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Gulf states eye enhanced future

Oman is leading the way in Gulf EOR development, and its neighbours are fast realising its advantages

Enhanced oil recovery is proving to be a much-needed tool for Arab Gulf producing states as they seek to sharpen their global competitive edge.

Squeezing every drop of potential from maturing reserves is crucial for the Gulf to retain its top spot in the global league table of oil producers, with the International Energy Agency forecasting that the US could be the world's largest oil producer by 2019.

There's also swelling oil and energy demand. The latest BP Energy Outlook anticipates a 54% climb in the Middle East's energy consumption by 2040. Demographic forecasts explain a lot. The UN expects the populations of Oman, the UAE and Saudi Arabia to rise by 45%, 39% and 36% respectively by 2050, to 6.7m, 13.1m and 45m. More people, more demand and more pressure means more innovative EOR technologies are needed.

EOR deployment can take up to a decade from R&D before seeing more barrels come out of the ground. But the effort pays—literally. Oil extracted via primary recovery accounts in general for 5-15% of the total reservoir; secondary recovery can extract about 20-60%, according to Future Market Insights, a consultancy. But EOR technology enables 35-75% of oil to be extracted. Each percentage point translates into millions of US dollars on year-end balance sheets. Transparency Market Research put the valuation of the global EOR market at $38.1bn in 2012, and sees it soaring to $516.7bn by 2023.

Pioneering Oman

The Gulf's efforts are already well underway. State-owned Petroleum Development Oman has grown into a global innovator, spearheading EOR to sustainably leverage every rial of worth from the sultanate's maturing and challenging fields. The company, which accounts for nearly 70% of crude-oil production in the Middle East's largest non-Opec producer, expects EOR to contribute more than 23% of production by 2025. The company's combined oil, gas and condensate production is currently 1.13m barrels of oil equivalent a day.

$517bn—estimated value of 2023 global EOR market

"PDO continues to add new EOR technologies to its portfolio with field trials, such as alkaline surfactant polymer at the Marmul field and high-viscous polymer injections in the horizontal wells at the Nimr field," PDO's managing director Raoul Restucci told Petroleum Economist. "Both concluded successfully and the programme now focuses on maturing these technologies at attractive unit technical costs." PDO has four field developments under EOR recovery processes: chemical EOR in Marmul, steam-assisted gravity drainage in Qarn Alam, steam injection in Amal, and miscible gas injection in Harawel. Plus, two pilots and trials are underway in Marmul and Nimr, as well as 34 surface and subsurface technologies that are maturing in collaboration with the company's new technology department. Demand is too high and time too short for the EOR pipeline to lose touch with technological trends.

In the UAE, Adnoc has also been forging ahead with the aim of recovering up to 70% of oil from its reserves. Between 10-15% of its oil is recovered with EOR technologies, primarily via miscible gas injections. The world's 12th-largest oil producer aligned with Norway's Centre of Integrated Petroleum Research, last October, to conduct applied research into techniques that could extend the life of its oil reservoirs.

New methods

Environmental awareness has long been a theme in EOR. But it goes in and out of vogue depending on the political climate. Now, with the Paris Agreement carrying the biggest political punch since the Kyoto Protocol was signed in 1997, the industry must stand to attention. As the energy mix diversifies to create a lower-carbon future, so too must EOR methods. Rethinking technologies that have been used in traditional E&P for decades fits with respondents' view in a GIQ Industry Survey, published by researcher Gulf Intelligence. Last December, 95% said the region must increase the number of bespoke solutions.

"The growing popularity of 'Go Green' strategies and initiatives like the Paris Agreement will push environmentally conscious companies to adopt eco-friendly EOR strategies. The role of renewable-based EOR to decrease carbon footprints wherever possible will only grow," Middle East director of Petronas Subsidiaries Abd Malik Jaffar told Petroleum Economist, pointing to Oman's Miraah project as a ground-breaking initiative.

Catch the wind: carbon capture will assist EOR schemes at two onshore oilfields in Abu Dhabi

Meaning 'mirror' in Arabic, the Miraah solar-thermal plant illustrates how fossil fuels and renewables can be EOR bedfellows. The project is the result of a $0.6bn contract to use 36 glasshouses to generate 6,000 tonnes of steam a day to support PDO's thermal EOR technology at the Amal field. PDO and GlassPoint, a supplier of solar energy to the oil industry, said Miraah had made a 55% cost saving as of last October compared to the pilot project—the sort of gain that whets investors' appetites. Improved designs, enhanced tooling and increased workforce productivity are largely to thank.

Back in the UAE, al-Reyadah, a joint venture between Adnoc and Masdar, officially inaugurated the Mussafah facility in November 2016. The first commercial-scale carbon capture, utilisation and storage facility in the Middle East, the project will gather up to 0.8m tonnes a year of carbon emitted from Emirates Steel and pipe it to Adnoc Onshore for use in EOR at its Bab and Rumaitha fields. Adnoc also announced plans in January this year to expand its carbon capture programme to cater to a six-fold increase in the usse of CO2 in maturing oilfields over the next decade, further supporting EOR.

Gas boost

Growing momentum behind renewable-powered EOR will help smooth some frown lines amongst energy stakeholders as the region faces a shortage of gas—one of the key ingredients in traditional EOR. Despite sitting atop approximately 40% of the world's natural gas reserves (the majority are in Iran and Qatar), gas development has largely played second fiddle to oil.

The region's rising import bills are rejuvenating efforts to bolster domestic gas production. In 2014, the Middle East imported 5.9bn cubic metres (208bn cubic feet) of gas as liquefied natural gas (4.3m tonnes), or just under 2% of the global total LNG imports, according to Platts Analytics' Eclipse Energy analyst. By end-2016, LNG imports had moved to 28.6bn cubic metres a year (20.9m t/y)—7.9% of the global total. This trajectory will intensify as the IEA expects demand for natural gas in the Middle East to double from current levels by 2040.

But there is good news. Miraah ensures an 80% natural gas saving at the Amal field, with significant savings also anticipated when the first phase of Kuwait's Ratqa Lower Fars comes on line later this year. "The natural gas needed to produce the steam for Ratqa's planned thermal EOR operations is equal to a quarter of the country's current gas production. This means Kuwait would need to increase its gas imports, just to meet the energy demand of this single oilfield," GlassPoint's sales director May al-Zanki told Petroleum Economist. Using 'free' sunshine is a better bet.

As pressure builds, both at home and abroad, oil producers are no longer reaching tentatively for the guiding hand of EOR to hedge against a potentially rocky ride. Instead, they're grabbing it and holding on tight.

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