Emergence of solar enhanced oil recovery

Solar EOR has several key advantages:

• No fuel costs, and very low operations and maintenance (O&M) costs(typically $0.35 per MMBTU), allowing solar steam generators to operate long after the economically viable lifespan of an equivalent gas-fired unit. By steaming for a longer period of time, solar EOR will increase proven reserves and maximize ultimate recovery from a field.
• Simple integration with existing gas fired steam generation systemsallow for a hybrid design that generates steam 24 hours a day, 365 days per year, rain or shine.
• Reduces volatility in field operating costs.The cost of steam generated via solar is completely decoupled from the price of natural gas allowing operators to reduce fuel gas volatility risk.
• Can be installed in oilfields where there is no availability of natural gasproviding a way to create and inject steam for EOR with no capital investment in a gas infrastructure. This is especially attractive in regions where natural gas is unavailable or in limited supply, such as parts of the Gulf Cooperation Council (GCC).
• No emissions. Going forward the regulatory burden for fuel-fired equipment will increase, with rising costs for emissions of both criteria pollutants and carbon dioxide (CO2). Solar steam generation produces no nitrogen oxides (NO_x), no particulate emissions, and no CO2, eliminating the financial risk of permit costs, ongoing cycles of burner upgrades and carbon taxes.
• Incentives and subsidies. Many governments now offer subsidies and incentives in the form of tax credits and accelerated depreciation for renewable energy installations. In some cases, such as the onshore United States, these subsidies and incentives apply not only to the solar steam generation equipment, but also to the interconnecting infrastructure all the way to the wellhead.

Enhanced Economics: Solar EOR is Undeniably Good Business

By reducing fuel costs, solar steam directly relieves the largest and most variable part of thermal recovery production cost. Depending on local sunshine, these systems can generate steam at an average cost from $1.75 to $3.00 per MMBTU. Even with today’s low gas prices, the ongoing fuel savings are significant. Even more important is the certainty of the long-term cost of steam. Once installed, solar steam generators produce at predictable, low operations costs for 30 years. Low-cost fixed-price steam allows operators to reassess optimal recovery strategies to achieve higher production rates by steaming wells harder and increase a field’s ultimate recovery fraction. Low-cost heat can expand proven reserves by making it economical to produce in shallower pay zones, and because solar EOR has minimal operating expenses, profits can be made by steaming wells for a longer period of time than if gas-fired steam was used.

Given that solar EOR has the potential to reduce fuel costs and increase production and total recovery, what options are available to deploy solar EOR in current projects? Put broadly, operators have three options:

• Integrate solar steam alongside existing steam generation facilities.Without making changes in how much steam is delivered to the field, operators can displace approximately 20 percent of their annual fuel costs with a solar-gas hybrid approach. Automatic control systems for the gas and solar generators communicate to ensure constant rate steaming with no operator intervention. Analysis by Stanford University professor Dr. Anthony R. Kovscek shows that 20 percent solar steam generation can economically increase production by 5 to 7 percent and reserves by approximately 12 percent, for the same operating costs as gas-fired steam (see figure 2). (Click on diagram to enlarge.)

Figure 2: Solar optimized steaming: With a solar field providing 20 percent of a field's annual steam and 80 percent gas-fired generated, injected wells will produce more oil earlier and for a longer period of time, increasing reserves by more than 10 percent.

• Integrate solar EOR into an existing oilfield with variations in the steaming rate. A recent simulation performed by Shell Technology¹ reported steaming-rate variations throughout a 24-hour period can be permitted without disrupting daily production cycles. Therefore, a hybrid solar-gas steaming operation could deliver 50 percent of annual steam from the solar collectors. As the proportion of solar generated steam increases, production costs become less dependent on volatile fuel and carbon markets, and the opportunity increases to drive the reservoir harder and longer, improving production rates and ultimate recovery.
• With variance in daily steaming patterns proven viable, operators have the option of bypassing gas firing and relying entirely on solar steam. For new wells, particularly in basins where gas is unavailable, field development plans based on as-available sunshine (a daily cyclical steam injection schedule) can deliver the same production rates as continuous-injection systems. Seasonal, location-specific variations in sunshine become an important consideration in planning such developments; however, completely avoiding the costs of gas pipelines and emissions costs may make this the most economical option in some situations.

The Potential to Profit with Solar EOR in Bakersfield

Home to three of the five largest US oil fields, San Joaquin Valley, California, provides a useful case to evaluate the potential of solar steam EOR.

Steam EOR has been used in Bakersfield operations since the 1960s, and is central to sustaining the productivity of heavy oil assets and producing massive reserves in tight formations. Initially steam was produced by burning crude, but over time operators switched to natural gas, driven by increased availability, lower prices and a tightening air quality regulatory regime. Today, almost all fired steam generators in the region use natural gas with low NO_x burners.

In 2009, steam production for EOR in the region used 280 million MMBTU of natural gas, approximately 25 percent of total California natural gas consumption, at an expense of over $1B.

The Challenge: An increasingly strict regulatory climate will require costly cycles of burner replacements and impose an expensive and time-intensive permitting process for new steam generators. Furthermore, California’s landmark climate legislation AB32, as well as pending Federal frameworks, are widely expected to add 20 percent to 30 percent to the cost of fuel in the form of taxes or allowance costs for CO₂ emissions.

The Solution: Solar generated steam enables production expansion in an emissions constrained environment while providing significant cost savings. Solar EOR is a cost effective alternative to natural gas generators by overcoming permitting costs, delays and serving as a hedge against the increasing cost for fuel and potential emissions taxes.

The San Joaquin Valley region has excellent solar resources, and with current US federal incentives for solar energy equipment, costs for solar EOR are below $3 per MMBTU for solar steam generation systems such as GlassPoint’s. Solar EOR enables California operators to expand proven reserves at pennies per barrel.

Zero Emission Steam Generation—A Solution for the Proactive Oil Producer

With more than 50 percent of the original oil in place in the United States still in the ground, enhanced oil recovery is essential to the future of domestic oil production (see figure 3). Extracting the oil using traditional steam-based EOR methods would be incredibly expensive financially and would come at a huge environmental cost. Given the recent advances in solar steam technology, rising costs of emissions compliance and regional policies that reward investments in solar equipment, the time is right for a large uptake in solar EOR. Solar EOR is a proven solution for heavy oil operators looking to expand production and profitability. (Click on figure to enlarge.)

Figure 3: More than 50 percent of discovered oil in the United States remains untapped and cannot be economically exploited with current recovery techniques.

¹P.G. van Heel, Shell Technology Oman, Muscat, Sultanate of Oman; J.N.M. van Wunnik, S. Bentouati, R. Terres, Petroleum Development Oman, Muscat, Sultanate of Oman (2010). The Impact of Daily and Seasonal Cycles In Solar-Generated Steam On Oil Recovery. Society of Petroleum Engineers, SPE 129225.