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Market Report:

The future of oil

 

The future of oil

As the emerging economies of countries such as India and China continue to grow at a frantic pace, so does their demand for oil. Yet the most easily accessible stocks of this resource are running low. Some analysts, such as the US Energy Information Administration, even believe that world production has passed its peak. Whereas ten years ago oil prices stood at around €7 a barrel, they are now more than 10 times that.

As a result, reserves that were previously too expensive to exploit particularly those trapped under the ice and snow of Arctic and Antarctic fields are being sized up for their potential. In order to force more oil from existing wells and exploit resources hidden in less accessible formations, companies such as BP and Shell are turning to new technologies through a process known as Enhanced Oil Recovery (EOR).

EOR explained
EOR can be divided into three main families: Thermal, Miscible Gas, and Chemical. The approach applied to an oilfield depends on the problems faced by those attempting extraction.

In thermal EOR, the focus is on heating the oil in the reservoir to reduce its viscosity and enable it to flow easier to the producing wells. The technique is currently being used by Bankers Petroleum to breathe new life into formerly state-owned oil fields in Albania.

Miscible gas EOR involves a gas such as carbon dioxide being injected into a well to force out remaining oil. If the gas can be left behind and the well capped, the process also provides an underground storage solution for greenhouse gasses while at the same time helping get more barrels of oil out of the ground.

The British Geological Survey has estimated the potential storage capacity under the whole of the North Sea at around 20 billion tonnes of CO2 in oil and gas fields, with an additional 2070 billion tonnes of CO2 in confined aquifers. At present, the UK alone currently produces emissions of around 560 million tonnes of CO2 per year, meaning the technology could have an important role in reducing Europes atmospheric pollution.

Chemical EOR is the least mature of the EOR technology groups, but it also offers great promise, explains Val Brock, Business Development Manager EOR, Shell International Exploration and Production BV. [The] addition of polymers to water floods increases the viscosity of the injection fluid, thereby helping to push thicker oil to the producer wells. Shell is applying this technology in a project underway for the Marmul field in Oman.

The other type of chemical EOR is the use of surfactants to break down the interfacial tension between oil and water that traps a portion of the oil in the underground reservoirs, Brock continues. Shell is working to deploy this technology in several fields in the near to mid term.

Organic methods
Meanwhile, BP is investing in research into advanced biotechnology in an attempt to use microbes that occur in wells to help drive out oil. At present, the microbes live in a nutrient-poor environment. By providing them with the right nutrients to grow in a certain way, scientists at the company believe they could be encouraged to break down heavy oil for easier extraction or produce surfactants in the reservoir, rather than the operator having to inject vast volumes of chemicals.

Currently, some four per cent of global production comes from the three families of enhanced oil recovery techniques. The International Energy Agency forecasts that this number will grow to some 20 per cent by 2030.  This growth will be dependant on a number of factors including price, technology, and competitive energy alternatives influenced by socio-political issues, says Brock. It is clear though, that EOR is seen as a key part of meeting the worlds future demand for energy in the coming decades. In response, Shell has increased its investment in EOR research by 10 fold over the last five years. We intend that EOR will be contributing some 10 per cent of Shells overall production in the coming decade, Brock adds.

Capturing CO2
Rehan Naqvi is a Senior Process Engineer CO2 for Shell Global Solutions and is based in the
Netherlands. After completing a BSc Mechanical Engineering at University of Engineering and Technology in Lahore in 2000, he pursued a masters degree in Sustainable Energy Engineering at the Royal Institute of Technology, Stockholm, followed by a PhD in the field of CO2 capture from power plants at the Norwegian University of Science and Technology (NTNU), Trondheim. He now supports projects that involve CO2 capture from power plants integrated with Enhanced Oil Recovery (EOR).

These projects have a twofold advantage; demonstrating that CO2 capture from power plants is feasible and possible, with the potential to pave the way for CO2 capture implementation in large industrial projects worldwide, while simultaneously producing difficult barrels, which otherwise would be very difficult to extract, he says. Such projects can result in a sustainable energy supply with the additional benefit of carbon emissions reduction. The produced oil makes CO2 capture more economical compared to pure capture and sequestration. I believe that carbon capture and sequestration could have an important part to play in the future energy equation in a carbon constrained world which is set to continue to heavily relying on fossil fuels, he continues. Successful projects have the potential to add value to the worlds efforts to develop technologies to make traditional energy more sustainable.

The company is working with Norways Statoil to develop the worlds largest project using carbon dioxide for enhanced oil recovery offshore. Captured carbon dioxide from power generation will provide CO2 to the Draugen and Heidrun offshore oil and gas fields. The venture forms part of Norways response to international and national climate targets, and could potentially store approximately 2-2.5 million tonnes of CO2 annually in the two fields.

With revenues from current oil production being at a historic high and demand showing no sign of slowing, the driving force to discover new technologies that can squeeze as much oil out of reserves as possible is very strong. By also developing systems that reduce the environmental impact of extracting and burning fossil resources, EORs future looks very bright indeed.

About the author
Julia Pierce is a London-based science journalist. She has previously written on the topic of energy and renewables for publications including New Scientist, The Engineer and Horizon.

Did You know?
The BP Statistical Review of World Energy 2007 predicts that oil reserves in the Middle East will last 79.5 years, Latin America 41.2 years and North America just 12 years
The petroleum industry is generally divided into upstream producers which find and pump the oil, and downstream transporters, that distribute and consume it

Website-Links
BP  www.bp.com
Shell  www.shell.com
Statoil  http://www.statoilhydro.com/en/Pages/default.aspx
British Geological Survey  www..bgs.ac.uk/
Bankers Petroleum  http://www.bankerspetroleum.com/s/Home.asp