ENHANCED oil recovery (EOR), also referred to as improved oil recovery or tertiary oil recovery, is most often achieved by injecting a liquid or gas into an oil reservoir, thereby lowering oil viscosity and increasing the amount of oil available for production. Some of the more common EOR methods include gas EOR (mostly carbon dioxide or CO2 EOR), thermal EOR and chemical EOR. Microbial EOR and seismic EOR also hold small, but strong niches in the EOR market. While only about 10 per cent to 30 per cent of oil is typically extracted from a well by conventional oil production processes, EOR methods can enhance these recovery rates by an additional 5 per cent to 20 per cent (on a conservative average).
The global market for EOR, estimated at more than $126.02 billion in 2011, has shown exciting growth since 2007, when the market totaled $54.96 billion. Technological challenges, hazy regulations, and high implementation costs have often been inhibitory to EOR projects, although this is quickly changing.
EOR production worldwide is expected to experience an upward trend as more countries begin to see the fruit of their EOR projects and as EOR becomes more feasible and more commonplace to oil producers, according to industrial and energy market research publisher SBI Energy. For the six-year period to 2015 the EOR market is expected to see total growth of 1,070.1 per cent in production, maintaining a steady uphill climb, possibly with some jumps as large projects come together.
The major markets in North America and China, which comprised 58 per cent of the EOR market in 2009, as well as emerging markets around the globe will reduce that share to 33.9 per cent by 2015.
Technological challenges, hazy regulations, and costly implementation have in the past often kept oil companies from using EOR. However, EOR is quickly becoming more feasible due to rising government interest and investment, new technologies, and increased availability of required materials such as CO2. It is expected that EOR will continue to perform extremely well in the world marketplace.
“Worldwide government interest in EOR has been fueled by a number of factors, the most obvious being to increase oil production,” says Shelley Carr, publisher for SBI Energy. “Besides increasing oil revenue, countries that are able to increase their oil production decrease demand for oil imports,” he adds.
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There is also much anticipation regarding the use of CO2-EOR to sequester CO2 permanently in the ground. “It is estimated 130 billion tonnes of CO2 worldwide could potentially be captured through the use of CO2-EOR,” notes Carr.
Some governments are also taking note that EOR has the potential to propel substantial economic growth. In Texas, where EOR now accounts for 20 per cent of its oil production, SBI Energy estimates that the benefits of EOR production will result in additional revenue of $200 billion and will create 1.5 million jobs.
SBI Energy calculates the EOR market will experience an average growth of 67 per cent per year over the six-year span, totaling $62.4 billion in 2009 and $1.3 trillion in 2015.
A large number of oil fields around the globe are maturing and are producing less oil — those affected are looking to EOR to increase, or at least maintain, their oil production levels. Many countries rely heavily on oil production for their financial health, and are becoming increasingly willing to invest in EOR, especially as the group of successful EOR projects grows and as the high price of oil continues to support research and development schemes.
Around the world, the EOR market is growing and metamorphosing to fit the various regions in which it resides. EOR market growth depends largely on regional factors, such as the health of the local economy; the level of foreign investment; existing politics and policies that may hinder or spur market growth; available technological knowledge and expertise; the type of oil being produced, the geographical location of oil fields and the geology of oil reservoirs; as well as regional oil supply and oil demand.
A plethora of technologies and processes are emerging and becoming available that are fulfilling these regional niches and easing EOR production for many oil operators. Many regions are jumping, or at least easing, into the world of EOR. The Middle East previously did not have much of a need for EOR; oil was plentiful and lower oil prices did not encourage seemingly un-needed experimentation. This is quickly changing; however. Many oil fields in the Middle East are maturing and are producing less oil; other fields in the region are nearing their peak oil production limits and their operators are proactively looking to EOR to maintain steady production in the future.
The lead analyst of the report comments that: ‘The EOR market is currently undergoing a period of rapid expansion, driven by high oil prices, escalating global energy demand, ageing oil fields and technological developments. With the in situ oil sands, CO2 EOR, and chemical EOR elements of the market are likely to see particularly strong growth over the coming years offering plentiful opportunities for companies involved in the EOR industry. As such, many of the leading 20 companies in the market are seeking to considerably expand their production portfolio.’
CO2 EOR MARKET 2012-2022
As oil production is maturing in many parts of the world and oil supply tightening, EOR is seeing growing interest to monetise the remaining oil reserves of many domestic markets. CO2 EOR is very efficient as a tertiary recovery technique, especially in fields that have been waterflooded. It also sequesters the undesirable gas in contained hydrocarbon formations, assisting in mitigating an increase in carbon emissions. While historically, naturally occurring carbon dioxide drove growth in EOR projects, the advent of carbon capture technology and its combination with EOR projects is seeing tremendous development. Visiongain has determined that the value of the global CO2 EOR market in 2012 had reached $4.2 billion.
SHELL IN OMAN
Shell in Oman is projecting itself as a world leader in tertiary recovery techniques as the Gulf sultanate’s petroleum industry tries to fully harness its limited oil reserves. Helping Shell is the fact that, while the sultanate has not been blessed with the same petroleum reserves as its neighbours, Oman’s leaders are determined to get the most out of their country’s remaining resources. Shell is the leading operator in Oman’s oil sector. It is also the leading operator in Oman’s condensate and natural gas production systems.
EOR is playing an increasingly important role in the Middle East oil sector as national oil companies (NOCs) tackle more mature fields, as well as reservoirs of heavy oil which is difficult to get to the surface. With today’s robust world crude oil prices, the incentive is high to improve the output from many of the region’s mature fields.
While the cash-rich Gulf Co-operation Council (GCC) oil states – Abu Dhabi, Saudi Arabia and Kuwait – still have an abundance of conventional oil reserves, Oman is using EOR to give a second life to its formerly declining oil industry.
The existing EOR techniques allow 30-60 per cent of a reservoir’s original oil to be extracted compared with 5-20 per cent coming out through the conventional techniques. In Oman, EOR has fuelled a resurgence in the country’s oil sector and incentivised Shell to innovate.
Oman’s crude oil production reached a long-term low of about 715,000 barrels per day (bpd) in 2007. But Oman’s Oil and Gas Minister, Muhammad Al Rumhi, expects this to hit 1million bpd by the end of 2013. Oman is now using a wider variety of EOR techniques to improve its oil yield.
The state-controlled Petroleum Development Oman (PDO) has about 15 per cent of its crude oil using EOR systems. This share is gradually rising as more of the sultanate’s oilfields are maturing and PDO’s EOR budget for the coming ten years is huge.
EOR is likely to become more prominent in Kuwait as the GCC state looks to increase crude oil production away from its conventional light oil reserves. The state-owned Kuwait Oil Co (KOC) now is focusing on developing its heavy oil resources in sandstones in northern Kuwait. Although full-scale EOR implementation in Saudi Arabia and Abu Dhabi is a long way off, both states are looking to carbon dioxide injection techniques to boost recovery.
The focus of world E&P watchers, however, is on Shell’s experience in Oman. The sultanate has crude oil reserves of 5.5 billion barrels, compared with about 100 billion barrels in each of Kuwait and the UAE. Despite its natural limitations, Oman’s oil industry is in recovery mode.
The sultanate’s output peaked at 960,000 bpd in 2001, but sank 26 per cent to 715,000 bpd in 2007. Oil production then slowly recovered to 891,000 bpd in 2011, driven by investments in various EOR programmes.
Minister Rumhi says that Oman is on track to hit 1mbpd by end-2013 when the Mukhaizna oilfield increases production to 150,000 bpd. That will mark a historic high for the sultanate, which is not an Opec member. Oman expects an average crude oil output of 915,000 bpd in 2012. Oman currently exports about 750,000 bpd of crude oil. The petroleum sector, mainly PDO, is to benefit from over $50 billion of investment over the next 10 years as the sultanate aims to maintain crude oil output levels and boost gas production.
