The Case for Offshore Steam

When we talk to folk in the industry, about our plans to steam the Pilot, Elke & Narwhal fields in the middle of the Central North Sea, sometimes we get a pretty sceptical reaction, sometimes we don’t. I prefer it when we get to talk positively about the potential of steaming offshore reservoirs, but not everyone has an open mind. You see, that’s not how the industry develops heavy oil in the North Sea. How to develop North Sea heavy oil was all worked out in the early nineties by the people who put together the development plans for Alba, Captain, Harding & Gryphon, the last wave of heavy oil developments in the UKCS.

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How Far Can Costs Fall?

Back in February, I wrote about how I expected upstream capital costs to fall as the oil price collapsed,  and then in July, I wrote again with an update on how the IHS UCCI (Upstream Capital Costs Index) had actually fallen up to that time. Well, this is a further update on that, mixed in with a bit of speculation on how far the fall might go before we touch bottom. 

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Rise Early, Work Hard, Strike Oil

Everyone knows  J. Paul Getty's formula for success: rise early, work hard, strike oil; and pretty much everyone I know in the oil business rises early and works hard, some of them even strike oil. So it's hard to find many oil folk who don't believe in the quote, of course the tricky bit is the last part of the aphorism. Striking oil generally requires a decent dollop of good fortune as well as brilliant geoscience and that elusive material, money; however when we do strike oil these days we generally manage to keep it in the well unlike these pioneers in times past who needed to have a decent turn of speed when they struck oil.

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Oil Industry Service Sector – Nimble Like a Ninja

Just like a Ninja the oil industry service sector has responded to the demands of the market place and reduced the cost of doing business in the upstream world by more than 15% in just six months. It turns out that I was a pessimist when I first wrote about this in February 2015. I thought then that it would take 18 months for there to be such a significant reduction in the industry's cost base.

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Who's who in steam

When we have been talking with potential investors and partners about steaming the Pilot oil field, we have often been asked who else steams oilfields? Most people knew about the Canadian oil sands and the steam assisted gravity drainage (SAGD) schemes which are coming on stream at pace over in Canada. But many fewer were aware of the steam flood projects which have been very successful in California, Venezuela, Indonesia and right here in Europe.

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Deep Steam

I wrote earlier about why 3,000' is the conventional limit for steam floods and this is a follow up note exploring some ways that we could increase that limit. It has some significance. For the UK sector of the North Sea at least, we have estimated that, if you could push the limit down to 4,500', the incremental recovery possible could be more than 2 billion barrels of oil. Almost as much oil as in Johan Sverdrup, if that isn't worth thinking about what is?

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Steam and Solvent – Better Together

Steam injection has a pretty remarkable ability to drive out almost all of the heavy oil from highly permeable reservoirs but it is costly to generate and there is a lot to be gained if you could improve the overall efficiency of the process. The inventor of the SAGD process, Roger Butler, also invented another process which uses solvents instead of steam to mobilise the heavy oil. That process is called VAPEX and involves the injection of a hydrocarbon solvent, such as propane, butane or naphtha

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The Best Time for EOR is Before You Produce a Drop of Oil

The sad truth of working in oil companies is that being assigned to work on enhanced oil recovery ("EOR") projects is sometimes considered career death. All the glamour jobs are on the big discoveries, putting in place billions of dollars of plant and equipment and bringing on hundreds of thousands of barrels per day of production. EOR is thought about as fields decline and managers are looking for some way to stave off decommissioning or being assigned to the "Acquisitions and Disposals" basket.

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