October 31, 2014: 3rd in the series -- 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
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.
Steam assisted gravity drainage (SAGD) is the leading technology, used at 75 percent of currently operational projects, with cyclic steam stimulation (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.October 30, 2014: 2nd in the series -- can chemical EOR take off?
In terms of current spending and production figures, chemical EOR will remain the smallest segment of the EOR market for the immediate future. Yet the potential for chemical EOR development is vast in terms of both size and regional scope. Chemical EOR already surpasses both thermal and gas EOR methods in terms of the number of countries with active projects (14), while double-digit spending growth is anticipated over the next five years as pilot projects are set up and expanded. As such, chemical EOR is set to emerge from the shadow of its rival EOR methods to become an important technology on the global scale.
The most interesting takeaway: the shale (tight) oil revolution is an under-discussed threat to CO2 EOR prospects.
The table at the linked article shows the 15 largest CO2 EOR producers in North America ranked alongside the 15 largest spenders in the shale oil market in 2014; the table shows there is significant overlap with companies involved in both endeavors.The second most interesting takeaway: "growth prospects for US CO2 EOR are overstated."
Shale oil development has lower start-up costs and quicker returns than CO2 EOR projects. Consequently, investors and company executives are likely to prioritize their shale oil asset development at this present time. Occidental – by far the largest CO2 EOR company in terms of production with 30 percent of the U.S. total – plans to keep CO2 EOR production in the Permian Basin flat through 2016 while increasing production from its shale oil assets in the region, according to the company's most recent presentation.
Although a CO2 EOR pure play company such as Denbury Resources could achieve 10-percent per year production growth (in a best case scenario), the market as a whole is unlikely to grow at this rate in the medium term. The optimistic forecasts for CO2 EOR production have tended to focus on the availability of new CO2 sources and pipelines, without paying enough attention to the plans of CO2 EOR producers and outside factors influencing the market.The other major points:
- prospects for CO2 EOR are more favorable in China, Brazil, and the Middle East
- CO2 EOR not economical in the North Sea (at least in the near term and at current oil prices)