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Petroleum News -- April
29, 2005
Recovering another 43
billion barrels of oil from six U.S. areas
With crude oil prices sky-high and the U.S. trade
deficit at record levels, U.S. oil reserves have assumed
a critical role in the U.S. economy. The search for new
reserves usually involves exploring for new fields. But
vast amounts of stranded oil lie underground in aging
U.S. oil fields. The oil is stranded because there’s
been no way of bringing it to the surface.
Maybe that situation is about to change — on April 20
the U.S. Department of Energy released a series of
reports suggesting that as much as 43.3 billion barrels
of this stranded oil could technically be extracted from
oil field reservoirs.
The key: a technique known as carbon dioxide enhanced
recovery that can greatly extend the capabilities of
conventional enhanced oil recovery methods such as
waterflood, gas lift and the use of miscible injectant.
Carbon dioxide has been used in the past to recover oil
by flooding reservoirs. But new state-of-the-art
techniques using large volumes of carbon dioxide have
substantially increased the ability of carbon dioxide to
recover oil.
Two techniques
Carbon dioxide enhanced recovery involves flooding a
mature oil reservoir with large volumes of carbon
dioxide. But there are actually two distinct recovery
techniques using carbon dioxide — miscible recovery and
immiscible recovery.
The miscible technique works with high-gravity oil.
Carbon dioxide from an injection well mixes with water
and oil in the reservoir to form a single, relatively
low viscosity fluid phase that flows out through a
production well.
The immiscible technique applies to reservoirs with
relatively low gravity oil or with low reservoir
pressures — in these situations the carbon dioxide does
not mix with the oil but, instead, reduces the viscosity
of the oil through swelling of the fluid. The pressure
of carbon dioxide forces the oil out through the
production well.
Selecting oil fields
Analysts from Advanced Resources International Inc., the
company that prepared the carbon dioxide enhanced oil
recovery reports for DOE, looked at six U.S. oil regions
— onshore California, onshore Gulf Coast, offshore
Louisiana, Oklahoma, Alaska and Illinois. As a first
pass at selecting oil fields in these regions to apply
the modern enhanced recovery techniques the analysts
used reservoir temperatures and oil composition data to
determine the minimum pressure at which carbon dioxide
would mix with the oil. If this minimum pressure was
less than the maximum injection pressure of a field
reservoir, that field became a candidate for miscible
carbon dioxide enhanced oil recovery.
The analysts also assessed whether any reservoirs might
support the immiscible technique.
Then the analysts used a computer-based carbon dioxide
oil recovery model to estimate how much oil might be
recovered from each of the selected fields. Adding up
these volumes for all of the selected fields resulted in
a technically recoverable oil volume for each region.
Add all of those numbers up across all of the regions
and you get a total volume of 43.3 billion barrels of
technically recoverable oil.
Economics
The next step of the analysis involved plugging
estimated volumes of carbon dioxide and recovered oil
for the selected fields into an economic model that
calculated rates of return for different economic
scenarios. The economic modeling took into account costs
that included drilling new wells, constructing the
necessary industrial plant and constructing carbon
dioxide delivery spur lines. Local tax and royalty rates
were used. The model considered oil prices at $25 and
$35 per barrel; carbon dioxide prices that related to
local supply possibilities; and rates of return of 25
percent and 15 percent before tax.
For each of the target regions the analysts then
identified the fields for which carbon dioxide enhanced
recovery would be economically feasible under scenarios
appropriate to the region — scenarios assumed different
price levels for carbon dioxide and some included the
potential for incentives such as tax credits and royalty
reductions. By adding up the estimated recoverable oil
from each viable field it’s possible to derive an
estimate for economically recoverable oil.
Onshore California
There is believed to be a total of about 57 billion
barrels of stranded oil in onshore California oil fields
and 5.2 billion barrels of this oil could probably be
recovered using state-of-the-art carbon dioxide enhanced
oil recovery.
The analysts looked at four different scenarios for the
use of carbon dioxide in the regions. The first of these
scenarios involved using traditional carbon dioxide
techniques and resulted in virtually no economically
recoverable oil. Another scenario that assumed the use
of modern, high carbon dioxide volume techniques with
relatively expensive carbon dioxide resulted in
economically recoverable reserves of 1.8 billion
barrels.
Factoring tax credits and royalty reductions into the
economics produced a recoverable volume of 3.5 billion
barrels. And the availability of low-cost carbon dioxide
from industrial plants would further increase
economically recoverable reserves to nearly 4 billion
barrels.
Onshore Gulf Coast
Onshore Gulf Coast oil fields are thought to contain
about 36 billion barrels of stranded oil. Carbon dioxide
enhanced oil recovery could probably render 10.1 billion
barrels of this oil technically recoverable.
Very little of the stranded oil could be recovered
economically using traditional approaches to carbon
dioxide enhanced oil recovery. However, the use of
state-of-the-art carbon dioxide techniques could result
in an economically recoverable volume of 1.8 billion
barrels. Factoring in tax credits and royalty reductions
increases economically recoverable reserves to 4 billion
barrels. Supplies of relatively cheap carbon dioxide
from various future industrial sources could increase
the economically recoverable volume to 4.3 billion
barrels.
Offshore Louisiana
Current estimates indicate that 15.7 billion barrels of
oil lie stranded in offshore Louisiana oil fields; 5.9
billion barrels of this stranded oil might be
recoverable using modern carbon dioxide techniques.
The use of carbon dioxide enhanced oil recovery will
only result in economically recoverable oil in offshore
Louisiana if tax incentives and royalty reduction are
applied. In that case there might be 1.3 billion barrels
of economically recoverable oil. With reduced carbon
dioxide costs in addition to the tax and royalty
incentives 3.6 billion barrels could become economically
recoverable.
Oklahoma
Oklahoma oil fields are thought to contain about 45
billion barrels of stranded oil. Of this volume 9
billion barrels may be technically recoverable using
modern carbon dioxide techniques.
Because of limited use of secondary oil recovery
techniques in the past, traditional carbon dioxide
flooding techniques could probably enable about 940
million barrels of the stranded oil to be recovered. The
higher efficiency of state-of-the-art carbon dioxide
techniques coupled with tax credits and royalty
reductions could make the recovery of another 4.6
billion barrels economically recoverable. This volume
would increase to about 4.7 billion barrels if there
were plentiful supplies of carbon dioxide.
Alaska
Current estimates indicate that without further oil
recovery techniques 45 billion barrels of oil will
remain stranded in Alaska. About 12 billion barrels of
this stranded oil could technically be recovered using
carbon dioxide.
The supply of carbon dioxide in Alaska would present a
major challenge in applying state-of-the-art carbon
dioxide enhanced oil recovery. So the analysts assumed a
relatively high carbon dioxide price.
Under this scenario there are no economically feasible
reservoirs in Alaska. However, if you bring exploration
tax incentives and royalty reductions into the economic
equation the Alaska oil fields could yield 7.3 billion
barrels of oil from carbon dioxide oil recovery. A
reduction in carbon dioxide costs to 70 cents per mcf by
obtaining future supplies from industrial plants in
Alaska increases the economically recoverable reserves
to 7.7 billion barrels.
Illinois
Illinois oil fields probably contain 5.7 billion barrels
of stranded oil. Modern carbon dioxide oil recovery
techniques would probably render 0.7 billion barrels of
this oil technically recoverable.
None of the technically recoverable oil can be recovered
economically using traditional carbon dioxide flooding
techniques. The use of state-of-the-art techniques ought
to make about 370 million barrels economically
recoverable. Tax incentives and royalty reductions could
increase the economically recoverable reserves to 470
million barrels. Ample carbon dioxide supplies would
make little difference to the economics of apply the
state-of-the-art techniques in Louisiana.
—Alan Bailey
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