New Technologies Drive Oil Boom in U.S.
By Jesse Emspak, TechNewsDaily Contributor | LiveScience.com – 23 hrs ago
Oil production in the U.S. is increasing, often driven by new ways of getting
the black stuff out of the ground. Start-up companies are trying out new
techniques, while larger, established players are giving a second look to older
methods that weren't profitable years ago.
The high price of fuel is one reason. The late 1990s saw a glut of oil, with
the average (inflation-adjusted) price dropping to about $17 per barrel. In
2012, the average has hit $93, and could go higher.
The International Energy Agency concluded, in a new report released earlier
this month, that theUnited States could overtake Saudi Arabia as the world's
leading oil producer in five years, becoming an oil exporter by 2030. Some
experts think this is overly optimistic, though, becauseunconventional oil
production can drop off faster than traditional oil.
[Why US Oil Dominance Won't Lower Gas Prices]
Heavy oil
Philip Bell is one of the entrepreneurs exploring new ways to get oil from
fields abandoned because they stopped producing. His company, ElectroPetroleum,
based in Wayne Pa., uses electricity to extract heavier oil once considered
unprofitable due to the expense and effort needed to extract and refine it. The
company has one pilot project in the United States and one in Canada.
ElectroPetroleum's method involves two electrodes. One, positively charged,
remains near the surface, while a negatively charged one descends to a
well-bore far below. Electric current runs through the electrodes, also
transmitting through the rock.
The electrodes heat up, like a soldering iron. Oil-bearing rock formations
usually contain a lot of water, and that water transmits the heat to the oil,
which then becomes less viscous and easier to extract. The electric current
actually breaks off some parts of the hydrocarbon molecules, reducing the
density of the oil. Without the combination of heat and electricity reducing
the oil's density it would be nearly impossible to pump.
Meanwhile, the positive and negative charges on the electrodes create a driving
force that moves the water and oil towards the negatively charged electrode.
The oil can then be pumped out of the well.
Bell says a big advantage of the process is that it doesn't require water.
Ordinarily, extracting heavy oils from the rock requires high-pressure steam.
Giving old tech a second look
Bell is also an executive at a conventional oil exploration company, Temblor
Petroleum, which uses more standard technologies. But there, too, previously
pricey endeavors have become worthwhile due to the skyrocketing price of oil.
Temblor uses hydraulic fracturing technology, or “fracking” – similar to the
method used in the gas industry – to break the rock in shale formations and
release petroleum.
"That's the biggest game-changer going," he said. His company operates on the
Monterrey shale in California, where he said there's something of a land rush.
N-Solv also uses a new technique to get more oil, employing solvents as an
alternative to steam for extracting oil from Alberta's tar sands. Conventional
extraction uses two horizontal wells, a producer and an extractor. The top one
is filled with high-pressure steam at 230 degrees centigrade (446 Fahrenheit).
That makes the oil in the sands less viscous and allows it to flow, via
gravity, to the producer-well below.
The solvents N-Solv uses reduce the oil's viscosity, and can operate at much
lower temperatures, on the order of 50 degrees C (100 F). The process also uses
a lot less water than conventional methods.
"I think the hard reality is the global feedstock of crude oil going to
refineries is getting heavier and heavier. Refineries [are] working on ways to
accept heavier crude," said Alexander Stickler, vice president of operations at
N-Solv. "Lots of guys are working on ways to access heavy oil viably."
Start-ups aren’t the only ones pushing the technological envelope. Chevron's
Tahiti project, in the Gulf of Mexico, is adapting an old technique called
water flooding for use in its offshore wells. Under the method, water pumped
into the oil reservoir pushes the remaining crude out. It's been used
extensively on land, but only recently have oil companies applied it to the
deepest offshore projects.
Meanwhile, Shell has developed low-salinity water flooding as a way of boosting
recovery by controlling the ionic composition of the water. The low-salinity
water prevents oil from "sticking" to the surrounding rock as the pressure
pushes it out. The company has refit the water-flooding systems on some of its
platforms in the Gulf, extending by a decade the life of those oil fields. BP
has also adopted a variant of this technology.
Several companies are also looking at extracting oil from shale. The process
usually involves digging up the shale and exposing it to hot gases, at
temperatures of hundreds of degrees. Shell Oil has a pilot project in Colorado
that heats the shale in place, by sinking heating elements into the ground. The
oil then flows up from the rock.
Other techniques, such as horizontal drilling and the injection of carbon
dioxide, have also boostedoil production in previously unprofitable wells.
Horizontal drilling is exactly what it sounds like. The idea is to get to parts
of an oil field that a vertical well wouldn't reach, without having to dig new
ones. Carbon dioxide injection involves pushing the gas into the well, so that
the pressure pushes more oil out of the rock.
Party won’t last forever
All these technologies might boost U.S. production of oil, and even marginal
increases add up when you include many fields. But that doesn't necessarily
mean the party will last long, said Robert Rapier, author of Power Plays:
Energy Options in the Age of Peak Oil.
The problem, he said, is that every oil field produces for a while, then
declines. In conventional oil drilling, the decline takes place over many
years. Unconventional oils will likely decline more quickly. That means that,
even if production increases enough for the United States to overtake Saudi
Arabia – something he thinks unlikely -- that level of production won't last.
Furthermore, high prices are what make extracting this harder-to-get oil worth
it. But more production could depress the price of oil enough to make such
methods unprofitable again. "Fracking technologies have improved, but the real
game-changer is simply oil price,” Rapier said in an email. “The marginal
production cost for oil right now is reportedly around $90, and if oil
prices fall, so will drilling activity.”
[Plentiful US Oil Won’t Kill Renewable Energy]
Then, there is the issue of fuel prices. Oil is sold in a global market, so it
isn't unusual for a barrel of Alaskan crude oil to end up in Europe or Asia,
and vice versa. The price at the pump is driven by a combination of global
prices, refining costs, subsidies and taxes. Domestic policy can only affect
the last two factors. That means that producing oil domestically is unlikely to
lower gas prices, unless the U.S. produced enough oil to depress prices
globally anyway.
Meanwhile, given that the market is global, the U.S. would still be importing
some amount of oil, even if it were less. One reason is demand: U.S. consumers
will probably still use more than can be produced at home. So true "energy
independence" is a long shot unless there is a massive change in the way
Americans use oil, like by switching to hybrid or electric cars.
Last, but not least, there's global warming, which suggests we shouldn't burn
all those fossil fuels at all. More than one environmentalist would say that
the cost of oil should increase to reflect the costs of climate change.
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