Sun shines on the oil industry

The oil and gas industry has been injecting steam into oil reservoirs for decades. Steam enhanced oil recovery (EOR) is both an accepted and effective method of increasing production from heavy oil resources and tight formations. While the simple premise of steam injection to increase the reservoir temperature and pressure has not changed significantly over time, the method and source of generating steam has. With the advent of robust cost-effective solar steam equipment, steam generation is set for a further evolution – one that removes industry reliance on volatile fuel costs and replaces it with a free and abundant resource: the sun’s rays.

The emergence of solar EOR
Heavy oil operators seeking to expand steam generation without the costs of gas or other fuels are already moving into

Solar collector creates steam efficiently and economically.

this space. ARCO pioneered solar steam generation with a pilot solar tower in the 1980s. Shell has recently sanctioned a project to produce steam for EOR via a parabolic trough system in Oman, and Chevron is building a California solar tower steam project. Although these systems have proven technical feasibility, the high capital costs of existing trough and tower collectors have limited the deployment of solar EOR.

But now, for the first time, with the recently developed GlassPoint solar collector system, field engineers can develop resources knowing they have fixed-price steam below market prices for the lifetime of the field. With the new system, solar EOR can produce steam at roughly half the cost per barrel of steam produced by burning natural gas. Like previous concentrating solar collectors, the system uses reflectors to focus sunlight to create high-temperature steam. GlassPoint’s technology combines proven systems in an innovative architecture to deliver ultra-lightweight collectors that are reliable and durable enough to withstand the oilfield environment, equipped with fully automated operations and cleaning systems.

For heavy oil operations in California, Texas, North Africa, the Middle East, and other sunny areas, solar-generated steam can now supplement, and in some cases completely displace, steam generated from natural gas.

Enhanced economics: solar EOR is good business
By reducing fuel costs, solar steam directly relieves the largest and most variable part of thermal recovery production

A number of regions produce heavy oil with sufficient sun resources for solar EOR.

cost. Depending on local sunshine, the GlassPoint system can generate steam at an average cost from US $1.75 to $3.00/MMBtu. Even with today’s low gas prices, the ongoing fuel savings are significant. Even more important is the certainty of the long-term cost of steam. Once installed, solar steam generators produce at predictable, low operations costs for 30 years. Low-cost fixed-price steam allows operators to reassess optimal recovery strategies to achieve higher production rates and increase a field’s ultimate recovery fraction by steaming wells harder. Low-cost heat can expand proven reserves by making it economical to produce in shallower pay zones. And because solar EOR has minimal operating expenses, profits can be made by steaming wells for a longer period of time than if gas-fired steam were used.

Given that solar EOR has the potential to reduce fuel costs and increase production and total recovery, operators have three options to deploy solar EOR in current projects.

Without making changes in how much steam is delivered to the field, operators can displace approximately 20% of their annual fuel costs with a solar-gas hybrid approach. Automatic control systems for the gas and solar generators communicate to ensure constant rate steaming with no operator intervention. Analysis by Stanford University professor Dr. Anthony R. Kovscek, shows that 20% solar steam generation can economically increase production by 5% to 7% and reserves by approximately 12%, for the same operating costs as gas-fired steam.

A recent simulation performed by Shell Technology reported steaming rate variations throughout a 24-hour period can

With a solar field providing 20% of a field's annual steam and 80% gas-fired generated, injected wells will produce more oil earlier and for a longer period of time, increasing reserves by more than 10%.

be permitted without disrupting daily production cycles. Therefore, a hybrid solar-gas steaming operation could deliver 50% of annual steam from the solar collectors. As the proportion of solar generated steam increases, production costs become less dependent on volatile fuel and carbon markets, and the opportunity increases to drive the reservoir harder and longer, improving production rates and ultimate recovery.

Operators can bypass gas firing and rely entirely on solar steam due to variance in daily steaming patterns proven viable. For new wells, particularly in basins where gas is unavailable, field development plans based on as-available sunshine (a daily cyclical steam injection schedule) can deliver the same production rates as continuous-injection systems. Seasonal, location-specific variations in sunshine become an important consideration in planning such developments. Completely avoiding the costs of gas pipelines and emissions costs may make this the most economical option in some situations.

The potential for profit
Steam EOR has been used in Bakersfield operations since the 1960s and is central to sustaining the productivity of heavy oil assets and producing massive reserves in tight formations. Initially, steam was produced by burning crude, but over time operators switched to natural gas. Today, almost all fired steam generators in the region use natural gas with low NOx burners.

In 2009, steam production for EOR in the region used 280 million MMBtu of natural gas (approximately 25% of total California natural gas consumption) at an expense of more than $1 billion.

An increasingly strict regulatory climate will require costly cycles of burner replacements and impose an expensive and time-intensive permitting process for new steam generators. Furthermore, California’s landmark climate legislation, AB32, along with pending Federal frameworks, are widely expected to add 20% to 30% to the cost of fuel in the form of taxes or allowance costs for CO2 emissions.

Solar-generated steam enables production expansion in an emissions-constrained environment while providing significant cost savings. Solar EOR is a cost-effective alternative to natural gas generators by overcoming permitting costs and delays and serving as a hedge against increasing fuel cost and potential emissions taxes.

The San Joaquin Valley region has excellent solar resources, and with current US federal incentives for solar energy equipment, costs for solar EOR are below $3/MMBtu for solar steam generation systems such as GlassPoint’s. Solar EOR enables California operators to expand proven reserves at a few cents per barrel.

Zero emission steam generation
With more than 50% of the original oil in place in the US still in the ground, EOR is essential to the future of domestic oil production. Extracting oil using traditional steam-based EOR methods would be incredibly expensive and would come at a huge environmental cost. The new ultra-light, ultra-durable solar collectors have been specifically designed for oilfield operations and deliver steam at less than the fuel cost of natural gas. Solar EOR (and the GlassPoint system in particular) is a proven solution for heavy oil operators.