Future of Oil and Gamechangers

Orhun Aydin
December 11, 2013

Submitted as coursework for PH240, Stanford University, Fall 2013


Enhanced oil recovery (EOR) is the primary method used to recover residual oil that exists after primary and secondary (waterflooding) techniques in petroleum accumulations. Primary recovery is only expected to recover up to 30% of the original oil in place (OOIP) under the most ideal of the conditions, and even with the application of secondary recovery, rarely can this exceed 50% of the OOIP. Therefore, between 50-70% of the resource base is available for exploitation with the use of EOR techniques. EOR schemes vary in scale and application, dependent primarily on reservoir properties and operational constraints. However, as oil production from mature fields continue to decline and unconventional fields continue to delineate into areas marginal areas, EOR becomes a crucial technology that has the potential to significantly extend the life of the field and to book increasing amount of reserves.

Enabling EOR Methods for Offshore Fields

Gamechangers are defined by Shell International Exploration and Production as technology pathways that will enable future energy sources. [1] In order to define the technologies for future the first step is to point out the future of the problems.

There are various . However, if an offshore field is of question then most of these aforementioned methods are not applicable since equipment needed for EOR equipment are hard to place on rigs that have tight space on them. Moreover, it is beneficial to have all of the operating units built on to the rig before it leaves the dock. So future planning of an offshore field becomes more and more important. The first question posed is: Is it worth developing the technology that will enable EOR on the offshore? The answer came from the future forecast of reserves to be discovered. [1]

As it can be seen above, there is lot of reserves that remain for further development in offshore fields. [1] This means after discovery these fields will go into primary depletion which will be followed by some suitable EOR method. If new technologies that will enable EOR on offshore fields emerge then the resource base will increase considerably. Moreover, as it can be seen Africa has a large offshore potential. If EOR is enabled on the African offshore that means more companies will come to Africa. Moreover, North America can get a large share out of this development too. Energy independence seeking countries such as US with a large offshore production potential will invest heavily in the offshore EOR technology. This may give this game changer a push since US will invest heavily on to the matter. It is likely that the Miocene reservoirs of the Gulf of Mexico, with its mature fields can be a hot spots for the pilot testing and development of many of these EOR schemes. An observation that is prevalent throughout the industry revolves around the fact that as development in the Gulf of Mexico modes to deeper water, permeability deteriorates, oil viscosity increases and initial reservoir pressure increases substantially.

In-Situ Combustion

In-situ combustion involves burning some of the in-situ heavy oil to generate heat in the reservoir that will eventually strip the lighter oil and push it towards the producers. Although this method is highly effective to improve the oil recovery there are multiple technical difficulties with its implementation. It is reported that modeling the fire started in the reservoir together with operating and maintaining the necessary equipment is hard. When technical difficulties are solved this method will be very promising since it can unlock the hardest reservoirs in terms of increasing their production. One of the reasons that makes this technique a gamechanger is its general applicability-- meaning that if other EOR methods are not applicable in-situ combustion is a good alternative to have. It has a potential to unlock both heavy-oil reservoirs and offshore reservoirs. It is particularly advantageous for offshore reservoirs since only a relatively small air compressor would be required in the injection facility design, which would significantly reduce the traditional EOR capital expenditure budget when compared to a nitrogen separation plant or a CO2 plant. Heavy-oil reservoirs will benefit significantly since it will eliminate the natural gas and water/steam requirement in the delivery of thermal energy into the reservoir while burning only a fraction of the oil that is in place. Usually, this will also result in slightly upgraded produced oil, which will increase its inherent value on the spot price market.

In-situ Upgrading

In-situ upgrading is the process of slowly heating the subsurface thus enabling production of light hydrocarbons from oil shale in vast quantities.

The reason this method is chosen to be a gamechanger is related to geographic locations of oil shale resources. As it can be seen in Europe it can make net importer countries such as Poland and Turkey self-sufficient. This means that enabling this technology can be changing the energy trade in Europe. Since most of Europe is mainly depending on Russia to supply them with energy having these two countries as alternatives may force Russia to reconsider its external energy trade policies.

This technology can also have deep implications for the energy independence of US in the future since it has vast resources of oil shale on its center region. Lastly, perfecting this method may unlock extra-heavy oil reservoirs which can contribute to increasing the life of hydrocarbons in world's energy consumption.

Future of EOR: Two Scenarios

In order to evaluate the future of EOR with different policies Shell's 2050 Energy Outlook scenarios are selected. These scenarios, namely Scramble and Blueprints, evaluate how the future of energy will be like if certain moves are taken today.

1. Scramble's Importance for EOR Future

Scramble is created to illustrate what would happen in the world if all the nations considered mainly their own energy security. In this energy scenario, oil and gas are the main sources of energy preferred by nations. Fuel sources such biofuels and coals are left out as secondary or tertiary sources of energy.

One immediate conclusion from this situation is that due to the heavy reliance on oil, primary depletion in fields will be accelerated and EOR methods would be required in order to stem a significant decline. At first, production coming from EOR will be the main source of increase in a country's energy balance. However over time reservoirs are going to deplete, or alternatively, development and recovery costs would increase significantly as the more inaccessible resources are targeted. In this scenario EOR methods are not foreseen beyond 2050, since most of the discovered fields will have undergone some enhanced oil recovery method by that time.

It is expected that environmental policies will not be extended beyond the minimum health and safety standards as resource revenue and energy security are expected to be the main driver of government policy. This may create a path way for chemical EOR which may be found environmentally unfriendly under certain circumstances.

In this scenario solutions to environmental problems and energy policies will be lagging since the main concern will be securing energy sources. However, a sudden reactionary backlash resulting from unacceptable contamination may invalidate some methods if environmental standards are not enforced early on. For instance if a massive piece of land is contaminated due to chemical EOR, these methods may be banned from application.

A three-step pattern is foreseen for this scenario.

  1. When supply tightens rely on coal, and heavy hydrocarbons by EOR

  2. Pump more biofuels into the market

  3. Cut back consumption by drastic measures

Developing countries that need a lot of energy such as African countries will be doing EOR on most of their fields (according to our scenario.)

Lastly, in this scenario national governments that have energy resources in their home countries will be rule makers since other governments will be relying on them for their growth. This may cause an increase in EOR operations in these countries since they would like to have the upper hand in policies as long as possible.

2. Blueprints' Importance for EOR Future

Blueprints is a more optimistic scenario in terms of forming coalitions between countries and regions to make sure that the world in general has enough energy. This scenario starts with coalitions at small scale such as between two cities making a coalition about decreasing oil consumption. After such coalitions work at this micro scale they are adopted at an international scale.

In Blueprints countries take precautions for environmental concerns and promote investment in renewable energies from the start. This will increase the life of EOR since countries will not be relying on one type of energy source. Thus the application for EOR will be spread out over 100 years, which may allow for further innovation and therefore application of a more suitable EOR technology to certain reservoirs (i.e. companies are not forcing an unsuitable method). While this is impossible to forecast, it is certain that more sophisticated methods will become more available.

Carbon capture and sequestration will be highly supported by governments. Although it is not an ideal way to store CO2, CO2 EOR methods may see an increase in number due to tax cuts and other initiatives taken by environment conscious governments and international entities.

Future of EOR: Two Scenarios

EOR has many implications for the future of energy. First of all, EOR methods increase the overall production from old oil fields and it postpones abandonment from those fields. This means oil can be produced for a longer period of time with EOR methods.

As mentioned before it will give extra time for green energies to develop and thus will make way to a smooth transition from non-renewables to renewables. If there was not the production buffer from EOR governments may need to take drastic energy consumptions measures in order to make the supplies last longer.

Moreover, developing countries that need energy and investment will be the main arena of EOR since they will need to keep oil companies for a longer period of time and would like to increase their production from their fields. Countries that are wholly dependent on petroleum revenues would have no choice but to increase their development into EOR as their primary production depletes if they are to maintain their expected level of spending.

Lastly, as time goes along EOR becomes more and more important. Since the resource is limited we will be discovering less and less new fields every year. This means the industry will be tempted to produce the most out of preexisting fields with the help of EOR.

© Orhun Aydin. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] J. L. Bravo, "Energy Security and Diversity - The Role of a Technology Strategy for an Integrated Oil Company," One Petro