SOLUTION: Title: How can oil and gas recovery be maximised from a mature

Title: How can oil and gas recovery be maximised from a mature petroleum province (e.g. Middle East Fields)?

Abstract:

Middle East holds few of the world’s largest oil and gas reservoirs, being online for more than half a century these fields are going through secondary and tertiary recovery phase. With oil demand projected to be around 104 Mbbl/day by 2045 (OPEC World Oil Outlook 2045) and the daily oil production coming from mature or maturing oil fields and reserves replacement not keeping pace with the growing energy demand. This challenge is becoming an opportunity for the E&P firms/operators to deploy advanced secondary and enhanced oil recovery (EOR) technologies that may mitigate the demand-supply balance.

This paper will cover an overview of EOR technologies implemented worldwide and discuss the scope and challenges for the middle east operators. EOR being a capital and resource intensive, expensive technology it has a proportional relation with oil price and overall economics. Operators around the world always struggle to answer which is the right time to implement a EOR solution for their asset. It is widely accepted in the industry, after primary and secondary recovery improved oil recovery is implemented. With lower CAPEX involved and immediate recovery achieved through this technique. The operator’s commitment to EOR heavily depends on long term obligations, both in capital and human resources. A vision to strive towards ultimate oil recovery instead of immediate oil recovery, research and development and willingness to take risks can ultimately help operators in the long run to maximize the potential of their assets.

Contents

Abstract: 1

Abbreviation 3

Introduction: 4

Concept of Oil and Gas Recovery: 4

Present scenario analysis: 6

Necessity of maximisation of Oil and Gas recovery: 7

Oil and Gas recovery through EOR in mature fields globally: 8

Maximising Oil and Gas recovery in the Middle East: 11

Conclusion: 14

Reference 16

Table

Table 1: Net injection utilization (Rough estimation) ** 11

Table 2: Strategy for maximizing oil production ** 14

Figure

Figure 1: : Schematic showing the progression of oil production from primary to tertiary recovery. IOR, improved oil recovery; EOR, enhanced oil recovery. SOURCE: Al-Mutairi and Kokal (2011).** 5

Figure 2: Oil prices and resource availability (IEA) 6

Figure 3: Timing of a EOR project; Cold Lake -Canada (Thermal EOR) 7

Figure 4: Worldwide EOR production rates 9

Figure 5: The impact of well cost (infill drilling) for the incremental oil production under steam injection shown in Figure 6.6. Income was estimated by the incremental oil (at two different oil prices) minus well cost ($500,000 per well). 10

Abbreviation

Mboe/d

Million barrel of Oil equivalent per day

Bcf/d

Billion standard Cubic feet per day

CAPEX

Capital Expenditure

OPEX

Operational Expenditure

NPV

Net Present Value

ESP

Electrical Submersible Pump

PCP

Progressive Cavitation Pump

SAGD

Steam Assisted Gravity Drainage

EOR

Enhanced Oil Recovery

MRC

Maximum Reservoir Contact wells

IEA

International Energy Agency

NOC

National Oil Companies

IOC

International Oil Companies

Introduction:

According to OPEC the oil demand for the coming decades will be for 2019-2025 increase of 3.44 mboe/day and 4.9 mboe/day for 2025-2035 respectively, gas demands will be around 2.36 mboe/day and 12.36 mboe/day for the same period. This will put pressure to the operators as from 1950 the reserves replacement for the conventional hydrocarbon reserves has fallen sharply. Around 70% of todays world oil production comes from brownfields, most of them producing from early 1950’s. With digitization and smart field technologies which involves lower CAPEX, operators have successfully gained 5-8% additional oil output from OOIP estimate. But with limitation to these technologies and ageing fields operators are constantly searching for new solutions to boost production from these assets, countries like USA, Canada, China, Venezuela and Russia have already successfully started and operating EOR technologies like SAGD, polymer flooding, miscible gas injection and surfactant flooding. With oil prices at all time low, new EOR implementations are being reconsidered and deferred, but the challenge of improved production remains the same. Operators in the middle east have already completed few successful EOR pilot projects and some are being actively run through, but overall commitment to the technology remains low because of the economics. In short term technologies like multilateral wells, horizonal wells, smart completions can give a gain in incremental oil of 5-10% maximum, but on medium and long term with a stable oil price companies will be investing more on EOR solutions for ultimate recovery from their assets.

Concept of Oil and Gas Recovery:

Development strategies for new fields are based on data obtained from seismic surveys, exploratory wells, and other limited information sources such as fluid properties and reservoir analogues. Based on the information at hand, initial development plans are defined through simulation studies considering either a probabilistic or a stochastic approach to rank options using economic indicators, availability of injection fluids (water and/or gas), and oil recovery and risk, among other considerations. Petroleum reservoirs usually start with a formation pressure high enough to force crude oil into the well and sometimes to the surface through the tubing, however over time the reservoir pressure declines and “primary recovery” through natural drive comes to an end. Many oil reservoirs enter into production without having the necessary pressure to drive the fluid out of the tubing to the surface in these cases artificial lift methods (e.g ESP, PCP, rod lift etc) is used. A recovery factor of 15-25% can be achieved through primary recovery method. [1]

Most reservoirs have some gas in a miscible state and helps the fluid to expand and move the fluid, but with volume depletion the solution gas escapes and lowers the pressure of the reservoir. A “secondary recovery” is required to re-energize the reservoir for the dead oil to move. Water and gas are the primary choice for injection as they are readily available from the produced fluid. Water which is a preferred choice for the operators comes with its own challenges. The water needs to be treated of any microbial content and lower salinity before it can be injected. If oil reservoirs are connected to active water aquifer in the same formations, it is necessary only to reinject water into the aquifer in order to maintain reservoir pressure. The secondary recovery method can achieve an oil recovery of 30-50% recovery. If a water breakthrough happens during this period, it means the oil has been dispersed as oil pockets spreading around the reservoir and the sweep efficiency of the injected fluid can no longer recover the remaining oil. For ultimate recovery enhanced oil recovery is required, it is most commonly known as “tertiary recovery”.

Figure 1: : Schematic showing the progression of oil production from primary to tertiary recovery. IOR, improved oil recovery; EOR, enhanced oil recovery. SOURCE: Al-Mutairi and Kokal (2011).**

Depending on reservoir types and category, operators screen out the most profitable EOR method for their asset. Most commonly used among them are steam injection, which is highly effective for oil having a viscosity of 19o API or below. Polymer flooding has a great potential for water injected oil reservoirs but has a limitation to high salinity, CO2 has been used and are being used both oil and gas reservoirs. Microbial, acoustic and electromagnetic methods are still in research stage, there are very few data available for further discussion.

Present scenario analysis:

With 70,000 oil fields globally, the global average or aggregate recovery factor from oil reservoirs is about a third. This is considered low and leaves substantial amount of oil underground.

Figure 2: Oil prices and resource availability (IEA)

A global effort is underway for some time now to increase this number and one of the reasons for its failure is the relationship between oil price and resource availability. According to the IEA, Figure 2 shows the relationship between production cost and oil resources and the cost associated in converting them to reserves. The cheapest method of pressurising the reservoir and producing oil from it is through water injection, as long as the process is viable the company will avail it. With current reserves estimate, another ~ 2 trillion barrels worth of oil can be produced with an oil price of $40/bbl. It has been estimated that EOR technologies can kick in when the price of oil is between $20-80/bbl [2]. During the 1980’s with the oil price above $125/bbl there was interest among engineers on spending time and effort in EOR R&D. But with the oil crash in the following decades the efforts were put in the back burners. Following the price rise from 2008 the projects all came back in the fore and companies started re-investments. This was not a general trend as US companies during early and mid-90’s kept on experimenting with various EOR technologies.

Figure 3: Timing of a EOR project; Cold Lake -Canada (Thermal EOR)

EOR projects are generally complex, technologically challenging and requires high capital investment and financial risks. The unit costs of EOR oil are significantly higher than that of secondary or conventional oil, so risk becomes significantly higher with oil price volatility. Any EOR project requires a long lead time period, it takes several decades from start to concept- laboratory trials, computer simulations a field pilot project and then it goes for a full commercialization [3]. There are lot of literature advocating deploying EOR at an early stage of a reservoir’s life, this not necessarily is a best option as the risk to return ratio is subject to the uncertainties which can’t be obtained due to limited data from the field’s operation.

Necessity of maximisation of Oil and Gas recovery:

Looking towards the future, oil and gas will continue to play a very important role in supplying the world’s energy needs, making up an estimated 53% of the global energy mix by 2040, according to our recently published World Oil Outlook [4]. The outlook on global oil demand is also positive. It is estimated to increase from roughly 93 Mboe/d in 2015 to over 109 Mboe /d by 2040. In relation to natural gas, demand is set to rise from around 350 Bcf/d in 2015 to 590 Bcf /d in 2040, between 2016 and 2040, an estimated $10 Trillion in oil-related investments will be required, and for gas, roughly $6 Trillion. Over the past few years, though, the industry has seen dramatic drops in investment due to the fallout from the price crash that hit the industry in mid-2014. Spending on global oil and gas exploration and production declined by around 26% in 2015, and an additional 22% decrease is forecast for 2016 and it is record low in 2019. As far as non-OPEC supply there is a steady decline in oil and gas production due to recent lower oil price levels, but then a gradual increase to 2021. From the long-term perspective, non-OPEC supply to continue to rise steadily, reaching a high of 61.4 Mboe/d in 2027, before dropping to 58.9 Mboe/d in 2040. At the same time the share of OPEC crude in the global liquids supply is forecast to increase from approximately 34% today to 37% by 2040. It is a fact that in medium and long term oil and gas companies will require a steady flow of investment to keep the supply steady to the consumer, which will ensure the global economy to flourish.

Oil and Gas recovery through EOR in mature fields globally:

Out of 85 million barrels of oil produced daily at around 3.5% or 3 million barrels of oil is produced through some kind of EOR methods (Figure 4). The bulk of the production is contributed by thermal methods which is contributing around 2 million barrels of oil daily, this includes the Canadian heavy oil (Alberta), California (Bakersfield), Venezuela, Indonesia, China and others [5].

Figure 4: Worldwide EOR production rates

In-fill drilling is essentially required to accelerate steam flooding (“improved rate of return”)[6]. With in-fill drilling cost per well coming on an average around $50,000 per well, the CAPEX associated with it increases the overall cost of the project; In this scenario an optimized well spacing is required to achieve a quicker ROI (Figure 5). Additionally, when considering infill-drilling programs, it is important to understand how long the drilling and completion of one well take and the number of drilling rigs available. This information will probably provide a quick estimate as to whether the project is feasible in terms of field implementation. As for chemical

The concept of mobility control and its relationship to the sweep efficiency of a waterflood evolved in the early to mid-1950’s. It was found that the sweep efficiency could be improved if the viscosity of the injected water could be increased. Thickening agents were actively sought. Numerous chemicals were evaluated but none which had economic potential were found until the early 1960’s [7]. Polymer flooding has economic potential because it uses materials which are relatively low cost. Field application is similar to waterflooding with minor changes to permit mixing and proper handling of the polymer solutions. Widespread use by most operators would be possible without extensive technical support.

But polymer has limitations with higher temperature, pressure and salinity. It has been noted by various authors with increased temperature the rheological properties of the polymer changes, which causes chocking of the sand pores. As polymer is injected with water, rheological properties like turbidity and salinity are very sensitive to polymers performance.

Hydrocarbon miscible processes have been developed and studied fairly extensively. A number of field tests have been conducted.[8] While it has been established that hydrocarbon miscible processes are technically feasible, the high cost of hydrocarbons used in a slug often makes the economics unattractive. Recently, attention has focused on carbon dioxide (CO2) as the miscibility agent.[9] Carbon dioxide has several properties which can be used to promote the recovery of crude oil when it is brought into contact with the oil. These properties include: 1) volubility in oil with resultant swelling of oil volume; 2) reduction of oil viscosity; 3) acidic effect on rock; and 4) ability to vaporize and extract portions of the crude oil under certain conditions of composition, pressure, and temperature. Solution-gas-drive recovery results from the fact that CO2 is highly soluble in oil. When CO2 is brought into contact with oil under pressure, the CO2 goes into solution. When the pressure is lowered, part of the C02 will evolve and serve as an energy source to drive oil to producing wells. The mechanism is similar to the solution-gas drive primary recovery mechanism and can be operative in either immiscible or miscible displacement processes. Carbon dioxide, at reservoir conditions, is not directly miscible with crude oil. However, because CO2 dissolves in the oil phase and also extracts hydrocarbons from the crude, it is possible to create a displacing phase composition in the reservoir that is miscible with the crude oil. There are over 100 commercial CO2-EOR projects, the bulk of them concentrated in the west Texas carbonates of the Permian Basin in the US. Their success has partially been due to the availability of low-cost natural CO2 from nearby fields and reservoirs. Another important CO2-EOR project is Weyburn Midale in Saskatchewan (Canada) where CO2 is sourced from a gasification plant in North Dakota and piped across the border [10].

Injectant Volume/ EOR barrel

Cost of injectant

Cost/EOR barrel

H/C Miscible

3-4 mcf/bbl

$6/mcf

$18-24

CO2 Miscible

4-5 mcf/bbll

$2/mcf

$8-10

CO2 Immiscible

8-10 mcf/bbl

$2 mcf

$16-20

Polymer

5-6 bbl/bbl

$0.7/bbl

$3-4

Alkaline Surfactant Polymer

2-3 bbl/bbl

$1/bbl

$2-3

Table 1: Net injection utilization (Rough estimation) **

Other gases, such as nitrogen (Cantarell field, Mexico) and acid or sour gases (Tengiz field, Kazakhstan, Harweel field, Oman and Zama field, Canada), have, or will be injected, although to a lesser extent than CO2 and hydrocarbon gases. The current challenges in gas injection as an EOR method are gravity segregation, and most importantly, availability of a low-cost gas source. A 2005 study by Alberta Research Council puts the recovery cost of oil per EOR methods presented in Table 1 [11].

Maximising Oil and Gas recovery in the Middle East:

The oil production from the middle eastern countries have grown 23% (Figure 6) in two decades 22.955 Mboe/day (1998) to 30.329 Mboe/day (2019); At the same time the consumption of oil has increased almost 60% (Figure 7) in the same period. This has inevitably put pressure in the operators which are mostly NOC, to keep the production at constant rate and or maximise for the future demand. With oil being the primary source of revenue for these countries, operators and governments are working for diversifying the energy demand. NOC’s are taking holistic approach to the management of activities across the oil and gas value chain. Whether they are emerging players developing the oil and gas sector based on newly discovered resources, or long-established companies managing mature and complex oil and gas operations, they have a common challenge: to maximize the overall benefit of hydrocarbon resources to the national economy.

In a lower oil price environment when there are lot of uncertainties, NOC’s are optimizing their value chain by deploying digitization drive and shifting to data driven policy making. According to McKinsey & Company “Analytical approach to production could improve the global average underground recovery factor by up to 10 percent, equivalent to unlocking an additional 1 trillion barrel of oil equivalents ”. Saudi Aramco, ADNOC, KOC and others in the middle east have pioneered these applications and have achieved an average of 8-10% incremental oil production. In short term utilisation of best-in-class reservoir management practices will enable the maximisation of water flooding oil recovery before deploying EOR. Saudi Aramco is perhaps the world leader in optimising the recovery from its reservoirs through prudent reservoir management practices. Some of these include [12] the deployment of (MRC), intelligent autonomous fields, gigacell simulation, deep diagnostics (ability to see inside the reservoir with clarity), and advanced monitoring and surveillance technologies. These are the few examples which can help the companies improve their oil recovery and should be considered before deploying EOR as a solution. Another technology “smart water flooding”, where treated (in terms of salinity and ionic composition) and optimized water is injected in the reservoir. Research has shown [13] that salinity and ionic composition play a significant role in oil recovery during water flood and may yield up to 10% additional oil recovery, this reduces the investment cost significantly as there are no need for injectants, new facilities, monitoring wells and changes in the completion of wells. Saudi Aramco, through its upstream arm (EXPEC Advanced Research Centre), has initiated a strategic research programme in this area to explore the potential of increasing oil recovery by tuning the injected water properties. Another aspect of waterflooding that can be improved is the monitoring and surveillance. Surveillance plan should be put in place as early as possible to gather data like water displacement, pressure and temperature changes, pump failure and gas expansions. These are some of the crucial information’s which can be utilised in the future for EOR planning.

There is a concerned movement in the national oil companies to focus on ‘ultimate’ recovery and not ‘immediate’ oil recovery that is driven by short term profits. A long-term view ensures an optimum exploitation of oil resources by keeping depletion rate low and improving the secondary recovery. EOR technologies like steam injection, polymer flooding and miscible gas injections are already deployed or being considered in some fields in the middle east. Oman’s first EOR program was completed in 1989 and led to progress in experience gained and reduction in technical and cost uncertainties. Oman has seen considerable investment in a range of EOR technologies to produce heavy oil [14]. Oman’s oil production fell by 27%, but by 2009, due mostly to EOR projects, oil production had increased by 17%. The EOR techniques that Oman has used include chemical EOR as well as thermal and miscible gas injection. The choice of EOR technology is based on the reservoir depth and oil viscosity. Petroleum Development Oman or PDO, which produces more than 80% of Oman’s oil production, commissioned its first EOR project in 2004, and expects that EOR will contribute to 25% of total liquids production by 2020. ADCO in 2009 implemented first ever CO2 pilot in the middle east, the strategy was to evaluate the feasibility of CO2 injection as an EOR process. After completion of the project objectives in June 2010 the company decided to expand the project scope with an investment target of $2 billion dollars. CO2-EOR strategy is a way forward for the middle eastern national oil companies, with commitment to reduce CO2 levels companies are searching ways to inject them back to the reservoir in the most cost-effective ways. Algharib conducted an EOR screening study over 107 middle eastern oil reservoirs to evaluate the applicability of CO2-EOR projects. The reservoir properties were subject to CO2-EOR screening criteria based on world wide experience; it was estimated 64 out of 107 have potential for CO2-EOR application [14]. The environmental concerns will also play a major boost in the trend, projects involving CO2-EOR application by ADCO, PDO and Saudi Aramco is a testimony that in the coming years the EOR has high potentiality.

Strategy

Oil Price

Price variation sensitivity

Solution

Short term

$25-40

15%

Improving existing recovery methods

Optimize injection patterns

Monitoring and Surveillance

Optimize lift methods for lower OPEX

Medium Term

$45-60

20%

Introduce EOR methods after screening

Improved CAPEX on value chain

Pilot scale production enhancement and goal for largescale implementation

Long Term

$65-80

10%

Implementation of EOR solutions to full field level

Optimizing CAPEX and OPEX

Improved surveillance and monitoring

Targeted drilling to exploit the oil pockets

Sustained production growth.

Table 2: Strategy for maximizing oil production **

Table 2 depicts the policy framework for operators considering various strategies depending on prices. The above table is only representative, final decision for any production enhancement solely depends on operators’ priorities and engagements.

Conclusion:

The objective of this paper is to investigate current situation of brownfield oil and gas reservoirs in the middle east and its comparison with the rest of the world. It is well known that middle east plays a major role in providing energy security to the world, its giant oil and gas reserves provides the fuel for world economy. With growing population and higher energy demand the world will require additional new oil reserves and better utilization of the existing ones. As mentioned in the paper, two third of the oil and gas fields of the world is going through secondary and tertiary recovery, this puts enormous pressure for the operators to produce these resources cheap and efficiently. The industry is moving towards smart technologies like multilateral drilling, horizontal drilling, dual completion, smart well and others to keep the liquid flowing to the surface, but with rapid depletion of pressure many of these technologies will have low future advantages. Solutions like production optimization, digital oilfield solutions are being implemented globally for surveillance and monitoring operation, it has been estimated that an improvement in current production analytical process can add another 10% recovery factor or 1 trillion barrel of oil equivalents in global recovery. Oil reservoirs in the middle east have a prudent water injection strategy, many in the region are improving this scant method and optimizing the quality of the process. A proper water injection strategy can improve the recovery of an oil field by 10% or more, without additional investments on the existing infrastructure. But with time the sweep efficiency declines, enhanced oil recovery becomes necessary. As discussed, earlier countries like USA, Canada, Russia, China and others have pioneered in this field and have developed efficient and cost-effective ways to sustain prolonged implementation of EOR technology. Middle east on the other hand is slowly adapting to these new ways of production enhancements. EOR technologies like steam injection, polymer flooding and CO2-EOR techniques are being deployed as a pilot and in some cases as full-fledged recovery technique. With commitment to the Paris Climate accord of 2016, many middle eastern oil companies and their government are envisaging CO2-EOR application as a permanent solution for their growing CO2 emission. Companies like ADCO, PDO, Saudi Aramco and KOC have charted a clear roadmap for their future production strategy and EOR is the key technical way forward. With oil prices averaging around $80/bbl in the future, companies around the world and middle east NOC’s will have a greater advantage in implementing these technologies.

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