Thermal Enhanced Oil Recovery To Transform North American Oil Sands Extraction

The choice of enhanced oil recovery technique will depend on the price of crude oil, finds Frost & Sullivan

The heavy oil production in California and fresh exploration frontiers like the oil sands in Canada have created a vast market for thermal enhanced oil recovery (EOR) in North America. More than 80 percent of oil sands cannot be extracted through conventional methods as they are extremely deep; therefore, tertiary methods such as thermal EOR, steam-assisted gravity drainage (SAGD), gas injection and chemical injection will help boost the thermal EOR market in North America.

Recent analysis from Frost & Sullivan, North American Thermal Enhanced Oil Recovery Market (http://www.frost.com/k017), finds the oil production from thermal EOR was 2.53 million barrels per day in 2013 and is expected to reach 4.64 million barrels per day by 2020. SAGD is expected to be the highest revenue contributor, followed by steam injection. Other thermal EOR methods are still nascent.

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“Thermal EOR will particularly find application in areas where oil is viscous and heavy. It currently accounts for 55 percent of the total EOR market in North America,” said Frost & Sullivan Energy & Environment Research Analyst Mahesh Radhakrishnan. “Although its share is declining compared to other EOR methods such as CO2 injection and gas injection, the segment will gain considerably from the rising investments in oil sands.”

Nearly 80 percent of the oil sands can only be extracted through the SAGD method, which is a more expensive technique than other thermal EOR methods. Though there will be a boost in SAGD application, the capital expenditure (CAPEX) and operational expenditure (OPEX) involved in the project make this technique prohibitively expensive. As OPEX accounts for more than 80 percent of the project cost, SAGD will be unfeasible if the oil costs less than $50 per barrel.

Companies intend to cut down their CAPEX by almost 50 percent for 2016. As most projects are either on hold or completely scraped due to extreme volatility in the market, potential market entrants are adopting a wait and watch approach.

EOR participants can thrive in this market if they ensure sustainability through consistent and collaborative investments in novel technologies. A case in point is the use of solar EOR instead of natural gas, a non-renewable resource, for oil recovery. Solar power can supply up to 80 percent of an oilfield’s steam needs, significantly reducing the consumption of gas. To maintain a round-the-clock supply of steam, a solar-powered steam EOR can be integrated with a gas steam generator, whereby solar steam will be injected during the day, and steam produced by the generator will be injected at night.

“Companies are moving toward more difficult hydrocarbon resources, which include heavy and extra-heavy crudes, oil sands, bitumen and shale oil,” noted Radhakrishnan. “These resources are physically challenging to explore, and extracting oil from them is technologically difficult; therefore, exploration companies will eagerly adopt EOR methods to recover more oil from these resources.”

North American Thermal Enhanced Oil Recovery Market is part of the Energy & Power (http://ww2.frost.com/research/industry/energy-power-systems/energy-power) Growth Partnership Service program. Frost & Sullivan’s related studies include: Oil and Gas Industry Trends and Technology, Global Smart Gas Meters Market, Strategic Analysis of the Global Artificial Lifts Market, Global Database of Oilfield Service Providers, and Emerging Trends Affecting the Global Oil & Gas Market. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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