D. Dowd Muska

 

Enhancing America’s Petroleum Boom

October 09, 2014

Call it fracking’s kid brother.

Enhanced oil recovery (EOR) doesn’t inspire the hatred of greenie pols and Hollywood ignoramuses. It attracts little praise or condemnation from pundits. And it’s responsible for just 12 percent of U.S. production of black gold. But as long as the global price of petroleum stays high, look for EOR’s importance to grow.

First, the basics. In a 1981 profile of early EOR tinkering, The New York Times explained: “[I]n primary recovery, oil is pushed to the surface by underground water pressure or by pressures generated by gas mixed in with the oil. As these natural pressures subside, water is injected through separate wells to increase the pressure sufficiently to continue forcing out oil. This is called secondary recovery.”

But as the Times noted, “the great bulk of oil … stubbornly remains in the ground,” even after completion of the two extraction processes. EOR, also known as tertiary recovery, lowers the viscosity of the “leftovers” -- by injecting chemicals, gases, or heat -- in an attempt to get every last drop.

No matter which method is selected, expenditures can add up quickly. According to the website Rigzone, “producers do not use EOR on all wells and reservoirs. The economics of the development equation must make sense. Therefore, each field must be heavily evaluated to determine which type of EOR will work best on the reservoir. This is done through … characterization, screening, scoping, and … modeling and simulation.”

Ironically, the stuff that has Al Gore and Leonardo DiCaprio so terrified is proving to be EOR’s best tool. Carbon dioxide is becoming the technique’s dominant ingredient, displacing steam and nitrogen. In the analogy of a Texas EOR executive: “If you’ve ever tried to get oil-based paint off of something with a garden hose, you know it’s hard to get off. CO2 acts like a solvent.”

EOR employing CO2 debuted in Scurry County, Texas, in 1972. The approach is found all over the nation today, from Alaska to California, the Rocky Mountains to the Gulf Coast. Energy Information Administration researchers broke down the tricky financials: “The cost of the CO2 itself can add $20 to $30 per barrel of oil produced. In addition, the producer must pay for surface facilities to separate the CO2 from the production stream and compress it back into the oil reservoir. The producer also incurs a financial cost for the time delay associated with repressurizing old reservoirs.”

When Bill Clinton’s presidency wound down, gasoline sold for under a buck in some sections of the country. (It hurts to remember, but it’s the truth.) EOR of any kind didn’t appear to have much of a future. A decade later, when it became clear that pricey petroleum wasn’t a fleeting phenomenon, investments in tertiary recovery began to flow. In 2008, the U.S. produced 644,356 barrels of petroleum per day through EOR. This year, Oil & Gas Journal estimates that the yield will be 778,048 -- a 20.7 percent increase. Not quite fracking’s meteoric rise, but impressive enough.

How much domestic crude is left for EOR to tap? Lots. Conservative estimates for CO2 use put the amount at 20 billion barrels. The real-world figure is likely to be far bigger -- perhaps by a factor of two or three -- given adoption of next-generation technologies and significant improvements to infrastructure. (Advanced Resources International’s Vello A. Kuuskraa and Matthew Wallace believe that “large-scale capture and utilization of CO2 from industrial facilities, chemical complexes, and electric power plants will be essential if the CO2-EOR industry is to achieve its full economic potential.”)

EOR is creating jobs, rewarding investors, and doing its part to restrain the cost of manufacturing petroleum products. Tertiary recovery is the forgotten contributor to the U.S. hydrocarbon renaissance, and its accomplishments deserve wider dissemination.

EOR also demonstrates the ignorance and fatuity of ecochondriacs. Unmoved by breathless media accounts of and CGI-infested blockbusters about “resource depletion,” scientists and engineers indefatigably pursue ways to meet mankind’s demand for climate-controlled homes, reliable electricity, and affordable transportation. Better drill bits, satellite-based surface sensing, deepwater rigs, 3-D mapping of geologic formations, airborne and underwater drones, efficiency-boosted engines -- progress is continual. Meanwhile, billions of taxpayers’ dollars are squandered on subsidies to energy systems hamstrung, perhaps permanently, by their diffuse and intermittent fuels.

“Ironically,” an analyst for the Energy Policy Research Foundation observed in 2007, “most of the oil we will discover is from oil we’ve already found.” That, in sum, is EOR -- another reason why there’s no end in sight for America’s petroleum boom.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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