Why the easy oil is over ..?

The UAE has always had a wealth of conventional hydrocarbons, but as some of these wells exceed half a century in production and begin to decline, the country needs to look more and more closely at EOR

The era of easy oil is over. Even countries such as the UAE, with abundant conventional oil reserves, are investigating the opportunities that enhanced oil recovery (EOR) methods are providing on declining fields.

According to Hatem Nuseibeh, president Total EP UAE & Total representative in the UAE, EOR is essential in the UAE because the country has been producing oil since the 1960s and all conventional methods have already been put into place, leaving scope for EOR to improve or enhance production from those fields.

“The quantities of oil in place in the UAE are so enormous that you cannot afford not to do EOR. The potential gain from EOR is so huge in terms of the number of barrels you can get above and beyond conventional methods currently in place.

EOR is not important, it is essential, it is the future,” states Nuseibeh.

International oil company Total has extensive experience in producing declining oil fields across the globe and firmly believes that countries’ governments, particularly in the Middle East region, need to plan EOR projects and start implementing them as soon as possible, so that the country can maximise what it can get out of the wells.

Paul Navratil, PwC Middle East Energy, Utilities & Mining leader, PricewaterhouseCoopers says that making that decision to investigate and implement EOR can be tricky.

“Do you wait until you have exhausted all of your conventional options, or until your conventional options are really starting to show signs of stress, or do you start putting EOR in place intuitively? We know that in the coming years, as new fields come online and as governments need to ramp up production to make up for natural decline, they will need to respond to that,” says Navratil.

According to PricewaterhouseCoopers, that debate of whether to invest in EOR sooner rather than later, is one that has been raging in countries such Kuwait, Qatar, and Oman.

The question comes back to the investment cycle, and how far ahead governments should look at investing in EOR. If Abu Dhabi’s fields are still very much commercially viable in a conventional context, the question then becomes why should the government invest ahead of the curve?

“Potentially, investing in EOR in the short term may decrease the UAE’s overall margin, but in the long term, obviously, we don’t need to debate the virtues of EOR; everyone knows it is required at a certain point in the lifecycle of a field, but the question is when does that margin require EOR?” asks Navratil.

Within the UAE, Dubai and Sharjah are clearly cases where decline is greater than production, but in the grand scheme of things, those rates are on a much smaller scale than Abu Dhabi.
The Abu Dhabi government, thanks to its forward planning, has been investigating EOR since 1991 on its Abu Al Bukoosh field, a pilot project site for looking at ways of recovering additional oil. Total began its first EOR pilot for gas injection at the site in 1991, the second one in 1993 and another in 1997.

“We have two pilots which are planned in the Abu Al Bukoosh field, both involve methods of chemical injection. One of them started the injection tests in March and the second one we will start the injection in April or May or do different reservoirs. The idea of these pilots is to test if this chemical EOR methodology will work,” states Nuseibeh.

While Abu Al Bukoosh cannot effectively demonstrate exactly how much more oil these chemical EOR methods will produce, it can demonstrate for Total what the right EOR methodology is in that field. That methodology can then be applied to all the big fields that exist, whether they are offshore or onshore.

“The two pilots are planned on two different reservoirs on Abu Al Bukoosh. The chemicals which we are injecting depend on each reservoir, on the temperature, on the salinity, on the reservoir characteristics,” said Nuseibeh.

With enhanced oil recovery projects, governments cannot simply bring in water and CO2 and see what happens. EOR projects require a big additional skill set in terms of identifying the right technology, applying the right technology and having the right people with the right skills to do that.

“If you talk about time to apply, it is something that requires years of planning, putting in the infrastructure, laying down all the stocks, testing it and then having the people with the wherewithal to use it, so it is easier said than done,” explains Navratil.

While enhanced oil recovery pilot projects are underway and have been since 1991, according to the deputy CEO of AlMansoori, Ibrahim Al Alawi, at the moment EOR will not play a very big role in helping the UAE reach its 3.5mbpd target by 2018.

However, if pilot projects such as those at Abu Al Bukoosh and an onshore Co2 injection pilot project driven by Adco are successful, the UAE may go ahead with a full scale EOR field implementation.

There are a number of enhanced oil recovery methods currently in use across the world, to allow companies to recover the maximum available amounts of oil from each reservoir. One method is to inject gas. The gas will then push the oil out of the rock and change the capillary pressure so more oil can be recovered.

“At the moment, oil companies in the UAE are using the associated gas in some of their fields to recover oil and after they take out the bits Gasco and Adgas want they reinject the leftover gas into the reservoir to maintain the pressure to keep the oil producing. This gas is quite valuable, so the UAE government is looking at injecting CO2 to maintain the well pressure so they can free up the gas to send it to market,” states Al Alawi.

It is very difficult for anyone to give an average standard level when a well can be considered to be ripe for EOR. Each well varies due to rock formation, pressure, how the well was drilled and more, but it can be measured in how much you can recover from the field. According to PricewaterhouseCoopers, recoverability is one of the most important measures when you are talking about how to manage a field.

“In the Middle East we are blessed with geological superstructures that provide us with a lot of steady oil production at an extremely reasonable cost when the field is still in 30-40% recovery mode,” explains Navratil.

When governments are looking at maturing fields, they need to take a leaf out of Norway’s book. The country has an aggressive stance on EOR, which has brought the overall recovery rate of a field to 60-70%. This means that governments do not need to go and find new fields because more of the current reserves are being exploited.

“The overall economic impact of bringing a field to 60-70% recovery dramatically increases the life span of the field and dramatically decreases the cost that you otherwise need to plow into exploration processes,” states Navratil.

The current levels of recovery in the Middle East, on certain fields is 30-40% if that were to be raised to 50-60% that would make a huge difference.

The biggest question the UAE government must ask itself around EOR, is what is the cost of putting in EOR and all of the infrastructure that is needed to support that, against the costs that would otherwise be incurred for maintaining a field in decline, or, on the other hand, finding and developing new fields?

“If on a national level, the average crude oil recovery factor from a reservoir is 35% and you have got a natural decline ratio, at what point does that decline overtake profitability?” asks Navratil.

According to Total, extracting oil is certainly not as easy as it was 30 years ago in terms of the average costs to produce, becuase as oil in existing resevoirs and fields gets scarcer and scarcer, it costs more and more to produce.

The application of EOR techniques would not only make up for the natural decline rate on the well, but would also raise the overall level of production from a certain field or overall production of the company. That increase could be utilised to fulfill demand, or fulfill an OPEC quota, or could be responding to an increase in domestic energy demand and allow the country to reduce its reliance on the otherwise export oriented hydrocarbons for internal energy. Source: Arabian Oil and Gas