How the region's NOCs are tackling enhanced oil recovery
David Branson, Executive Advisor with Strategy&, part of the PwC network, says the Middle East’s NOCs are in the early stages of EOR development.
National Oil Companies (NOCs) of the Middle East, and their international partners, are increasingly pursuing enhanced oil recovery projects as a means of achieving maximized recovery from existing reservoirs.
Currently, with the exception of Oman, which is a global leader in thermal, chemical and gas EOR, most of the region’s NOCs are in the early stages of developing EOR projects and capabilities.
Lower oil prices since 2014 have required that all companies, the region’s NOCs included, have had to balance long-term objectives with preservation of short-term cash flow.
This has necessarily slowed the momentum for EOR projects, which generally fall under long-term goals. With the stabilisation of oil prices, interest in EOR is again growing. However, commitment to long-term, expensive projects requires companies to have confidence that oil demand and prices will remain elevated over the lifetime of their projects.
There are other constraints, too. NOCs face a range of technical, commercial, and organisational challenges in implementing EOR projects. Many Middle East carbonate reservoirs have highly variable reservoirs, which make the response to EOR variable and reservoir-specific. Availability of gas and water for injection is increasingly a constraint.
NOC costs for primary production are amongst the lowest in the world. In comparison, EOR projects appear costly and, in the face of an uncertain outlook for future oil prices, high risk.
Organisationally, NOCs will need to ensure alignment of goals and objectives between operations teams focused on short-term objectives, and field development teams with longer-term recovery maximisation objectives.
In response to challenges with reservoir uncertainty and variability, the number of pilot projects that are planned, or underway in the region, is increasing. Pilot projects are essential to test and refine the best EOR approach for each field and reservoir. Advances in the understanding of reservoir and fluid chemistry are leading to advances in injectant properties and injection processes.
These advances will support increased efficiency in water usage, whilst developments in energy efficiency, notably through solar power, also have the potential to reduce cost.
In parallel, NOCs are building up their capabilities, either internally, through the strengthening of technical and R&D functions, or in industry and academic partnerships. Given similarities in challenges, collaboration between NOCs is becoming more common.
Meanwhile, digitalisation has the potential to accelerate EOR efforts significantly. For reservoirs that have been in production for many decades, and have a long history of drilling and waterflood, relevant data and reservoir models are often not readily available.
Emerging technologies, such as artificial intelligence, provide the industry with new tools to investigate and structure data. Advances in real-time reservoir monitoring, present an opportunity to quickly assess reservoir response, and shorten the time between piloting and full-scale implementation.
Given the scale of in-place volumes, the potential for reserves growth in the region through EOR is substantial. Securing this potential will require continued focus on addressing technical and commercial challenges.
NOCs will also need to ensure an appropriate balance between long-term recovery maximisation and short-term production optimiz.
The extent to which EOR progresses in the region depends on the view that individual NOCs have on the pace of the transition to renewable energy sources. This will determine their view on future oil demand, oil price, and the value of EOR projects.