Report: Enhanced oil recovery deployment held back but will eventually grow
Although enhanced oil recovery (EOR) currently accounts for merely 7.5 percent of total crude oil production in North America, Frost & Sullivan expects the market to grow rapidly as oil fields deplete and oil extraction becomes more complex. In fact, Frost & Sullivan predicts that the market earned revenues of $20.10 billion in 2014 will reach $70.60 billion in 2020.
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| Carbon dioxide injection will be the key EOR method in North America, finds Frost & Sullivan. Credit: Frost & Sullivan |
Use of carbon dioxide EOR (CO2-EOR) will be more widespread than chemical or thermal EOR as federal governments focus on carbon capture and sequestration; while chemical EOR has not shown significant growth due to long pay out times and a longer breakeven point, using the right technique of injecting the chemical will help the method gain traction, Frost & Sullivan says.
Economic stability plays a significant role in EOR deployment. When the economy is slow, the decreased demand for oil lowers oil prices and curbs the adoption of EOR. EOR is profitable only when oil prices stand at $80 per barrel or above, as the capital and operational costs of the projects are very high.
"Economics also influence the selection of the type of EOR employed," said Mahesh Radhakrishnan, Frost & Sullivan energy and power industry analyst. "With governments turning their attention to carbon capture and storage, the number of CO2-EOR projects is expected double by 2020. By 2025, 50 percent of the oil produced in the US will be through EOR, of which 50 percent will be through CO2-EOR."
Despite the increasing number of CO2-EOR projects, overall production growth has been weak as a result of poor infrastructure to supply CO2. Further, technology plays a significant role in implementing new methods to extract oil from difficult environments such as oil sands or extra-heavy oil.
The long time taken to design novel, fully functional technologies is holding back EOR, Frost & Sullivan concludes, although, ultimately, EOR will grow.
"Focusing on ultimate recovery rather than immediate recovery for short-term profit is necessary to keep depletion rates low and help companies exploit their reserves better," said Radhakrishnan. "Emphasis on long-term strategies will also improve secondary oil recovery through sustainable development in the North American market."
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