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Middle Eastern EOR, Part 1

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Oilfield Technology,

For all the talk about the rise of ‘light tight oil’ in the US and its impact on the North American energy sector, the Middle East will remain critical to meeting world oil demand. The Middle East’s role will be particularly important as the global economic recovery starts to accelerate, with the International Energy Administration estimating that new production capacity of 21 million bpd will need to be added globally by 2020 to offset existing field declines.

To continue to play this role in meeting required production capacity, however, the Middle East will have to complement existing primary and secondary production with an increasing focus on enhanced oil recovery (EOR) projects as fields approach maturity. Implementing EOR is, however, about more than simply overcoming technical and commercial challenges. The widespread adoption of EOR will also require national oil companies (NOCs) to not only amend their operating models to emphasise integration, but also to ensure alignment of approaches with other stakeholders in the energy sector in the country and in the Middle East region.

Current status of EOR projects in the Middle East

Current global proven oil reserves are estimated to be in the range of 1500 - 1700 billion bbls. The Society of Petroleum Engineers estimates that EOR has the potential to add an extra 800 billion bbls globally – significantly higher than estimates of ‘light tight oil’ potential, for example – based on the increase of the average recovery factor from 30 - 50% to 50 - 80%. Given that the giant and super giant fields in the Middle East are onshore, the region may account for as much as 50% of global EOR potential. For the most part, oil production in the Middle East is still dominated by primary and secondary production methods, notably waterflooding. However, as signs of increasing field maturity become more commonplace, and in the scenario that oil prices remain above US$ 100/bbl, NOCs in the region are turning their attention to EOR (see Figure 1). EOR production costs are estimated to range from US$ 20 - 80/bbl, higher than conventional production costs yet still competitive compared to costs of ‘light tight oil’ and other potential unconventional growth areas such as oilsands.

Whilst pilot projects are either planned, or under construction, in Kuwait, Saudi Arabia, Qatar and the UAE, it is Oman that is the undoubted regional leader in EOR. Oman’s reservoirs are complex and highly fragmented, with a significant proportion of heavier oil. In addition, as a consequence of the smaller resource base, Oman’s production started to decline in 2001. This reversal led to a renewed focus on technology application and, in particular, EOR. Oman now boasts a portfolio of thermal, chemical and miscible gas EOR projects, and oil production has increased every year since 2008. By 2020, Petroleum Development Oman (PDO), the main operator in the country, estimates that 22% of its production will come from EOR projects. For other Middle Eastern countries, large-scale production from EOR projects will not be achieved until after 2020 as the cycle time to identify, develop, pilot and implement is typically longer compared to conventional field development and commonly exceeds 10 years. Given this time scale, and with increasing industry experience suggesting that EOR projects are most effective when implemented before the onset of field decline, NOCs in the region are actively seeking to advance their EOR strategies.

Figure 1. Current and planned EOR projects in the Middle East. Source: Booz & Company.

Challenges for EOR project implementation

As the attention of NOCs in the Middle East turns increasingly to considering EOR projects, they will need to overcome technical, commercial and a range of broader integration challenges.

Technical challenges

First amongst the technical challenges is the need to identify and develop EOR processes that maximise recovery from tight, heavily fractured carbonates, which typically form the main reservoirs in the Middle East. Identifying fracture networks, characterising fluid flow through these networks and understanding the response of reservoir rocks and fluids to EOR injectants is critical to selecting the optimum EOR method. A pre-requisite to being able to conduct the necessary studies and build reservoir models is the completeness and consistency of geological, well and production data – for older fields originally developed 50 years ago, the availability of such data may not be guaranteed.

A particular challenge for implementing EOR in the Middle East is the availability of water and power. Thermal and chemical EOR projects typically require large volumes of water which has been treated to the required quality standard for injection into the reservoir, which together with existing and planned water flood projects places additional demands on scarce water supply. Treating water, generating steam and providing the necessary re-injection facilities places additional demands on power supply, requiring companies to supplement the existing power supply with other alternative sources of power such as solar.

Commercial challenges

On the commercial side of the business, EOR projects require significant upfront capital expenditure on wells and facilities. EOR projects also have high operating costs due to the need to source and inject fluid or gas into the reservoir. As a consequence, EOR projects typically do not compare favourably with existing production operations or with other improved oil recovery projects such as infill drilling. Furthermore, the time delay from embarking on an EOR project to achieving sustainable, commercial production, taking into account the time required for piloting, makes EOR application a risky proposition for companies blessed with prolific reservoirs in supergiant fields. Implementation of miscible gas EOR projects, using either sour hydrocarbon gas or CO2, requires existing flowlines and facilities to be replaced with corrosion-resistant materials, which results in increased project costs. In the absence of large-scale natural sources in the region, sourcing CO2 from industrial complexes remains a costly and complex process.

Broader integration challenges

Implementing EOR projects also requires a number of broader challenges to be addressed, requiring integration of approaches, disciplines and stakeholders. These aspects are often overlooked because EOR implementation is seen only as a technical/commercial challenge. Such integration challenges may include the need to consider the impact that an extensive EOR strategy may have on trade-offs to be made between short-term production targets and long-term maximising of recovery from key reservoirs. These trade-offs may be expressed within the NOC as differences in performance objectives for field-based operational staff focused on daily production targets, and central reservoir management organisations tasked with recovery factor optimising. Such trade-offs may also affect overall NOC and country production targets and may, in some cases, require integration with the broader policies and strategies for the energy sector.

In common with all industry participants, NOCs face constraints with respect to resources and capabilities and need to ensure an integrated approach to staff deployment aligned to an emerging EOR strategy. Within the broader industry, EOR projects have only started receiving significant attention as oil prices have risen in the past eight to 10 years. As a consequence, staff with hands-on experience in EOR project design and implementation are at a premium. For NOCs facing staff constraints, deployment of scarce resources on projects that will not show results for many years is difficult given the many more pressing operational and short-term issues that they typically face.

Part 2 of this article can be reached here.

Adapted by David Bizley

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