Enhanced oil recovery, as a segment within the oil and gas industry, may be growing by leaps and bounds, although the grey area when it comes to defining what form of oilfield activity precisely constitutes as EOR, made experts gathered at the roundtable discussion organised by O&GME, shy away from putting a financial estimate to the magnitude of the market.
“No, I can’t offer an estimate, simply because the minute you start considering solar techniques and chemical methods, we are talking of all sorts of different things. But if you ask me in terms of what percentage is potentially being invested into EOR, I would say not even 10%,” Abhay Bhargava of Frost and Sullivan, said.
“I remember we did a five-year engagement with Aramco, where a huge focus was looking at chemicals. Certain aspects of those projects were also about looking at the EOR side. The interest is certainly there. From an analyst’s opinion, I’m sure there is a lot more to be done as there is no more easy oil,” Bhargava observed.
He continued, “Unfortunately, I can’t be putting a financial estimate to the EOR sphere – simply because we are not sure what we are counting; are we counting the services, are we counting the technologies. We haven’t tried to assess all of it. We do try and look at the individual components.”
“Just to complement what Abhay said, I agree that the answers is no,” Moin Muhammad of Schlumberger said. “At the same time, ‘No’ is not accepted. Today, globally we are producing 98-99bn barrels of oil per day, and the question is how much of that is associated with enhanced oil recovery. For that I’ll have to use Schlumberger’s definition of enhanced oil recovery, which is altering the fluid flow behaviour in the reservoir.”
“Based on that”, he continues, “our estimate is 5-6%, or under 10% for sure. So based on that 99bn barrels of estimate per day, only 4bn barrels are being produced as a result of EOR. $17-18 per barrel is the estimated (open literature) cost of EOR-extracted oil. So in simple terms, the EOR market size globally is in billions.”
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Vikas Handa, the managing director of Drilltech, offered a new angle to the discussion, saying: “If I had a crystal ball I could have given you an answer to how profitable it (catering to the EOR market) would be. It is closely linked to the oil prices, because in this tight market the cash flow becomes important. Having said that, it really depends from operator to operator. So if somebody has a cheaper reservoir, while OPEC quota is limited, why will I invest in EOR. Those sort of decisions also come into play, if I am an E&P company. This is very closely linked to the oil prices and the cash flow.”
The key idea that emerged from the discussion was that the EOR market would boom on the back of the fundamental need in the region – that of operators seeking to secure the future of their oil assets, and prevent depletion of reserves.
“NOCs are very interested in securing the future (of their reserves) for the next 20-30 years. For that reason I am of the opinion that enhanced oil recovery is a very serious topic in the boardrooms of NOCs. This is happening and most of the regional operators are working on EOR projects. What’s slowing it down or not letting it grow exponentially, is the technology itself. The industry must come up with innovative, reliable technologies,” Muhammad says.
“You’ve tapped in the primary, secondary and tertiary techniques, and you probably got 40% oil out from your reservoir. You still have 60-70% down there. Do you want to go and invest in new production or do you just want to extract more. So, that’s a basic business decision that’s being taken by the owners on this. There is no doubt that they will go ahead with EOR,” Bhargava said.
“Overall the market is going to grow. You look at the history of oil in the Middle East, there are depleting oilfields everywhere, and they have to do justice to those fields. It’s a no-brainer that this market is definitely going to grow,” Handa says.
Schlumberger is leading the EOR market with its competitive portfolio…
