New Study: Offshore EOR Crucial to Sustaining Future Oil Supply

Mon May 5, 2008 2:09pm EDT

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TULSA, Okla., May 5 /PRNewswire/ -- A major campaign of enhanced oil
recovery (EOR) in offshore fields will be crucial for sustaining the world's
future oil supply, according to renowned petroleum consultant Dr. Rafael
Sandrea.
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    Offshore fields have been the main source of growth for world oil
production in recent years, as onshore oil output has been essentially flat
during the last two decades, he noted.  But less than a fourth of the world's
ultimate recoverable oil reserves in offshore fields has been produced to
date. That opens the door for a big EOR push to extract the remaining
technically recoverable oil offshore.  Sandrea also contends that EOR is a
more cost-effective way to add reserves than is exploration or acquisition.
    Sandrea, president of Tulsa, Okla.-based IPC Petroleum Consultants Inc.,
is the author of a groundbreaking, provocative new multiclient study to be
published in May by the Oil & Gas Journal Research Center. The OGJ Research
Center is an arm of PennEnergy.com (http://www.pennenergy.com), the new energy
portal developed by PennWell Corporation, publisher of Oil & Gas Journal,
Offshore, Oil & Gas Financial Journal, and Oil, Gas & Petrochem Equipment.
    In his multiclient study, Future Oil & Gas Supply: A Quantitative
Analysis, Dr. Sandrea employs a unique, proprietary methodology to provide a
holistic assessment of the global oil and natural gas resource base, with the
view to evaluate its potential production capacity over the medium and long
term. He employs a novel approach that has long informed his exclusive
services as an advisor to governments and intergovernmental bodies and as a
consultant to major oil companies and the world's leading investment bankers
and other financial institutions on matters of risk analysis for international
upstream petroleum investments and appraisal of global oil and gas reserves
and resources.
    Sandrea most recently delivered a presentation based on his multiclient
study as a plenary speaker at the 16th Improved Oil Recovery Symposium, held
in Tulsa during April 19-23 and sponsored by the Society of Petroleum
Engineers' (SPE) Mid-Continent Section and the US Department of Energy.
    Dr. Sandrea will deliver a presentation on his study's conclusions at a
press conference scheduled for 10:00 a.m. CDT, May 7, at SPE's 2008 Offshore
Technology Conference (OTC) in Houston, Tex. OTC, the world's largest annual
gathering of petroleum industry professionals, is being held May 5-8 at the
Reliant Center in Houston.
    Offshore oil role
    The global offshore oil and gas sector's production performance the past
two decades has been "remarkable," noted Sandrea, adding that offshore fields
now account for about a third of world oil and gas production, expressed in
oil-equivalent terms.
    But offshore's potential is even greater, he said, given the vast
remaining discovered resources.
    "Globally, a total of 500 billion barrels [bbl] of offshore oil has been
discovered, of which 200 billion bbl has already been produced," Sandrea said.
"The ultimate recoverable reserves for the global offshore could be near 850
billion bbl."
    Offshore oil production will continue to grow strongly in the medium term
and is expected to reach 35 million barrels per day (b/d) by 2015, up from 24
million b/d in 2005, he estimated.
    The disparity in discovered vs. produced reserves is even greater for
offshore natural gas, Sandrea said: "In regard to offshore natural gas
reserves, more has been discovered (580 billion bbl of oil equivalent) than
oil, and barely one-sixth has been produced."
    EOR potential
    Dr. Sandrea estimates in his study that the total volume of discovered,
conventional original-oil-in-place (OOIP) resource worldwide is nearly 11
trillion bbl; this number excludes the vast heavy oil and oil sands regions of
Venezuela and Canada.  Today the average worldwide recovery factor in oil
fields is only 22 percent of OOIP.
    He contends that an effort to increase that recovery factor by a single
percentage point would add more than 100 billion bbl of oil to the world's
reserves -- enough to replace almost four years of global oil production.  In
fact, Sandrea asserted, " ... 70 percent is a tenable level of recovery."
    "EOR is indispensable to extract this massive volume of oil left
underground -- almost 80 percent -- while extending the economic life of the
abundant mature oil fields," Sandrea said in his study. "However, at the
present time, barely 3 percent of the world's oil production comes from EOR."
    Increasing oil field recovery rates by a single percentage point would
yield ten times as much added reserves as new discoveries and extensions, he
pointed out.
    And the economics favor EOR today, especially at a time when oil prices
are at stratospheric levels -- as are oil and gas companies' operating costs.
Sandrea estimates that EOR could add reserves at a capital expenditure of $2-
4/bbl, compared with about $4-6/bbl for deepwater development, almost $13/bbl
for acquisitions, and more than $14/bbl for overall global finding and
development costs.
    He estimated that industry would need to spend $200-400 billion to improve
the world's average recovery rate by a single percentage point to recover that
incremental 100 billion bbl. That compares with industry's current global E&D
spending of $260 billion/year.
    While deepwater and ultradeepwater exploration and development has
garnered headlines with spectacular successes, Sandrea's study pointed to
geological evidence that, to date, suggests the deep water is a play with
limited prospectivity within a global offshore context.
    Given the minimal application of EOR offshore today, that suggests EOR
could ultimately make a greater -- and more cost-effective -- contribution to
future offshore oil production than the deepwater plays, Sandrea concluded.
    Dr. Sandrea will be available for questions following his briefing at the
May 7 OTC press conference, to be held in the press conference room, which is
located next to the OTC press room in Room D1 of Reliant Center. He will also
be available in person at the PennWell booth to discuss his study, No. 2941,
from 9:30 a.m. to 12 noon on May 5-6.
    The Oil & Gas Journal Research Center multiclient study Future Oil & Gas
Supply: A Quantitative Analysis can be ordered online at
http://ogjresearch.stores.yahoo.net/ogjexrep.html.
    For interviews with Dr. Sandrea or for copies of the Executive Summary and
Table of Contents for the multiclient study Future Oil & Gas Supply: A
Quantitative Analysis, please contact Bob Williams, Director of Research, Oil
& Gas Journal Research Center, at bobw@pennwell.com or 918-831-9535.
    About PennWell
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     Contact: Bob Williams, Director of Research, Oil & Gas Journal Research
Center bobw@pennwell.com or 918-831-9535.
SOURCE  PennWell Corporation

Bob Williams, Director of Research of Oil & Gas Journal Research Center,
+1-918-831-9535, bobw@pennwell.com, for PennWell Corporation
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