Special Report: EOR/Heavy Oil Survey: POINT OF VIEW: SPE IOR conference chair laments lack of R&D funds

US funding for basic enhanced and improved oil recovery research and development is as scarce as it's ever been, says Dwight Rychel, general chair of the biennial Society of Petroleum Engineers Improved Oil Recovery Symposium, to be held Apr. 24-28 in Tulsa.

"There is so much more we need to do in the way of basic research into such issues as reservoir heterogeneity, reservoir sweep, channeling, mobility control, and wettability—and then, having gained knowledge in those areas, demonstrate those findings at the field scale," he said in an interview with Oil & Gas Journal.

Regarding the potential for increasing oil recovery with EOR-IOR R&D, he observed, "It's a truism that all the easy oil has been found. But you have to remember that the world's ultimate conventional discovered oil resource totals 11 trillion bbl, and of that total only 1 trillion bbl has been produced at an average global recovery factor of 22%. EOR today accounts for only 3% of the world's oil production. What if we could nudge that recovery rate higher with a comprehensive global approach to IOR-EOR?"

For the US, he noted, EOR-IOR potential is tremendous, with more than 218 billion bbl of discovered, technically recoverable oil lying unproduced in reservoirs shallower than 5,000 ft.

Industry R&D efforts

Major oil company consolidations in the 1980s and 1990s cost the industry some of its R&D pioneers, among them major oil companies such as Amoco, noted Rychel, a consultant in energy research, development, and technology transfer.

"While a handful of majors still pursue some oil and gas R&D, the reality is that service companies conduct most R&D these days, and it is focused on new tools and other solutions driven by their marketability—not that there is anything wrong with that," he said.

For instance, the industry has developed marvelous new technology the past 20 years, particularly in the areas of 3D seismic and drilling efficiencies. "But the kind of fundamental, basic R&D that the industry really needs to have in order to make order-of-magnitude strides in improving oil and gas recovery has dwindled in the past decade or so," he said.

Currently, he said, "So much of that research is being undertaken now by national oil companies that don't have the scope of institutional knowledge that international oil companies have or by academic institutions that are scrambling for funding. If an operating company today conducts or funds research in EOR-IOR, those efforts are primarily devoted to its own portfolio of properties and typically held closely."

DOE funding

R&D funding by the US Department of Energy has moved away from conventional EOR-IOR.

"For now, most DOE-funded oil and gas research—whether through the agency's own directly funded programs or through its management of projects administered by the RPSEA (Research Partnership to Secure Energy for America) consortium and funded under the Energy Policy Act of 2005 (EPACT)—is focused on unconventional oil and gas, such as the gas shales, deepwater challenges, and environmental issues," Rychel said. "There are a handful of active projects under RPSEA focused on small producers that involve such areas as near-miscible CO₂ flooding, seismic stimulation EOR, miniwaterfloods, alkaline-surfactant-polymer floods, and the like."

Rychel explained that the "EPACT program is essentially valued at $400 million of cost-shared R&D over 8 years—which is pretty modest to begin with, but funding for EOR and IOR research accounts for only a tiny fraction of that program amount. Nevertheless, it's a positive when you consider that federal funding for oil and gas R&D essentially dried up for a couple of years in the middle of the last decade."

DOE still manages some EOR research, particularly projects related to CO₂ sequestration and EOR.

"That's an area that will get greater attention in Washington, DC, as the debate over energy needs and climate change concerns heats up this year," Rychel said. "CO₂ EOR and sequestration has significant potential in the US because it holds the prospect of increasing oil production and reserves while at the same time finding cost-effective ways to safely store CO₂ emissions."

But he offered a warning: "It won't be a magic bullet to address America's goals of improving energy security, reining in energy costs, and mitigating CO₂ emissions. There simply is not enough potential EOR demand for CO₂ that would make it a game-changer for mitigating CO₂ emissions."

Nevertheless, he said, "There is every reason to believe that it would be a win-win solution helpful in making progress toward the country's energy and environmental goals."

He noted that a recent study by Advanced Resources International Inc. of Arlington, Va., estimated that carbon capture from proposed US climate legislation could increase US oil production by 3-3.6 million b/d by 2030 if all the captured CO₂ were used for EOR (OGJ Online, Mar. 11, 2010).

But there are difficulties in gathering all this CO₂ at a reasonable price relative to oil. Rychel said, "The low-hanging fruit for CO₂ supplies—the natural deposits and very large gas plants (LaBarge in Wyoming and the Great Plains coal gasification plant in North Dakota)—has been taken. The next big sources are the coal-fired power plants."

But securing CO₂ from these sources will not be easy. So far there are no regulations or laws requiring the capture and separation of CO₂ or placing a price on CO₂ not emitted, although both the House and Senate have proposed bills and the Environmental Protection Agency is working on regulations as well.