eor past, present and what the next 25 years may bring

7/26/2019 EOR Past, Present and What the Next 25 Years May Bring

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EOR: Past, Present and What the Next 25 Years May BringGeorge J. Stosur, SPE, Petroleum Consultant, Washington, D.C.

Copyright 2003, Society of Petroleum Engineers Inc.

This paper was prepared for presentation at the SPE International Improved Oil RecoveryConference in Asia Pacific held in Kuala Lumpur, Malaysia, 2021 October 2003.

This paper was selected for presentation by an SPE Program Committee following review ofinformation contained in an abstract submitted by the author(s). Contents of the paper, aspresented, have not been reviewed by the Society of Petroleum Engineers and are subject tocorrection by the author(s). The material, as presented, does not necessarily reflect anyposition of the Society of Petroleum Engineers, its officers, or members. Papers presented atSPE meetings are subject to publication review by Editorial Committees of the Society ofPetroleum Engineers. Electronic reproduction, distribution, or storage of any part of this paperfor commercial purposes without the written consent of the Society of Petroleum Engineers isprohibited. Permission to reproduce in print is restricted to an abstract of not more than 300

words; illustrations may not be copied. The abstract must contain conspicuousacknowledgment of where and by whom the paper was presented. Write Librarian, SPE, P.O.Box 833836, Richardson, TX 75083-3836 U.S.A., f ax 01-972-952-9435.

AbstractThe paper presents an analysis of worldwide EORactivities and trends for the mid-term future. The focus ofthe paper is on EOR production levels and thecorresponding number of projects within each major EORtechnology group: thermal, gas flooding, chemical andother methods.

Most EOR activities are in North America where theconventional oil production decline is now well

established and EOR is one of a few remaining optionsfor additional oil production. In the United States, theunfavorable economic climate of the late 1980's causedthe number of new EOR projects to decline rapidly,followed by the corresponding leveling of oil productionand even a modest EOR production decline in 2002.

Thermal recovery continues to provide the largest,although it is declining fraction of EOR production. In thelong-term, thermal recovery methods may play anincreasingly important role in the recovery of the hugeheavy oil and tar sands resources. Gas floodingcontinues to gain momentum and shows promise for

further gains. Chemical flooding projects suffered fromdeclining interest and negligible production rate. Fluiddiversion via permeability modification control offersconsiderable near-term potential.

It is likely that EOR-produced oil in the United States hasalready reached its peak level and that it will increaseabove the current production rates only at substantiallyhigher and stable oil prices. Worlds EOR production peakis likely to occur 30-35 years after the onset of global oilproduction decline, or in mid 2060s.

DefinitionsThere is much confusion around the usage of the termEOR and especially the term IOR. Ref. 1 describes theeffort to reach agreement on the definitions to clarifycommunications by forming an industrial committeeunder the auspices of the SPE. This paper adheres tothat proposed definition, Fig.1.

Enhanced oil recovery (EOR) refers to reservoirprocesses that recover oil not produced by secondaryprocesses. Primary recovery uses the natural energy othe reservoir to produce oil or gas. Secondary recoveryuses injectants to re-pressurize the reservoir and todisplace oil to producers. Enhanced oil recovery

processes target whats left. They focus on therock/oil/injectant system and on the interplay of capillaryand viscous forces.

EOR in PerspectiveJust how did EOR evolve and what has been its share ofoil production? In this regard it is helpful to note thecurrent distribution of oil production by primarysecondary and tertiary (EOR), in the United Stateswhich has remained without change for at least 15years, Fig.2. Only 37 percent of oil produced in theUnited States comes from primary methods. Secondarymethods of waterflooding and gas pressure maintenancecontribute the lions share of 51 percent. About 12percent is produced by tertiary methods, also known asEOR.

Worldwide oil production by EOR is now 2.9 millionbarrels per day, or 3.7 percent of world's total oiproduction, Fig. 3.

Over the years, U.S oil production from EOR processeshas grown steadily and reached a plateau from 19922000, Fig 4. The first significant EOR production declineoccurred in 2002. Fig. 4 also illustrates several importantrends with respect to the popularity of various EORtechnologies in the U.S.:

Thermal projects, mostly steamfloodingcontinue to contribute the largest fraction ofEOR production, but growth rates stopped in1988. In fact thermal EOR production hasdeclined by 16 percent since 1998. Heavy oi


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production by steamflooding in Californiaaccounts for most of the decline.

Gas miscible and immiscible applicationsenjoyed rapid rate of increase since 1982, buthave leveled off since 1992, and even registereda small decline in 2002.

Chemical projects exhibited a period ofpopularity from 1982 to1992, but never reachedmore than 4 percent of the total yearly EORproduction rate. Since 1992, production ratefrom chemical flooding was negligible and only avery small fraction of one percent of total EORproduction.

Microbial EOR, despite over 100 field testsconducted worldwide, never achieved sufficientstrength to allow a measurable production rateon par with other EOR methods.

Thermal recovery methods, even though their growthrate may have peaked in the United States, will continuegrowing elsewhere in the world, where massive heavy oiland tar sands are found and where environmentalrestrictions may not be as severe as those in the UnitedStates. As the worlds conventional oil production startsto decline within 30 years, attention will be focused onthe almost immeasurable quantities of heavy oil and tarsands, much of which can only be produced by thermalmethods.

For the time being, gas injection methods continue tohave the advantage over other EOR applications,particularly in the United States and Canada. Thereasons are obvious, though different: there are anumber of high quality, naturally occurring CO2 sourcesin the U.S., while Canada has an excess of natural gaswhich it successfully uses for miscible gas flooding.

Chemical methods in the U.S., despite two decades ofheightened attention and publicity, were just never ableto get off the ground. But, chemical flooding in China hasbeen successful. Most operators shun chemical flooding,saying that it is too expensive and unpredictable.

The above conclusions should not be extrapolated

indiscriminately, since too much depends on individualreservoir situations, availability of injectants, specificlocal conditions, oil prices, government incentives andmany other factors beyond the control of operators.

Even more telling is the steady decline of the number ofactive EOR projects, Fig. 5. The number of active EORprojects has dropped steadily from 512 in 1986, to 147 in2002, a decline of 71%. This may indicate thatresources and technology are being applied byexpanding ongoing promising projects rather than bystarting new projects. Also, the better EOR projects

demonstrated a positive cash flow, while new projectswould not be profitable at expected oil prices. Fowhatever reason, companies are not now investing innew EOR projects at the rate they were through 1986 -the year crude oil prices dropped to $12 per barrel. Theoutcome of the situation has led to an increasing amountof EOR production coming from a smaller number o

projects. This is a "natural selection" process wherebythe most effective and efficient processes continue toproduce and flourish while those less efficient andeffective are reduced or retained for additionatechnology development.

On one hand, the trend points to fewer EOR projectssupplying an increasing amount of oil per project in aperiod of unpredictable and rapidly changing oil pricesattesting to the basic strength of the EOR technologiesOn the other hand, the trend is less than encouraging forthe future of EOR in the United States. While the 2002dip in EOR production may have been spurious, the ten-

year period of no-growth in EOR production, ending witha significant decline is sobering for the supporters ofEOR technologies.

Several technologies that were believed to make largeimpact on EOR applications have not materializedTechnologies such as horizontal wells, 4-D seismic andcrosswell tomography found only limited use. In the caseof crosswell tomography, the cost is still relatively highcompared to 3-D seismic surveys that provideinformation over a greater areal extent.

Traditional EOR methods have recently been challenged

by rapid progress in exploration, including the 3-Dseismic revolution accelerated by computer powerThese achievements have called greater attention todiscovery and development of smaller oil pools at theexpense of EOR processes in maturing oil fields. Similaimprovements in computational technologies andincreased speed of data acquisition and processing arecreating new opportunities for better reservoimanagement that is essential to successful EORapplications.

The Role of TechnologyThe decade of the 1990s marked extraordinarytechnological improvements in exploration, drilling, andproduction. The president of the American PetroleumInstitute has stated mind-boggling progress has cut thecost of finding and producing oil by 60 percent in reaterms over the past 10 years.

According to the Energy Information Administrationstatistical reports, worldwide finding and developmencosts have declined from $21 per barrel in early 1980'sto about $6 per barrel in late 1990's. Advances inexploration have caused oil discoveries per exploratoryoil well completion to increase six-fold from the early1980's to the late 1990's. In the upstream area relating


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to improved oil recovery, the cost-sensitive steam oilratio has declined by a factor of two since the early1980's. In general, however, it seems that the overallprogress in EOR technologies during the 1990s did notkeep pace with high-tech developments applicable toconventional recovery methods.

The 30th anniversary of the Offshore TechnologyConference was marked with a display of technologythat would have seemed like science fiction a decadeearlier. Examples of innovative technologies include:

Conversion of Star War defense lasertechnology to drilling. Two lab experimentsresulted in equivalent rate of penetration of 166and 450 ft/hr (2).

Baker Hughes, Inc., revealed the concept of aDownhole Factory, a production managementsystem that combines fiber optics, robotics,

artificial intelligence and other technology toconvert natural gas into electric power within thewellbore. It has already formed alliances andtrademarked the Downhole Factory title for thenew technology that it expects to assemblewithin 10 years (3).

Downhole separation of water that is producedwith oil, a costly process at the surface becausethe water then must be reinjected, or otherwisedisposed of, is already undergoing field tests (4).

Cross-borehole seismic tomography, and theassociated miniature (0.5 inch) geophone tools,that permit improved reservoir characterizationon the interwell scale (5).

There is every reason to believe that technologicaladvances will continue unabated. Even as we mayeventually be running out of inexpensive, conventionaloil, there are enormous resources of unconventionalhydrocarbons that far exceed the conventionalresources. The EOR knowledge and experience will beessential in commercial development of these resources.

What might the next 25 years bring?An even more challenging question was posed for the

panelists of the SPE International Conference on IOR inKuala Lumpur, Malaysia, in 2001: Will 50% of theWorlds Oil Production Come from IOR/EOR by 2020?Not surprisingly, there was no agreement, nor definitiveanswers.

Answering that question, even in a qualitative sense, isno less difficult than predicting todays desktopcomputing power 20 years ago. The outcome will, ofcourse, depend on such variables as the rate oftechnology development, the worlds economic activity,climate change scenarios, population growth, politics, oil

price and its supply, and many others that are bythemselves hard to predict.

Nonetheless, many economists and geoscientists havetried to look into the future of oil supply as far as the mid21

stcentury, but none of the studies looked specifically

into EOR contribution to the overall oil supply in the

United States or the world.

Let us start with a few assumptions. First, assume thathe definition of EOR is as proposed in Ref. 1, andshown on page 1 of this paper. The proposed definitionof IOR from the same reference is: Improved oirecovery (IOR) refers to any practice to increase oirecovery beyond primary production. That can includeEOR processes as well as all secondary recovery

processes, such as water flooding and gas pressuremaintenance.

Table 1 shows the percentage of oil produced by primaryrecovery, secondary recovery and enhanced oirecovery, for the United States and the world, for theperiod of 1970 to 2050.The significance of the year 1970 is that the U.S. oiproduction reached its peak that year and started todecline from that time on. The significance of the yea2037 is that the world oil production will then reach itspeak and will begin to decline (6). The followingconclusions are drawn:

In countries with long oil production history anda well established oil production decline, such asin the Unites States, EOR has seeminglyreached a plateau and may not grow much

more.

EOR has always stayed at a level that is muchbelow oil production by secondary methodswhich also have reached ceiling and remainedflat about 15 years ago.

EOR is not likely to exceed oil production fromsecondary operations because waterfloodingand gas pressure maintenance (secondary) wilalways be less expensive than EORapplications.

For the foreseeable future, major oil companieswill continue focusing on exploration for largereservoirs while pondering alternative energysources and renewables. For them, it is simply amatter of survival. EOR is great, but has a limito its growth, even at much improved oil prices.

As in the United States, where EOR has leveledoff about four decades after the countrys onsetof declining total oil production, the worlds EORwill reach its peak about 30 years after the onseof its production decline, now thought to occur in


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2037 (6). The EOR fraction of the worlds totaloil production would be similar to that in theUnited States.

Within 25 years, economical andenvironmentally acceptable ways of oilproduction from the worlds huge heavy oil and

tar sands, as well as from other unconventionalsources of liquid and gaseous hydrocarbonsmay be possible. Even before then, nuclearpower is expected to provide much energy tomany sectors of the economy, except thetransportation sector. It is also conceivable thatdemand for oil (in particular) may beconstrained, not so much by its supply, as byadvancing developments in high efficiencyautomobiles or by concern for the environment.

The extreme sensitivity of EOR activity to oil price hasbeen recognized and pointed out by the National

Petroleum Council (NPC) study in 1984, (7). The studyestimated EOR production levels at three pricescenarios through the year 2010, Fig. 6. As early as1984, NPC predicted that there would be little growth inEOR production at $20/bbl (Implemented Casescenario), and that EOR production would peak in mid1990s. Considering that average oil prices during thattime were closer to $20 than to $30/bbl, that projectionhas proved to be reasonably accurate, Fig. 6. However,the stated case was the most conservative of the manyother scenarios and assumed no technological advancessince 1984. The Advanced Technology Casesuggested EOR production level at a rate nearly twicethe level of Implemented Case, which proved to be

unrealistic. Overall, the study was overly optimistic.

Based on the documented history of EOR developmentand application in the U.S., EOR did not quite live up toits early promise. If the percentage of EOR as a fractionof total oil produced continues to increase, it is largelydue to the declining total oil production in the U.S.

Table 1 shows actual and projected oil recovery in theU.S. and the world, by recovery type, for the period of1970 to 2050. Currently, EOR contributes 12 percent ofoil to the total oil stream in the U.S. This fraction may

increase somewhat, if only because total oil productionwill continue to decline. It is unlikely that EORcontribution will exceed 18 percent of total oil productionin the U.S. or elsewhere in the world. Substantiallyhigher and more stable oil price levels are essential toreach over that threshold. And that is not in the cardsany time soon.

ConclusionsIt is likely that EOR-produced oil in the United States hasalready reached its peak level and that it will increaseabove the current production rates only at substantiallyhigher and stable oil prices.Worlds EOR production peak is likely to occur 30-35years after the onset of global oil production decline, or

in mid 2060s.

References1. Stosur, G., The Alphabet Soup of IOR, EOR

and AOR: Effective Communication Requires aDefinition of Terms. SPE # 84908, October2003.

2. Star Wars Laser Technology for Drilling andCompleting Gas Wells. JPT, February 1999.

3. Oil Industry Peers Into Its Future at OffshoreTechnology Conference. O&GD, April 29, 1998.

4. Feasibility Evaluation of Downhole Oil/WateSeparator Technology. U.S. DOE Report NoW-31-109-Eng-38, January 1999.

5. Natural Gas and Oil Technology PartnershipPartnership website www.sandia.gov/ngotp.

6. Long Term World Oil Supply; A Resource BaseProduction Path Analysis. www.eia.doe.gov.

6. Enhanced Oil Recovery A report by theNational Petroleum Council, June 1984.

Primary recovery

Natural flow

Secondary

recovery

Artificial lift

Pump gas lift etc.

Waterflood

Tertiary

recovery

Pressure maintenance

Water Dry hydrocarbon

gas injection

ThermalGas miscible /

immiscible

Chemical &

other

ImprovedOilRecovery(IOR)

EnhancedOil

Recover

y(EOR)

CombustionSteam soak/cyclic

Huff-and-puffSteam drive/flood

Hot water driveElectromagnetic

CO2Nitrogen

Flue gasHydrocarbon

AlkalineMicellar-PolymerMicrobial/foam

Source: Modified from Oil &Gas Journal, March 2

Fig 1. Sequential stages of oil recovery with proposed content fo

Enhanced and Improved oil recovery (modified after Oil andGas Journal)
http://www.sandia.gov/ngotphttp://www.sandia.gov/ngotp


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Secondary

51%

Primary

37%

Tertiary

( EOR)

12%

Fig.2. Sequential oil production cycles and their correspondingshare in percent of contribution

0

2

4

6

8

10

12

14

80

82

84

86

88

90

92

94

96

98

2000

2002

WorldEOR,

Percentageof

TotalOilProduced

Source: EIA

Fig.3. Historical growth of EOR in the United States and the world

United States

Fig. 4. EOR in the United States by major processes

0

200

400

600

800

80 82 84 86 88 90 92 94 96 98

2000

2002

EORProductionRate(1,000bbls/day)

0

100

200

300

400

500

600

Numberof

EORProjects

Total Production Rate

Number of EOR Projects

Source: EIA

Fig.5. Correlation of U.S. active EOR projects and EOR production

levels

0

200

400

600

800

1,000

1,200

1,400

1,600

1980 1990 2000 2010

TotalEOR(1,000bbls/day)

Actual EO RProduction Data

$20/bbl

$30/bbl

$40/bbl

Fig. 6. Actual EOR production in the U.S. compared to theNational Petroleum Council study, for three oil price scenarios(Nominal crude oil price at constant 1983 dollars, implemented

technology case, 10% min. ROR). NPC study on EOR.

0

100

200

300

400

500

600

700

800

80 82 84 86 88 90 92 94 96 98

2000

2002

EOR

Product

ion(1,0

00bbls/day)

Chemical

Gas

Thermal

Total EOR

14181016814EIA

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