growth over the coming decade. However, perhaps the most discussed technological advancements in the thermal EOR market over the past 12 months has been the prospects for solar EOR.
Solar EOR involves the concentration of sunlight onto tubes to create the steam needed for thermal enhanced oil recovery. The leading company in the field, GlassPoint, states that their system can reduce an oil field's natural gas consumption by up to 80 percent, which can lower the costs of extracting oil while freeing up more gas for other uses, including export.
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