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Could steam flooding in the North Sea be viable?

Wednesday, November 9, 2016

By flooding a reservoir with steam, you can get up to 80 per cent recovery. The revenues from that could justify the cost of putting in the steam, said Steve Brown, of Steam Oil Production Company.

Could it be viable to use steam flood in the North Sea? Steve Brown, CEO of the Steam Oil Production Company, notes that steam flood can achieve over 80 per cent recovery factor, compared to about 45 per cent with water flood - which could generate more than enough revenue to cover the cost of creating the steam.

Oil companies commonly use water to improve oil recovery, pumping in the water in one well, so it pushes oil through the reservoir to a production well nearby. With careful 'water flood' for 20 or 30 years, you can get up to 40 to 50 per cent of the oil out, Mr Brown said.

But by using steam, you can get much more oil out, and get it out much faster.

He was speaking at the Finding Petroleum forum in London on March 10 2016, 'Finding & Exploiting new petroleum resources in Europe.'?

Steam heats the oil, which will increase recovery in two ways. Warmer oil has a lower viscosity, so it flows out of the rock more easily. The steam also lowers the residual oil saturation (so less gets left behind in the rock pores).

'It turns out that residual oil saturation is highly temperature dependent,' Mr Brown said. 'For steam it can be as low as 5 per cent. It is hard to believe.'

There is only one offshore steam flood, in the Congo, operated by Perenco, in 65m of water. The reservoir is proving a 'very difficult reservoir to steam flood,' with interbedded limestones and siltstones, he said. Sandstones are better for stream flooding.

In the North Sea, the reservoirs are much better. But because no-one has yet used steam flood successfully offshore it is hard to find people willing to try it, Mr Brown said.

Steam Oil

In the North Sea UK Continental Shelf, Steam Oil has licenses on blocks 21/27b and 28/2a (the blocks are joined together). It bid for the blocks in the 28th license round for the UK North Sea (2014). There are two discoveries on it, known as Pilot and Harbour.

Steam Oil's plan is to drill 42 horizontal wells across the block, between 1000m and 1800m long, alternating producers and injectors.

The steam flow will be carefully controlled in the injection wells, and the production wells will be designed to automatically shut off the relevant zone if the steam is 'breaking through' to the production well. This is known as 'conformance control', he said.

Economics

'You're probably wondering, surely this is far too expensive, you can't do this in today's environment,' Mr Brown said.

'Maybe if the oil price is 30 something you really struggle.'

But Steam Oil has worked out ways to reduce the cost of steam flooding, which could make it viable.

The wellheads will probably need to be on a platform (above the water level), because you probably can't do steam injecting from a subsea well head or using flexible flow lines.

But platform production is very feasible, with relatively shallow water depths of 80m.

These depths mean that the well can be drilled with a jack-up rig, rather than a more expensive floating rig.

For taking the oil away, you can't use a pipeline for heavy oil (since it will clog), so Steam Oil plans to use a Floating Production Storage and Offloading vessel (FPSO), and it has picked the cylindrical Sevan Marine design. The accommodation block can also be on this vessel, rather than the wellhead platform.

The steam must be generated close to the injection wells, so you don't lose heat as it travels down a longer pipeline. The steam making processes can be built on the FPSO.

The water used to make the steam must be as pure as possible, to maximise the efficiency of the boiler. Steam Oil 'plans to take seawater, which has 35,000 ppm dissolved solids, and put it through 2 passes of reverse osmosis (pushing the water through a membrane under pressure). After a final stage called electro-deionisation, you can reduce the solids to 10 ppm. BP is using a similar technique on its Clair Ridge field, where it is creating low salinity water to use in water floods.

For fuel, Steam Oil plans to use gas. It will need 200 bcf of gas in total to get the 152m barrels of oil out.

Taking all of this into account, Steam Oil expects to pay $10 a barrel for the facilities, $6.50 for drilling, and just under $10 for operational cost, and $11.5 to $12 for fuel, leading to a cost of around $37.5. So if the oil price is $50, Steam Oil can break even and make a 10% rate of return, taking tax into account.

It is also possible to reduce the ratio of barrels of steam injected: barrels of oil produced. The simulations suggest it should be 2.7. However the Kern River steam flood in California has a ratio of 2.3 (ie less steam).

It might be possible to bring it down by injecting a non-condensable gas with the steam - for example one company has reduced the steam oil ratio to 1:1 by co-injecting methane.

'We think there's a real possibility to get that cost down, and to get the cost base to $30 a barrel, which gives us a breakeven at $40 Brent,' he said. 'We think there's a real project here, and it ranks pretty well when we compare it to other projects in the North Sea,' he said. 'For maximising economic recovery in the UK - we think steam flooding is really important,' he said.

The steam flood capex and opex costs don't look particularly high compared to other North Sea oil and gas projects being planned, particularly as the Steam Oil project will produce oil at a higher rate, he said.

Associated Companies
» The Steam Oil Production Company Ltd

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