Days of Easy Oil Fade in Middle East

The days of easy oil for the Middle East are not yet over, but energy companies in the region have recently started testing newer, costlier techniques to enhance oil recovery, as fields show signs of aging.

“Enhanced oil recovery in the Middle East should become a must because many fields are in their maturing phase and their production will start to decline,” said Simon Haddad, vice president for geosciences and reservoir engineering at Total in France. “Players in the oil industry are expected to bring the technological expertise in order to slow down the decline rate and extend the life span of these fields.”

For decades, traditional techniques used abroad, like injecting water or gas in existing wells to extract more oil from the ground, have been employed in Abu Dhabi, Oman and even Saudi Arabia. Known as secondary recovery methods, they are used once the natural pressure in the reservoir has fallen. They can be permanent, with water filling cavities in wells and ultimately leading to their ruin.

Tertiary recovery techniques are now being explored, steps that require more advanced technology and more money.

Despite added cost and uncertainty, carbon dioxide, nitrogen and polymer injections have been tested more regularly over the last two years in efforts to find new ways of maintaining production levels in maturing fields.

Petroleum Development Oman, which is majority-owned by the Omani government and accounts for more than 70 percent of the country’s crude oil production and nearly all of its natural gas supply, is the front-runner on new techniques. In its Amal-West field, steam-flood techniques — involving steam injections — are currently being studied. In its Qarn Alam project, which began full operations this year, thermal methods are used — in some cases, they involve setting fire to oil to create steam and gas.

“Thermally assisted gas-oil gravity drainage” is a complicated name for an even more complex method that has not been used anywhere else in the world and began to be studied this year in Qarn Alam.

“Partly through enhanced oil recovery in the last couple of years, Oman has managed to reverse the production decline that started in 2002,” said Chris Graham, regional analyst for the energy adviser group Wood Mackenzie, based in Britain. “By investing in new techniques at the moment, they can build up their own expertise and be in a good position in 10 to 15 years when the rest of the Middle East is looking to do this in their own fields.”

Petroleum Development Oman is also using polymer flooding in its Marmul field, identified from its discovery in 1956 as an area with heavy oil that is difficult to extract using traditional methods. The company estimates that up to 30 percent more oil could be extracted from the reservoir using polymer injections in order to keep up with production demands.

“Even a 1 percent increase in the recovery factor could translate to billions of barrels of oil across the Middle East,” Mr. Graham said.

And the international players are taking note. Royal Dutch Shell, which has a 34 percent interest in Petroleum Development Oman, has 11 projects for enhanced oil recovery that are in development or operation globally. In the region, Shell is involved in conducting polymer floods in Oman’s Marmul field, now injecting about 100,000 barrels of polymer solution per day since early 2010. It is also working with Salym Petroleum Development to conduct its first small-scale pilot test in the West Salym field. The next step, once the testing phase is complete, is full-field implementation of these new techniques.

Total has also partnered with regional entities to test new techniques.

One of the company’s main applications is on the ABK field in Abu Dhabi, where recovery has improved by more than 15 percent from the original development plans with a combination of gas injections and other techniques, including water. Total is also looking into relatively new techniques using carbon dioxide, a method that Mr. Haddad believes is one of the best, with recovery rates of up to 8 percent more based on the initial oil in place. With the shortage of gas in Abu Dhabi, oil companies are forced to look for cheaper, alternative methods, like nitrogen and carbon dioxide injections.

“But in the Middle East, we do not have fields with large amounts of carbon dioxide,” Mr. Haddad said, describing one of the main challenges to this solution. “So we need to generate it or capture it and inject it in the oil field.”
Masdar, the Abu Dhabi government-backed renewable energy company, supplies companies, including Abu Dhabi National Oil, with carbon dioxide captured from places like Emirates Steel Industries specifically for enhanced oil recovery on onshore fields.

Masdar estimates that for every ton of carbon dioxide injected, two to three additional barrels of incremental oil can be extracted compared with using natural gas, depending on reservoir maturity and geology. While effective, these techniques can be expensive.

“Fortunately, the additional oil recovered will offset all or part of the cost, depending on the rate of oil recovery in the reservoir and the amount of natural gas replaced,” said Sultan Ahmed al-Jaber, chief executive of Masdar. “This approach is a substitute to the natural gas currently utilized, which allows for natural gas to be liberated for meeting domestic power demand.”

Higher oil prices also make these techniques more financially feasible for companies. Development costs for some methods could surpass $50 a barrel, so a sustained high oil price is needed to ensure that these projects are profitable.

“The higher the better, although at $70 to $80 per barrel, most current projects should work,” Mr. Graham said. “The fact that the oil price has remained so high has renewed industry interest in enhanced oil recovery.”

In fact, the International Energy Agency estimates that oil production from currently exploited sites will decline by two-thirds by 2030. This means that nearly 50 million barrels of oil production per day will need to be made up for and that enhanced oil recovery will play a critical role in closing this gap.

Aside from Oman, Abu Dhabi and Saudi Arabia, companies are constantly looking for new mature fields to explore.

“In the future, our main focus in the E.O.R. area is Iraq,” said a BP spokesman, Toby Odone, using the initials for enhanced oil recovery. “Initial plans here are to increase production by 10 percent.”

At this point, even areas rich in “easy oil” are not being overlooked.

NYTimes