240. CLEANING THE PETROLEUM CRACK PIPE

Heading Out at the Oil Drum had an eye-opening post recently about EOR (Enhanced Oil Recovery) using CO2. Here's a tid-bit from the Oil & Gas Journal:

Glencoe Resources Ltd., private Calgary independent, is using the gas to improve recovery of primarily light oil from multiple formations in several depleted oil fields about 100 miles north-northeast of Calgary.

The company hopes to boost the recovery factor to as high as 40% from 10-20%.

Here's Heading Out's comments on another EOR program in China:

This technique is being used in Liaohe, the third largest oilfield, in China, which is now declining in production. By pumping in flue gas from a nearby power plant and combining it with steam the recovery of oil from the reservoir was increased from the 20 -30% achieved with steam, to around 50 - 60%.

From an article on Weyburn, a Canadian EOR project:

Carbon-dioxide injection will allow EnCana to extract another 140 million barrels of oil from its 51-year-old Weyburn field, an enormous volume at a time when the average new well drilled in Western Canada yields a mere 50,000 barrels.

[...]

An oil reservoir that has been drained to the point of being unprofitable is often called a dry well, but that term is misleading. In fact, it's more like a wet sponge: You can wring it once, and get a lot of water. A second squeeze will extract a bit more. Eventually, your efforts are in vain -- even though that sponge is still wet.

Now, better technology and high crude prices are about to shift an enormous amount of oil into the grasp of the industry. As many as five billion barrels could be added, according to Mr. Issacs. That would more than double Canada's conventional oil reserves.

Others have even higher hopes. Richard Baker, president of Epic Consulting Services in Calgary, says eight billion barrels could be added to reserves, a figure that would include the widespread injection of water into existing wells. "It'd be like finding eight giant reservoirs," says Mr. Baker, who is working on a report for the industry that is aiming to nail down the opportunity presented by enhanced recovery. "It's a question of when it's going to occur, not if it's going to occur."Source

I was initially sceptical about the economics of CO2 injection, but this Weyburn project is amazing. According to the stats, the project will produce 130 million barrels of new oil (market value: approx. $7.8 billion). Project cost: $5.3 million, including a 330km purpose-built pipeline from the U.S. to Canada. That's a very lucrative investment.

This is data from another Oil & Gas Journal article, kindly sampled by Heading Out:

The latest technology for enhanced oil recovery by injection of carbon dioxide holds the potential to recover 43 billion bbl of oil "stranded" in six mature US producing regions, says a study conducted for the Department of Energy.

DOE's Office of Fossil Energy calls the volume, estimated in the study by Advanced Resources International, "technically recoverable potential."

It identifies as "state-of-the-art CO2 EOR technologies" horizontal wells, 4D seismic to track injectant flow, automated field monitoring systems, and injecting larger volumes of CO2 than were used in earlier EOR projects.he study says state-of-the-art CO2 injection might recover 5.2 billion bbl of 22 billion bbl of oil unrecoverable by conventional production methods in California. The stranded oil is in 88 large reservoirs amenable to CO2 injection.

Note those figures: 43 billion bbl (=43Gb) of oil from mature producing regions in the US. That's four Prudhoe Bays right there -- almost as much oil as Ghawar has pumped in its entire service life. In the U.S. of all places! 43Gb is twice the current reserves of the U.S. That's enough oil to supply current U.S. oil demand, day in and day out, for 6 years.

This EOR phenomenon is causing a bit of angst and head-scratching amongst the peak oil pessimists. Dave from the Oil Drum says it well. He seems to be wrestling free of his denial and moving towards the acceptance phase:

Was this "technically recoverable potential" booked as reserves to begin with? The question matters because one of the common arguments used against peak oil is that EOR increases the URR. And that appears to be the case in these CO2 injection cases if the oil is indeed "stranded" and was never counted as reserves. If that is indeed so, then this would appear to be a case of reserves growth without new discovery due to the application of technology.

Indeed, it seems technology has helped us "discover" four new Prudhoe Bays in the U.S., and (yup, your guessed it) this will be YET ANOTHER type of "funny oil" which Colin Campbell will not add to his graph of discoveries ("The Growing Gap", see #238, #237 and #230 below). Or, if he does add it, he will be "backdating" it into the past so we can all maintain the polite peak oiler groupthink that we aren't discovering much oil anymore.

At a deeper level, I believe we are going to increasingly see a phenomenon which is familiar to anyone who has watched a marijuana smoker clean an old resin-encrusted pipe for a few more hits. There are incredible volumes of oil still remaining in old holes we discovered a long time ago, and pumped all the easy oil out of. So what are we going to do when we run out of new discoveries? We're going to go back to the old discoveries, and "clean the pipe".

Consider Ghawar. We have this field riddled with thousands and thousands of injecting/extracting perforations, and equipped with massive capital investments. Are we really going to walk away from if after it poops out the first time, or the second time, or even the third time? I doubt it. There will still be a massive volume of oil down there, already discovered, and we know it's there. Why not hit it with CO2, or fracture it with a nuke, or put a nuclear reactor on site to cook it out? Or even mine it, like coal, as was done in the early days of oil? Essentially, we're talking about a shift from a "hunter-gatherer" style of oil extraction, to a more sedentary, capital intensive "agricultural" style of oil extraction, as I've previously discussed.

-- by JD