California based GlassPoint believes it has the perfect technology to maximise oil production in the Middle East with its solar EOR solution. Chief executive Rod MacGregor explains all.
Enhanced oil recovery (EOR) also known as tertiary recovery is quite a new oil extraction technique designed to maximise the potential of both mature and newer oil fields.
Many oil field operators use a variety of methods to get the most out of depleting fields with gas injection and steam injection – the latter known better as thermal recovery – as the more widely used. Typically with thermal recovery, the thick viscose residual oil in a reservoir is affected in two principal ways by the injected steam, it is heated and the resultant pressure created by the steam forces the now liquefied heated oil to the surface.
However the steam used for thermal EOR is usually produced by burning gas to generate this steam. This puts unnecessary stress on oil and gas producers to produce gas both for their own consumption and also for the consumer market.
San Francisco, California based Glasspoint, a specialist in solar-powered thermal EOR is hoping to wean oil and gas producers especially in the Middle East in addition to its home state of California, off their dependence of gas-fueled thermal EOR solutions.
The company received a US$3.5 million injection from a consortium of Chrysalix Energy Venture Capital and the venture arms of Shell, Total and Kuwait Petroleum in September to help it accelerate the commercialisation of its solar steam technology and will finance the deployment of a solar enhanced oil recovery demonstration plant in Bakersfield, California.
Oil & Gas Middle East speaks with Glasspoint CEO and co-founder Rod MacGregor who says that the concept of generating steam through what is essentially process heat using concentrated solar power (CSP), could bring a sea-change to conventional EOR methods across the Middle East.
“We are right there in that intersection between the oil and gas industry and clean energy and the area we will be focusing on is thermal enhanced oil recovery,” he says.
“You can greatly increase the amount of oil you can economically extract from a field by essentially injecting steam.
Of all the EOR processes out there, thermal is by far the most popular.”
About 10-15% of oil in newly drilled-for wells MacGregor says, comes out naturally under its own pressure without the need for extra pumping due to naturally abundant gas in the reservoir creating the pressure.
He says that depending on a reservoir’s formation, it is possible to get between 30-50% of the original oil in place this way and historically this is the point at which many oil field operators had stopped operations as it was not economic to extract the remaining amount of oil.
This meant that the remaining oil was left stranded and the well abandoned before the operator moved onto drill another.
Glasspoint’s solar EOR solution using CSP is said to be considerably cheaper than CSP used for electricity generation as it uses low temperature process heat rather than the superheated steam required to generate electricity which wears out equipment more.
“If you look at the cost of the equipment and you divide by the amount of energy you get out, it turns out that it’s actually cheaper than burning natural gas. For most places where there’s heavy oil that’s being developed, we’re cheaper than gas,” explains MacGregor.
According to him, one of the main benefit of this technology is that it could go some way in reducing the 60% in operating costs spent on gas when developing heavy oil fields.
Restating reserves
Although cost-saving is an important incentive for oil companies and countries alike, of all the figures that they hold dear, the estimated oil reserves they are able to claim to have is perhaps the most crucial.
Reserves estimates are usually the raison d’être for oil companies and how they are valued, and for oil-dependent economies namely in the Middle East, it is the sole measurement of their wealth, so the stakes are high.
“You’re then in a situation where you said ‘yesterday my oil fields had a hundred barrels of oil in it but today because I’m switching to solar enhanced oil recovery, it’s got 112 barrels of oil in it and you can restate your reserves,” McGregor says.
“The significance of solar EOR isn’t that it saves oil companies money, it’s that it allows them to restate their reserves.”
He says that there are some precedents to this when oil field operators moved from water-flooding reservoirs to steam flooding which proved to be more economical and allowed them to restate their reserves, the same happened with CO2 enhanced oil recovery.
The thinking behind the solar EOR concept is that if the steam used in enhanced oil recovery is cheaper, it is possible to produce more barrels. The number one job for an oil company is reserve replacement.
If all the easy-to-find oil has already been discovered, explains MacGregor, it is difficult to carry out a new exploration and production campaign, the cheaper and naturally more popular choice for operators is to simply improve recovery from their existing reservoirs.
Solar EOR in the Middle East
The Gulf region, abundant in both oil and gas and year-round dependable sunshine presents Glasspoint with a unique opportunity to help local producers maximise their output potential. MacGregor says that as many Gulf countries try to meet increasing domestic gas demand and with much of the gas already produced in the region over-committed, any solution to help free up natural gas for export and consumers should essentially be welcomed.
“One of the huge users of gas is enhanced oil recovery and as the fuels age and as you want to increase production, you’re doing more and more enhanced oil recovery which takes more and more gas but they want that gas for things likes power generation, desalination and domestic industry and of course for export from the LNG trains.”
“If you switch oil fields from gas-based EOR to solar EOR, you free up gas and in the simple sense you export that [gas] at a much higher price. You get this double benefit, not only do you get more oil but you free up extra gas that you can export,” says MacGregor.
Supporting local industry
A positive side-effect of Glasspoint’s Solar EOR solution according to MacGregor is that much of the components for the technology could be manufactured locally. “One of the attractions is that we can source the components locally and generate local jobs,” he explains.
“A very large proportion of the system is made of aluminium which we can also source locally, aluminium is a growth industry in the Gulf. We’ve engineered it with local sourcing in mind.
Our initial deployment is that we will use our existing supply chain and over time we’ll be looking to localise as much content as possible.”
Transition
Glasspoint’s technology sits at the crossroads of the transition between economies currently dependent on conventional sources of energy with clean energy aspirations and MacGregor speaks enthusiastically about this. “Using solar for enhanced oil recovery is a nice transition because it enhances the oil economy and at the same time it prepares you for the next one, so it’s not ‘either/or’, it’s both,” he says.
“We’re developing a local clean energy economy that grows out of your existing oil-based economy. The Middle East is blessed with two huge energy sources, one is under your feet, and the second is above your head, if you can transition from one to the other seamlessly, I think there’s tremendous benefit.
“There’s nothing to say that even in a couple of hundred years when all the oil’s gone that you can’t still be exporting energy, it will just be solar energy that you’ll be exporting rather than oil.” MaGregor admits that the main obstacle for Glasspoint’s solar EOR technology is its novelty although he points out that it is not an alien concept especially in this region.
“The whole idea of CSP happened in Egypt – it was the first place that it was ever done – about a hundred years ago so in many ways the technology’s coming back home. Nobody in the Gulf is doing solar EOR at the moment, this will be the first,” he says,McGregor says that deploying a brand new technology such as solar EOR in the region is difficult as it is not present in any oil field, and finding partners that share the company’s vision of a solar EOR future is key.
Once a few of the systems are in place, he believes that expansion will speed up.
