IN A world of higher oil prices and increasing capital costs, getting more oil at less cost from reservoirs makes a lot of sense. Not surprisingly, oil majors are investing in the most cost effective enhanced oil recovery (EOR) solutions. Also as natural gas remains a scarce resource in the Gulf region, more and more oil operators are turning to solar steam to help recover heavy oil assets and save gas resources for higher value uses, such as desalination, industrial development and export as LNG.

Royal Dutch Shell is the latest oil company to invest in technology that uses heat from the sun to tap hard-to-reach supplies of crude in aging wells. The oil giant has along with three venture capital firms, invested $26 million into California startup GlassPoint Solar, a leading player in solar steam generators for enhanced oil recovery (EOR)—a cost-effective alternative to gas-fired steam generation.

GlassPoint is currently constructing the Middle East’s first solar EOR project with Petroleum Development Oman (PDO) and last year commissioned the world’s first solar EOR project in California, US.

For GlassPoint, the funding is a key next step to future large-scale deployment of its solar steam technology in EOR projects around the world and will allow it to enter its next phase of growth, executing on large-scale projects throughout the Middle East.

“The Series B funding we raised will go towards accelerating large-scale deployment of GlassPoint’s solar steam technology in EOR projects around the world,” says Rod MacGregor, CEO of GlassPoint in an exclusive interview with OGN.

Commenting more specifically on Shell’s investment, MacGregor says: “Royal Dutch Shell is a strategic investor in GlassPoint and a critical ally for expanding the development of solar EOR in key markets worldwide. Shell’s investment in GlassPoint validates the company’s enclosed trough technology as a viable alternative to costly, gas-fired oil recovery and will allow the company to enter its next phase of growth, executing large-scale projects throughout the Middle East,” he says.

A GlassPoint’s glasshouse structure

“Right now, we are building the first commercial solar EOR plant in the Middle East with Shell’s joint venture partner PDO. The goal of the project is to evaluate how solar steam can reduce the amount of gas used in thermal EOR projects. If successful, we would hope to expand our footprint with PDO to full-field projects,” he adds.

The company also plans to build local manufacturing plants for its equipment in countries where it will get contracts to reduce oil production costs. “GlassPoint also plans to establish local subsidiaries in each of our target countries, as we have done in Oman, to generate in-country value and further reduce costs. A significant portion of solar field construction cost is transportation, so if we manufacture the glasshouses locally using locally produced steel and aluminum, costs are reduced and the country benefits,” says MacGregor.

According to market analysts BCC Research, oil companies are expected to spend more than $16 billion globally on EOR recovery technologies, this year. While abundant sunshine and gas scarcity drives solar EOR deployment in the Mena region, price volatility and pending carbon legislation motivates producers in the US.

“For solar EOR to be successful one needs good sunshine and heavy oil. The GCC is blessed with an abundance of both, making it an ideal location for GlassPoint,” says MacGregor and adds: “when you also consider the opportunity to release gas for higher-value uses like export as LNG, power generation, desalination and industrial development, the GCC has the perfect environment for the application of solar EOR to flourish.”

“Besides sunny Mena regions, we are also looking into emerging cap-and-trade markets, such as California, to help producers meet environmental compliance regulations,” he adds.

After the development of a successful prototype unit in China in 2010, GlassPoint in February 2011 unveiled the world’s first commercial solar EOR project at a 100-year old oil field operated by Berry Petroleum in McKittrick, California. Then, in August 2011, it announced the award of a contract with Petroleum Development Oman (PDO) to build a 7 MW solar steam generator for EOR at an oil field in Southern Oman. PDO is a joint venture between the government of Oman, Shell, Total and Partex.

The company is headquartered in Fremont, California with offices in Bakersfield, California, Muscat, Oman and Shenzhen, China.

UNIQUE TECHNOLOGY
According to MacGregor, GlassPoint’s solution is unique because it is designed to meet the specific needs of the EOR application. “GlassPoint designed an entirely new solar thermal architecture called “Enclosed Trough” that uses less land and raw materials, can operate on lower water quality, and has much lower operating costs than conventional solar boiler designs,” says the CEO.

The most unique aspect of the Enclosed Trough design is that the mirrors and other delicate components are placed inside a protective glasshouse enclosure. This leads directly to lower capital cost and lower operating costs. The main cost driver for solar thermal systems is the need to build structures that can withstand high wind loads. Peak wind speeds in many oilfield locations can often exceed 85 mph, so older exposed mirror designs include a large amount of steel and concrete to protect each individual mirror from high winds.

In an Enclosed Trough design, the glasshouse outer wall provides the wind protection and so requires steel and concrete, just as in the older designs. However, there is only one outer wall for row upon row of mirrors. By sharing the cost of wind proofing the mirrors in this way the amount of steel, concrete and aluminum used is approximately half that of older exposed mirror designs.

The glasshouse in an Enclosed Trough design also reduces the operating expense of the system. In gulf oil fields, mirrors that are left outside quickly become covered in dust and no longer operate efficiently. This leads to a need to frequently wash the mirrors, consuming a large amount of labour and water.

The glasshouse in an Enclosed Trough system protects the mirrors from sand and dust. In addition the glasshouse itself has a fully automated washing system that recycles its own wash water, leading to a substantial reduction in operating costs.

Another advantage of using a glasshouse is that they are already in high volume production, and they have been continuously improved over a period of over one hundred years. The result is a highly optimised structure that can be erected quickly and at low cost.

Finally, the GlassPoint steam generator conforms to oilfield best practices for EOR and is designed as a Once Through Steam Generator (OTSG). These boilers are designed to operate directly on produced water that has been minimally cleaned and softened. In contrast, solar designs intended for electricity generation are designed as recirculating boilers that require very pure water, greatly increased the water treatment costs.

DESIGNED FOR HARSH OILFIELDS
Apart from claiming its technology is cheaper, GlassPoint also says its systems are designed specifically to operate in harsh oilfield environments and deliver class-leading price-performance.

“GCC oil fields certainly represent some of the toughest terrain out there, but we’ve developed our system specifically for these types of harsh environments,” says MacGregor.

Explaining how GlassPoint’s system can reduce the amount of gas needed for EOR by up to 80 per cent, he says: Recent studies have shown that oil producers can vary the rate of steam injection around the day – steaming more during the day with low-cost solar steam, and less at night when the sun isn’t shining. This strategy, known as variable-rate steam injection, has been shown to deliver the same oil production as constant-rate injection. Without increased facility costs, variable-rate injection can significantly increase the solar fraction of an EOR project. Solar steam can deliver up to 80 per cent of a field’s total annual steam needs, with fuel-fired steam providing the balance. The resulting deep reductions in fuel use can significantly improve the value of thermal recovery projects in sunny regions.

INCREASING ULTIMATE RECOVERY
Interestingly, not only has solar EOR technique a wide cost advantage over conventional EOR technique, the ultimate recovery through this route is also higher. Explains MacGregor: The decision to stop producing from an individual oil well is an economic decision.

Operators keep producing oil until it is uneconomic to do so, not when the well stops producing oil. Clearly, the economic tipping point depends on the price of oil and the cost of production. The largest element of production cost in a heavy oil field is fuel purchase for steam generation. If steam costs less, the well will be produced for longer, increasing ultimate recovery.

However, late in the life of an oilfield, when the cost of the solar field has been recovered, the cost of steam is just the O&M cost (roughly $0.35 per mmBtu) because solar “fuel” is free. In contrast, fuel for a gas fired steam generator can be as high as $18 per MMBtu if the fuel is LNG, as it is in many gulf oil fields. The result is that solar EOR wells will be steamed for longer than fuel-fired EOR wells, resulting in a higher recovery fraction.

Simulations have shown that if 20 per cent of an oilfields steam comes from a GlassPoint solar array that ultimate recovery can be increased by 12 per cent of original oil in place (OOIP), MacGregor adds.