Changing Assets

March 20, 2000
One result of the roller coaster ride that crude oil prices have taken during the last 2 years has been the sale of noncore assets by many companies.

One result of the roller coaster ride that crude oil prices have taken during the last 2 years has been the sale of noncore assets by many companies. One company's noncore assets become core assets of another.

As seen in OGJ's exclusive biennial enhanced oil recovery survey, starting on p. 45, some EOR projects have suffered this fate, but many still are being operated by the acquiring company as EOR projects.

Carbon dioxide projects

Although not shown in the survey-because the survey reflects project status at the start of 2000-the largest EOR project divestiture since the previous survey is the pending sale to Occidental Petroleum Corp. of Altura Energy Ltd., a BP Amoco PLC-Shell Oil Co. joint venture (see related story, p. 29).

Both Shell and the former Amoco Corp. were pioneers in developing CO2 injection technology for improving oil recovery. And, in recent years, Shell, through Shell CO2 Co., was heavily involved in promoting this technology to smaller operators.

Shell has further removed itself from carbon dioxide activity by announcing its intent to sell its share of Shell CO2 Co. Ltd., a partnership of Shell CO2 Co. and Kinder Morgan Energy Partners LP (see related story, p. 30). Kinder Morgan will acquire Shell CO2's interest in CO2 reserves in the McElmo dome and Doe Canyon source fields in Colorado and the Bravo dome source field in New Mexico. The sale also includes Shell CO2's stake in the Cortez, Bravo, and Central basin pipelines that supply CO2 to the Permian basin.

Shell estimates that almost 3.3 tcf of CO2 has been produced from the McElmo since production started in 1983. By some estimates, more than 10 tcf of CO2 reserves remain at McElmo.

Thermal recovery

Even though Shell sold its stake in the CO2 venture, it remains an active participant in thermal EOR projects through its interest in Aera Energy Ltd., a JV with ExxonMobil Corp., and through its activity in the Peace River heavy oil deposits in Alberta. In Alberta, Shell also has an interest in another nonconventional oil recovery venture, the proposed $3.5 billion (Can.) oilsands mining and upgrading project operated by Albian Sands Energy Inc.

In the last 2 years, Aera has expanded its thermal EOR activities by acquiring ARCO Western and some Texaco Inc. properties.

Although thermal EOR production may have reached its peak in the US, new Canadian projects-especially steam-assisted gravity drainage (SAGD) projects-are at various stages. SAGD is attractive because, according to one estimate, a pair of wells in an SAGD pilot typically produces 630 b/d. But economics depends on the steam:oil ratio as well as freshwater access.

In Canada, project operators are also changing. For instance, BP did much initial thermal EOR work in the Wolf Lake-Primrose area of Alberta but several years ago sold its stake to Amoco Canada Ltd., which announced significant expansion plans. Now that BP and Amoco are one company, the combined company has let go of the Wolf Lake-Primrose properties. Canadian Natural Resources Inc. is now the operator.

Although operators change, EOR projects continue. To keep up with the changes, look for an EOR survey update in 2002.