|One view of the potential CO2-EOR extension of reserves. Click to enlarge.|
The US Department of Energy (DOE) released reports projecting that state-of-the-art enhanced oil recovery (EOR) techniques could significantly increase recoverable oil resources of the United States by a factor of four or more. That would, in effect, double the efficiency of US oil recovery from 33% to more than 60%.
According to the findings, 89 billion barrels or more could eventually be added to the current remaining US proven reserves of 21.4 billion barrels.
These promising new technologies could further help us reduce our reliance on foreign sources of oil. By using the proven technique of carbon sequestration, we get the double benefit of taking carbon dioxide out of air while getting more oil out of the earth.—Energy Secretary Samuel W. Bodman
The 89 billion barrel jump in resources was one of a number of possible increases identified in a series of assessments done for DOE which also found that, in the longer term, multiple advances in technology and widespread sequestration of industrial carbon dioxide could eventually add as much as 430 billion new barrels to the technically recoverable resource.
If the 89 billion barrels in resources is converted to reserves, the US would be fifth in the world behind Iraq with 115 billion barrels, and an additional 430 billion barrels would make it first, ahead of Saudi Arabia with 261 billion barrels.
Next-generation enhanced recovery with carbon dioxide was judged to be a game-changer in oil production, one capable of doubling recovery efficiency. And geologic sequestration of industrial carbon dioxide in declining oil fields was endorsed last year as a potential method of reducing greenhouse base emissions by the Intergovernmental Panel on Climate Change.
The assessments looked at maximizing oil production and accelerating the productive use of carbon dioxide in all categories of petroleum resources, including as-yet undiscovered oil and the new resources in the residual oil zone.
The findings are consolidated in the February 2006 report Undeveloped Domestic Oil Resources: The Foundation for Increasing Oil Production and a Viable Domestic Oil Industry.
The 430 billion barrel potential was identified in increments of up to 110 billion barrels from applying today’s state-of-the-art enhanced recovery in discovered fields (90 billion in light oil, 20 billion in heavy oil); up to 179 billion barrels from undiscovered oil (119 billion from conventional technology, 60 billion from enhanced recovery); up to 111 billion barrels from reserve growth(71 billion from conventional technology, 40 billion from enhanced recovery); up to 20 billion from tapping the residual oil zone with enhanced recovery; and, another 10 billion from oil sands.
The summary report identified three keys to converting the large technical potential from enhanced oil recovery to actual economic reserves:
- Accelerated development of improved EOR technology;
- Risk mitigation policies and actions; and
- Large, affordable EOR-Ready supplies of CO2.
Pursuing the undeveloped domestic oil resource poses considerable economic risks and technical challenges for producers. The risks and challenges stem from a lack of information on the actual geologic condition of the remaining resource (e.g., the distribution and saturation of the residual oil in the reservoir’s pore space), uncertainties on how well oil recovery technology (often adapted from other settings) will perform in a new setting or basin, and the inherent volatility and uncertainty surrounding world oil prices.
To date, this combination of geologic, technical and economic risks have posed severe barriers to the full development of the remaining domestic oil resource.
Nonetheless, leaving this domestic oil resource in the ground, while steadily increasing our oil imports, would be bad public policy.—from Undeveloped Domestic Oil Resources
Accordingly, the report suggests eight steps to overcome the barriers to developing the technology and the presumed increase in reserves:
Mitigating the financial and investment barriers associated with enhanced oil recovery. This could, the report suggests, involve reductions in federal/state royalties and state severance taxes (until payout) to provide risk mitigation during the initial years of a commercial scale project. They could also involve modifying Section 43 of the federal tax code (that contains investment tax credits for application of EOR technology) to provide downside protection of investment during periods of low oil prices.
Reducing the geological and technical barriers of enhanced oil recovery. Optimizing the performance of current CO2-EOR (and other EOR) practices and pursuing new, more efficient technology will help lower the geological and technical risks involved with enhanced oil recovery.
Encouraging the production and productive use of CO2 from natural sources and industrial emissions. The report suggests exploring a range of approaches from natural sources of CO2 to the capture of high volume by-product CO2 from centralized refinery coke and residues gasification facilities and sale of high-purity CO2 from ethanol, hydrogen and other chemical production facilities. Production and efficient separation of byproduct CO2, particularly from next-generation, low-emission power plants, could provide large, long-term sources for EOR-Ready CO2, sufficient to meet the full CO2 requirements for recovery of stranded oil.
Integrated energy systems to reduce the energy penalty associated with producing and capturing EOR-Ready CO2.
Collaboration with Canada on oil sand and heavy oil technology.
In-depth evaluation of the geologic settings and economic feasibility of undiscovered oil resources to help formulate additional supportive policies.
Improving the information base on domestic oil fields to accelerate the pace and level of reserve growth in already discovered oil resources.
Increased investments in technology development and transfer would lead to higher domestic oil recovery efficiencies.
The separate assessments and reports contributing to the total resource estimate are:
Basin Oriented Assessments, ten assessments of producing U.S. basins and the potential of state-of-the-art enhanced oil recovery;
Stranded Oil in the Residual Oil Zone (ROZ), five reports looking at new resources in the residual oil zone; and
Evaluation of the Potential for “Game-Changer” Improvements in Oil Recovery Efficiency for CO2 Enhanced Oil Recovery, a report on next-generation technology.
Achieving this could be expensive—hence the focus by the reports on risk mitigation for the producers. One of the contributing reports estimates an increase in capital investment of 4x; CO2 of 2x; and Operating and Maintenance (O&M) costs of 3x for a sample oil field, resulting in a total cost increase 3.6 times that of “traditional” practice.
Offsetting that in the report’s analysis is the potential for an ultimate improvement in the trade balance by $8 trillion, cumulatively, assuming one-half of the future technically recoverable resource becomes economically recoverable and oil prices average $40 per barrel.
The reports were prepared by Advanced Resources International and Melzer Consulting.