Prime time for enhanced oil recovery

Exxon Mobil Malaysia Chairman J Hunter Ferris (left) and PETRONAS President and Group CEO Tan Sri Shamsul Azhar Abbas at an event to mark the completion of the Tapis-R  integrated topsides fabricationExxon Mobil Malaysia Chairman J Hunter Ferris (left) and PETRONAS President and Group CEO Tan Sri Shamsul Azhar Abbas at an event to mark the completion of the Tapis-R integrated topsides fabrication

By Liysa Emhaaj

With crude oil prices holding above the USD100 mark in recent weeks, oil and gas companies could be putting their Enhanced Oil Recovery (EOR) plans back on the boardroom agenda.

Scattered reservoirs, depleting reserves and plateauing production rates have, in the past decade, had oil producers explore various brownfield rejuvenation techniques, including EOR. This technology-driven approach, however, is capital intensive and has a long development cycle from concept to commercialisation.

But where industry figures once pointed to EOR’s recovery cost to be as high as USD80 per barrel (depending on the EOR method used) prohibitive, many oil producers including Malaysia’s national oil company, PETRONAS, are now re-examining its merits as an effective approach to improve the recovery factor of its reservoirs.

Executive Vice President Exploration & Production Business for PETRONAS, Dato’ Wee Yiaw Hin at a regional industry conference recently said that PETRONAS has not let up on its improved oil recovery strategy which it embarked on more than a decade ago. In spite of cyclical crude prices, the company has kept its focus on this secondary oil recovery method. This includes bumping up its exploration and production capital expenditure in the next five years to over RM240 billion – an estimated 20 percent hike from the previous term.

Part of this budget will go towards mopping up more than a dozen brownfields where it will apply various forms of EOR technologies – including water and chemical injection – in order to improve its production levels. The company is looking to shore up to 1 billion barrels of oil over a thirty-year to forty-year period using chemical, water and CO2 injection EOR methods.

However, industry observers have indicated that the company could still be re-evaluating the feasibility of some of these projects given that operations expenditures could more than double in the near future due to manpower shortage and rising material costs.

“Our efforts must prove to be commercially viable before they are sanctioned,” Wee (pic) said.

The economics of some of PETRONAS projects have changed from when the company first embarked on sweating its assets in order to improve the recovery factor of its fields. As such, it is said to be searching for more investors and partners.

“Collaboration amongst oil and gas players is one way to reduce these cost pressures. Some of our joint initiatives have resulted in cost savings as well as technology and knowledge transfer,” Wee said recently.

PETRONAS is currently collaborating with Shell which has committed US$12 billion (RM38 billion) over 30 years for EOR initiatives in nine oilfields in the Baram Delta off Sarawak and four fields in the North Sabah development area.

The company’s efforts with Exxon Mobil to advance its EOR ambitions – including a recent RM10 billion joint investment for redeveloping its 40-year old Tapis field – is expected to deliver first oil before the end of 2014. The Tapis-R water alternating gas (WAG) processing facility is the largest of its kind in Southeast Asia.

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