On the road to recovery

The enhanced oil Recovery (EOR) process is currently witnessing rapid developments in the oil and gas industry. More than 70% of the oilfields around the world have reached or are nearing maturity. Oil and gas production from several of these mature fields is declining each year, while demand for energy is growing with each measurable increase in global population. This is prompting oilfield operators to employ secondary or tertiary recovery techniques to extend the life of these mature fields. Oil and gas companies in the some of the leading oil producing regions like the Middle East and Russia are adopting EOR to ensure optimum oil supply to their customers. Tertiary recovery methods are also being used in the US to obtain the maximum potential out of some of their oldest oilfields in the Gulf of Mexico. A few other leading producers of oil and gas, such as Norway, the UK, and Malaysia have also used EOR process in their continental shelves.

Oil production declines once it reaches its peak. When the use of pump jacks and secondary recovery methods such as water flooding do not yield the desired results, tertiary recovery methods, such as EOR, have to be employed to stimulate the oil displacement. According to the US Department of Energy, primary and secondary recovery procedures can recover up to 25% of the oil from the well. An increase in recovery rate by one percentage point can potentially add up to two years of hydrocarbon supply for the oil company. Hence, improvements in oil recovery rate can give a significant boost to the oil company’s revenues and profitability. It can also reduce the concerns regarding global energy supply as recent discoveries of oil and gas reserves have not been substantial.

EOR techniques have the potential to considerably improve the oil recovery factor and increase the economic value of the wells. However, it considerably increases the cost of production of oil due to the capital expenditure required to design and construct the additional infrastructure and to source the gas or chemical to be injected. In the case of CO2 injection EOR technique, the cost of procuring CO2 itself can add $20 per barrel of oil to the overall production cost. Moreover, the results of EOR processes are not immediate and time can also play an influential role in adding to the costs.

All must be factored in before initiating an EOR project. The prevailing oil price, then becomes an important determinant and the uncertainties associated with the price movement are major risks for most EOR projects.

When oil prices stabilised over $100 per barrel, it led to significant advancements in the EOR techniques, especially in the US and Europe. New polymers and surfactants were introduced for the chemical EOR industry with the potential to increase the recovery rate by a significant margin of the estimated recoverable oil in the wells. Oil and gas companies also invested in the research and development of nanoparticles to improve the foam generation capability and stability of surfactants against permeable rocks. Polymer flooding and surfactant flooding are emerging as alternatives to CO2 injection in improving the oil recovery rate of the fields. Microbial and miscible gas injection EOR techniques also saw considerable developments during the high-price environment.

Even after the prolonged oil price crash that occurred during 2014–16, and the subsequent price recovery in the past year, EOR is still playing an important role in global oil production. Recent developments in drilling technologies and improvements in efficiency have enabled oil and gas companies to bring down their production costs across several oil fields. These companies are also continuing the use of EOR processes to ensure optimum production from their matured wells. Some of the leading oil companies, such as Shell and BP, have started incorporating EOR in the initial field development planning itself. This approach can enable oil and gas companies to plan for a much longer production time-frame than usual and maximise the potential for oil extraction from the discovered fields.

Playing the field

Most oil fields only produce a fraction of the oil contained in the reservoir. EOR helps to maximise the oil reserves recovered, extend the life of fields, and increase the recovery factor through external input of chemicals or energy. EOR is an important tool for companies helping to maintain production and increasing the returns on older investments. Although, benefitting from the presence of existing infrastructure EOR technology is often costly and uneconomic. The high cost of EOR efforts has been deterrent to its wider use but, when economical, it can provide equivalent or lowercost barrels when compared with new greenfield developments. As fewer large discoveries are made, EOR will be an option to maintain or increase production for mature fields. EOR will continue to be an important technology to increase the value of the late life assets and as new techniques evolve, EOR will play a greater role in the global supply of oil.

EOR can be defined as thermal or compositional transformation of either the hydrocarbons or reservoir rock to aid in the recovery of additional volumes. This tertiary method of increasing oil recovery is invoked after the primary and secondary recovery methods have run their course. New technologies and materials are greatly improving the yield of these techniques and will continue to provide additional production at mature fields. In addition, EOR is now being considered during the development to further enhance the performance of new fields. The macroeconomic effects of increasing EOR programmes will increase production and recoverable reserves of oil though most will solely be viable in a higher-price environment.

EOR technology is broken into three main types: gas injection, chemical and thermal. Chemical EOR usually involves the injection of chemicals into the reservoir to alter the properties of the oil to improve migration. Miscible flooding or gas injection is used to reduce the surface tension between oil and water to increase the flow the oil using carbon dioxide, nitrogen or natural gas and liquefied petroleum gasses. Physical EOR involves a change to the reservoir via thermal efforts commonly in-situ combustion, hot water injection, and steam flooding, all of which reduces the resistance to flow of oil aiding recovery. Steam-assisted gravity drainage is most effective in heavy oil fields that have only single-digit recovery factors. In these cases, often the recovery can be increased by 50% or more. Each field presents its own challenges and a combination of EOR studies are need to determine the best course of action on a case-by-case basis. Many companies are preparing for eventual use of EOR by collecting more detailed information via seismic studies and pilot testing as the successful deployment of EOR technology is highly dependent on the reservoir’s geologic and fluid properties.

The key players in the EOR theme are upstream companies that have the capital to contract or even research and develop techniques and technologies. The upstream category will also be supported by multiple companies across the industry as EOR becomes more widespread. Some of the top upstream oil and gas companies by production with EOR programmes currently under way are China National Petroleum, Rosneft Oil, Abu Dhabi National Oil and Petroleos Mexicanos, for instance.

EOR outlook in the Americas

The US has been the leading adopter of EOR technologies in the Americas for nearly four decades. Being the largest consumer of energy, the US extensively used EOR across its oil fields while also depending on oil imports from the OPEC countries. According to the US Department of Energy (DOE), there were approximately 200 EOR projects in the US before the shale boom. The oil produced using EOR accounted for nearly 14% of the total US oil production in 2012. CO2 injection is predominantly used in the US oil fields, although other techniques such as chemical and steam injection were also used in some of the fields. This high adoption of CO2 in EOR has encouraged the US to consider CCS to reduce the greenhouse gas emissions from power generation and industrial operations.

The advancements in horizontal drilling and hydraulic fracturing technologies in the past decade have enabled the US to produce large quantities of oil and natural gas from shale formations. This has not only enabled the US to meet its domestic energy requirements but has also allowed the country to start exporting oil and gas to international markets. The shale boom has unlocked a cache of crude oil and natural gas reserves for the US. However, at present, the oil recovery rate from shale formations is only 7%. The shale oil producers have started testing EOR techniques to improve the recovery rate. EOG Resources, an independent oil and gas company, has tested CO2 technique in its shale plays in Eagle Ford and is planning to implement the technique on 100 wells to improve the recovery rate.

EOR techniques are being used in other oil-producing countries in the Americas, including Canada, Brazil, Venezuela and Mexico. Gas injection, especially CO2 injection, is the most commonly adopted technique for EOR in these countries.

Adoption of EOR in EMEA

The EMEA region, including Russia, has actively adopted EOR techniques for the past four decades. In fact, during this period, the oil and gas industry in Europe has been at the forefront in the development and adoption of EOR techniques. Several oil and gas fields in the North Sea continental shelf are reaching their maturity and EOR is expected to play an integral role in furthering the life of these fields. The UK and Norway are the most prominent oil producers in the North continental shelf. The UK is evaluating different ways to reduce its greenhouse gas emissions by 80% of levels observed in 1990 by 2050. One of the approaches under consideration is carbon capture and storage from various emissions sources, including power generation, and CCS’s application in improving oil recovery. The process of CCS and its use in CO2 injection not only has the potential to increase oil output from matured wells but also in achieving net carbon reduction, thus meeting climate change goals.

Norway traditionally has been among the leading oil producers in the world. The vast stretches of continental shelf in the North Sea, Norwegian Sea and the Barents Sea surrounding Norway have been a rich source of hydrocarbons. However, the crude oil production in Norway reached its peak in 2000, producing 181m³. Since then, it has dropped to nearly 50% of its peak in the last 17 years. Oil and gas is an important contributor to the national GDP and is also a leading generator of employment for the country. In an attempt to halt this declining production levels, Norway’s petroleum regulator is pushing for the use of EOR techniques across its fields. The regulator has also asked the operators at its newly discovered offshore field, Johan Sverdrup, to undertake pilot studies on polymer EOR injection to stimulate oil recovery when the field starts production in 2019.

The oil-rich Middle Eastern countries have employed EOR techniques in their mature fields to increase the oil recovery amid growing energy demand from domestic and international markets. The demand for gas in the UAE is growing rapidly due to the utilisation of gas injection technique at its oil fields. In 2017, Kuwait became the first country in the Middle East to initiate testing of chemical injection EOR in its northern region. Saudi Aramco, the national oil company from Saudi Arabia, in its 2016 Annual Review announced its plans to adopt surfactant injection at the Ghawar field.

Oman has widely contributed to the advancement of EOR technologies for accelerating oil recovery. The adoption of EOR in Oman has haltied the decline in oil production considerably. The production in Oman fell by 27% during 2001–07, but in the next five years, oil production increased by 28%, driven by EOR projects. As most of these EOR projects were based on gas injection, the demand for gas is growing significantly. To reduce the dependency on gas for EOR, in 2011, Oman started constructing the world’s first thermal EOR technique that used solar power for steam generation. This project is estimated to reduce Oman’s gas use in oil production by 20%, allowing gas to be diverted for other applications like power generation and desalination.

EOR outlook in the Asia-Pacific region

Asia-Pacific (APAC) has traditionally been among the leading importers of crude oil and natural gas as the domestic production has been considerably lower than the energy demand of this region. There are, however, some key exporters of oiland gas in this region, such as Australia, Malaysia and Indonesia. The production of hydrocarbons in other parts of APAC is insufficient to meet the domestic demand. Despite this fact, EOR is being adopted in these countries in order to improve the oil recovery from the domestic fields, thereby reducing the need for imports. This is especially evident in China and India where the demand for energy is growing rapidly, resulting in growing dependency on imports, which has the potential to impact the trade finances of these countries.

Oil producers in Australia, Malaysia, and Indonesia have employed EOR techniques to increase the oil production and extend the life of mature fields. The proximity of these countries to leading oil and gas importers – namely China, India and Japan – is a major factor for employing EOR. In Australia, production of hydrocarbons from its mature fields is declining and there is a rise in use of EOR techniques to ensure sufficient oil supply for domestic as well as international markets. Australian energy companies are also conducting studies to evaluate the possibility of CCS and its use in EOR. In Malaysia as well, a similar scenario of declining gas production is being observed. The Malaysian Government is encouraging oil and gas companies to adopt EOR to halt this decline, as it intends to retain its market share for exports of LNG. The oil and gas industry in Indonesia has used EOR techniques for over three decades. Steam flooding has been the most commonly employed technique in Indonesian oil fields, while other techniques have also been tried out with varying results. The application of steam flooding at Duri Field in Indonesia, is considered among the world’s largest project, in terms of output, that is making use of this technique.