Concentrated solar power (CSP) arrays to power enhanced oil recovery (EOR) will have found buyers before the year is out, says the head of a company that has developed this product, and is currently in sales negotiations with oil companies.
Using CSP to create steam that is then pumped into depleting oil fields to enhance the recovery ratio is a cheaper alternative to using natural gas as an energy source, and will help oil companies increase their proven reserves, says Rod MacGregor, CEO of GlassPoint, a company that has pioneered the technology.
GlassPoints product will soon become popular with customers, believes MacGregor, who says his company is close to making its first sales.
“We will be announcing a deal to deploy a solar enhanced oil recovery system this year, we are currently at the contract negotiation phase,” he told Arabianoilandgas.com recently.
GlassPoint which is based in California, USA, is also looking to cater to the oil industry there. But the Middle East is soon to become the company’s primary market, says the CEO.
“We believe that in the short to medium term the Middle Eastern opportunity will dwarf the California one, obviously there’s a lot more heavy oil in the Gulf than in California,” he says.
He is quick to point out the advantages that a widespread application of his technology would have for the region, and for the power and water sector in particular, which is suffering from a tight supply of gas.
“There are many countries in the Gulf that suffer from a shortage of gas, or, to be more specific, the gas is over-committed. Some countries are actually looking to import coal, and importing coal into a petrol exporting country is crazy,” says MacGregor. “ The reason they are doing this is because one of the huge users of gas is enhanced oil recovery, but they want that gas for power generation, desalination and the domestic industry, and of course to export.”
For oil companies, the big benefit is that, as cost is a factor in determining proven oil reserves of an oil field, lowering the cost of oil extraction will increase the amount of proven reserves.
“If you look at the cost of the equipment and you divide this by the amount of energy that you get out, it turns out that for most places where heavy oil is being developed, our solar technology is cheaper than using gas,” says MacGregor.
In addition, the companies profit from being able to market the gas they are not using for EOR.
“If you switch oil fields from gas-based EOR to solar EOR, you free up gas which you can sell on,” MacGregor points out.
Rapid expansion
So far, solar has seldom been discussed in the context of EOR. But with the technology making rapid strides towards higher efficiency, the prospect of using it to create the requisite steam to push oil out of the ground has become more appealing.
This has not escaped the attention of the oil majors. Shell has recently commissioned a pilot project to produce steam for EOR from a parabolic trough system in Oman, and Chevron is building a solar tower steam project in California. Both projects have proven their technical feasibility, but high capital costs have so far limited the application of the concept.
But now, less pricey solar collector systems have been developed and are ready for use. GlassPoint is one of the companies looking to bring this technology to the market. Founded two years ago, the company has already developed the technology, set up outsourcing agreements with producers in China, where it has also built a demonstration plant. It is also planning another such plant in California after receiving a capital injection from Chrysalix Energy Venture Capital, whose limited partners include Total SA, Royal Dutch Shell PLC and Kuwait Petroleum.
MacGregor offers no timeline for success, but he believes his product will become popular as soon as it has been proven to be commercially viable. “Once we are up and running, the expansion will be very rapid,” he says.
To break into the market, getting in with the right people is crucial.
“Our technology isn’t present in any oil field today, so getting the first system or two up is key and we need to find partners that share our vision,” he says. The prime reason for the above mentioned capital injection was precisely for this reason, and MacGregor told the DowJones newswire in a recent interview that “the deal with Chrysalix was more for strategic than for funding reasons.”
