At present, the global market scale of EOR technology is about 3 million barrels per day, and the ratio of three main technologies is 4:2:1. SAGD & CSS are still dominating in thermal EOR. Solar Energy EOR has its limits. China has put CO₂ EOR into its energy strategy and acted as the leader of global chemical EOR.

With the energy demand increasing around the world, old oil fields gradually get exhausted. And the absence of new oil field leads to the utmost exploitation of present reservoirs. As a result, EOR technology draws a lot of attention; thermal displacement, chemical displacement and gas displacement have become the main methods of enhancing recovery.

In the past 10 years, thermal displacement and gas displacement has ve contributed a lot to global oil production, especially the oil sand projects in Canada and CO₂ EOR displacement projects in USA. Chemical displacement was left behind in the North America. According to Visiongain, the global EOR production is more than 2 million barrels per day. Particularly, gas EOR production is around 750 thousand barrels per day while chemical EOR produces only 375 thousand barrels per day, of which 300 thousand barrels come from China.

Thermal EOR: Focus on Future Projects in Canada and the Middle East

Thermal Displacement can reduce the viscosity of crude oil and increase its mobility ratio. This method is usually applied to shallow wells and viscous oil. At present, SAGD and CSS are the primary technologies. Thermal EOR has achieved great success in the US, Canada, Venezuela, Oman, China and Indonesia; many a significant project has been in operation for decades.

In the next ten years, the primary opportunity does not lie in the established oil field but in the new oil sand project in Canada and the solar energy EOR application in the Middle East. Due to the high cost of thermal EOR, the present threat mainly comes from the low oil price reducing its economics.

In Canada, thermal EOR would not be more appropriate to exploit deeper oil sand reservoir than mining. In 2012, the application of thermal EOR has exceeded mining. 80% of the remaining reservoir in Alberta is buried deeper than 200 meters underground, which cannot be developed by mining. In the next decade, thermal EOR will dominate the oil sand market. So far, SAGD technology is dominant and has taken 75%. CSS technology is more popular in other areas.

With some projects going into production in the next two years, thermal EOR oil sand market will go through a rapid-developing period, but the increased production will also bring problems in transportation and refinery bottleneck. Due to Canada Federal Government, China’s investment slows down, so some projects may get postponed or even canceled combined with the influence of low oil price on market. However, the projects in construction, got approved or announced is more than 160. Even only part of them got finished, thermal EOR oil sand projects would bring a remarkable production growth.

Thermal EOR projects are not eye-attracting except in Canada. The climax of thermal EOR which has already faded away in the US is in 1980s. Other large-scale thermal EOR projects, like Mukhaizna in Oman, Duri in Indonesia and Shengli Oil field in China, are estimated to keep a steady production growth in the next decade. Actually, the most noteworthy technology in the next 12 months is probably solar energy EOR.

Solar energy EOR is to produce displacing steam by converging sunshine onto the hot tubes. According to GlassPoint, a leading company in this field, their system can save 80% consumption of natural gas for oil field hence reduce the cost of exploitation and render natural gas available in other areas, including export.

The great opportunity of solar EOR is in the Middle East, where heavy oil is abundant and light application time is long enough. But they are in a short supply of natural gas because of the increasing domestic demand. In the beginning of 2013, Oman started the solar energy EOR project by the technology of GlassPoint and the average steam production is 50 tons per day. Other countries in the middle east like Kuwait, Bahrain and Saudi Arabia are probably to join the solar energy EOR project. GlassPoint established the first solar energy EOR project in 2011 in California, which is also a potential market.

Thermal EOR project needs a large amount of wells to inject steam and produce oil. Because large quantity of natural gas is needed to produce steam, the cost of thermal EOR is the highest among oil exploitation projects. The current profitable oil price of thermal EOR projects in operation is per barrel. However, most of them are oil sand projects, requiring more capital and operation expenses.

Since project construction needs 5 years while operation and production endures 20 to 35 years, short-term price fluctuations do not affect the project apparently. However, if the current oil price which is less than per barrel became normal, some suggested projects might be laid on ice or even canceled. According to International Energy Information Administration, if oil price remained lower than per barrel for a long time, a quarter of the oil sand projects would be in danger and mining projects with higher cost would be more vulnerable.

Thermal displacement, which takes 63.8% of global EOR production in 2014, dominates the EOR market. In the next two decades, a large number of thermal oil sand projects will get established and this number keeps growing. Except the bottleneck of transportation, the limit on investment towards China is the most important factor. If the global standard oil price cannot restore to 0 per barrel in the mid-term, both investors and oil companies will have to evaluate the breakeven price of projects.

CO₂ EOR: US in Advance and Cost is the Key

CO₂ EOR is not a new technology. It has been applied successfully in the US for more than 40 years and used to displace the remaining oil in old oil fields, extending oil fields’ life span. In 1980s, petro-industry developed rapidly in the US, and a large quantity of natural CO₂ gas formations were discovered under the ground of New Mexico, Colorado and Mississippi. The source of industry-scale CO₂ grew immediately and became the supplying gas source of EOR projects.

In the past 25 years, US CO₂ EOR projects produced around 1.5 billion barrels oil. Presently, more than 6400-mile pipelines are transporting CO₂ and about 68 million tons of CO₂ is used to produce 0.3 million barrels oil per day, especially in Triassic Basin. Other districts are left behind a lot than the US, mainly because of the lack of natural resources. But some countries are now establishing or expanding CO₂ EOR projects.

It has been discussed that the revolution of shale oil is to post a threat towards CO₂ EOR projects. Compared with CO₂ EOR projects, the start cost of shale oil exploitation is lower, so now it has been considered first by investors and CEOs. From the aspect of production, the CO₂ EOR project of Western Oil Company in Triassic Basin is the largest, taking 30% of the total production in the US. Recently, this company announced that the production of CO₂ EOR project is to keep steady til 2016, and shale oil production is to increase at the same time.

The US CO₂ EOR projects possess 10 man-made resources in operation and 13 more that might be completed in 2020. In the next decade, man-made resources are probably to exceed natural ones, which is easy to result in an overestimation of the potential market growth. Early in this year, a report from NEL (National Energy Lab) of US DOE (United States Department of Energy) pointed that the production of CO₂ EOR projects can double to 615 thousand barrels per day in 2020. Some other agents were even more optimistic but ignored the influence of project plan and external factors.

The exploitable reserves in North Sea equal to 15 to 35 billion barrels oil. Specifically, in British waters, there are 3 billion barrels can be developed. To combine CCS (Carbon Capture & Storage) with CO₂ EOR projects can reduce the emission of CO₂ as well as explore more oil. However, many assessments on North Sea EOR projects indicated that the cost of installing CO₂ injection apparatus is too high and the supply of cheap CO₂ is not adequate. The unfavorable economic feasibility will continue in the next decade even oil price is raised or environment inspection is improved.

The prospect of China is much better. China possesses abundant industry CO₂ resources and the geological conditions of many oil fields favor CO₂ displacement. China has incorporated CO₂ EOR projects into her energy strategy and several projects have been started despite higher cost. Brazil has established a CO₂ EOR project in Lula Oil Field, whose CO₂ comes from floating production storage platform at sea. Since EOR project was included in the original design, it is more economic than installing CO₂ apparatus later. If it succeeds, Brazil will popularize this technology in the whole oil field. Besides, UAE, Saudi Arabia and Kuwait in the Middle East are all planning CO₂ EOR projects.

In the US, shale oil will be an obstacle to the development of CO₂ EOR project, but the ROI (Return of Investment) has begun to drop down. CO₂ EOR project can be expected to increase apparently in the first few years after 2020 and the project production in 2024 can be expected to exceed 450,000 barrels per day. CO₂ EOR projects confront many challenges except in the US, especially at sea, including gas resource and cost, inadequate project experience, the limit of environment inspection and the competition of other EOR technologies. However, with the aging of oil fields and dramatic discovery decreases, the prospect of developing more oil from old oil fields is reviving. High oil price will support the establishment of more CO₂ EOR projects around the world.

Chemical EOR: Smallest Market Share but Promising Future

Chemical displacement can decrease interfacial tension and increase mobility ratio hence enhances oil recovery. The application of chemical EOR reached its climax in 1980s, when many precursive projects were started, especially in the US. Encouraged by vast research expense and increased oil price, a lot of precursive projects were established, including polymers and surfactants displacing experiments. But with the oversupply of crude oil, oil price decline and project cost growth, chemical EOR projects became economically unfeasible. Project number decreased sharply and chemical EOR market became difficult in the next two decades.

The high construction cost and operation cost has always been the restrain factors of chemical EOR projects; some even achieved hundreds of millions of dollars. If the environment is complicated, the expense will be higher, like offshore chemical EOR projects. Also, the project has to be designed according to the characters of specific oil reservoir. Many companies regard chemical EOR projects as cost-consuming and adventurous.

In recent years, with technology development and the appearance of high oil price, some new projects are being prepared. The development of three key factors promoted cost decline. The first one is the concentration of demanded chemical agents, especially surfactants, dropped down greatly. The second one is the unit cost of chemical agents reduced. The third one is that chemical EOR technology is easy to understand and effectively enhanced the producing performance of oil reservoir. These factors dropped the operation cost down to per barrel in some producing area. Also, the cooperative R&D activities of oil companies and universities increased. Now some precursive projects are underway and the cost is being expected to further decline with the accumulation of knowledge and experience.

Because of the economic change of chemical EOR projects, global project activity changed as well. Although the US dominated chemical EOR market in 1980s, she has no apparent contribution now. China has become the leader of global projects. CNPC and Sinopec Group separately have huge projects in Daqing Oil Field and Shengli Oil Field. Currently, 60 chemical EOR projects are distributed in some countries, including precursive projects and a few developing projects in larger oil field.

In Canada, the commercial-scale chemical EOR project on Pelican Lake has been in progress for more than 9 years. It is unconventional since the crude oil is heavy oil of 14API degree. Canada currently has 15 precursive projects, of which mostly lie in Alberta. Oman also regards chemical EOR as one if its three types of EOR projects. Oman Oil Developing Company started Marmul Oilfield Polymer Displacement Project and planned to promote in two stages. The company also has 3 chemical EOR precursive projects and several vision projects. Other countries like India, Malaysia, Indonesia and Russia also have chemical EOR plans.

Judging from current project expense and production, chemical EOR will continue to take the smallest market share in the near future. But its potential is great when the scales and districts are considered. The number of countries developing chemical EOR projects has exceeded that of thermal EOR and gas EOR. Chemical EOR will go out of the shadow of competing with other EOR technologies and become an important technology around the world.

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