How Canadian Oilsands Can Go Green – At Less Than $10/barrel

Posted by Keith Schaefer -Oil & Gas Investments Bulletin

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Electrically-Enhanced-Oil-Recovery

A large part of Canada’s massive oil sands deposits could become one of the most “green” energies on the planet, by using electricity to heat up and break down the heavy oil.  EEOR, or Electrically Enhanced Oil RecoverySM is a new technology being field tested in Saskatchewan by a Canadian junior producer, Deloro Resources.

EEOR uses little water, emits no greenhouses gases on site, and uses electricity from local utilities to a conventional heavy oil well, says Phil Bell, President and CEO of Electro-Petroleum Inc., (EPI) the Pennsylvania company which developed the technology.

He adds that EEOR also greatly increases production, which means that both capital and operating costs will be a fraction of current technologies, like SAGD (Steam Assisted Gravity Drainage).

EEOR is simple technology which passes direct current between electrodes at the surface and at the bottom of a well (it can also be passed between the bottom of two wells). This electrical current creates several changes in the oil formation sands.

One is that the heavy oil breaks down by a process known as “cold cracking”. So the heavy minerals and asphalt-like products that make heavy oil “heavy” are cracked, and the oil becomes lighter, increasing the API gravity, which is more valuable.  This also makes the oil flow more easily (the industry calls this reducing viscosity).

Bell says that fine sands and other sands are also affected by the current.  The electrical field helps to create more permeability, which is the ability of the rock or sand to allow oil to pass through it.  So both the new, lighter oil flows more freely in the sands and has more permeability, providing a double bonus.

Bell says that in a California field test, EEOR increased production from five to 50 bopd of heavy oil, increased the API from 8.1 to 10.7, lowered the amount of water coming up the well and lowered the amount of sour gas being produced.

The electrical current itself, going from the surface to the bottom of the well bore, acts as a driver for oil flow to the well.

Electrically-Enhanced-Oil-Recovery

The electricity also heats up the formation near the well bore itself, allowing the heavy oil to flow better. Once at surface it can be transported via heated lines and put in heated storage tanks onsite.

Conventional technologies must also heat up the oil to get it to flow, usually by drilling two long well bores deep into the formation.  Producers must then wait for the upper steam well to heat up the surrounding oil formation before oil starts to flow from the lower well.

Bell says that energy costs for EEOR are less than $4/barrel, and capital costs are less than $10/barrel on only a 20 bopd well.  Another positive for EEOR is that it works at depths greater than 2500 feet, or 800 metres, while conventional SAGD only works above 2500 feet.

“The technology is not fully commercial yet”, says Bell.  He doesn’t want to get into details but says they are now working on several projects.

“We found Deloro via our partners at Yet2.com.  They didn’t have capital to do a steam project” and the reservoir characteristics were such that Bell thought it was a good fit.

“Capital costs will be a fraction of what they would pay for a steam operation and opex (operating costs) will be less,” Bell says.

EPI and Deloro have made one heavy oil well at Wilkie produce up to 19-25 bopd, and a second well has now been permitted. EPI is paying 50% of the well and will receive 50% of the proceeds until payout, and then goes to a 10% working interest.

EPI plans to use the success at Wilkie and its other projects to extend the use of the EEOR technology into bigger fields with larger working interests.

 

by Keith Schaefer, editor and publisher of The Oil & Gas Investments. Sign up HERE (60 day, money back guarantee, no questions asked)

Hello, this is Keith Schaefer, editor and publisher of The Oil & Gas Investments Bulletin.  I started my subscription service in mid-2009 because I could see there was no place where retail investors could go to easily find which oil and gas companies were creating huge shareholder wealth by using exciting new technologies, such as horizontal drilling, fracing and 3D seismic.

These companies are increasing cash flows – and stock prices – by finding ways to get more oil and gas out of the ground.  And junior and intermediate producers – $2-$20 stocks – are leading the way.

I find the leaders in the new plays that are using these technologies.  My research is finding  higher and higher flow rates from new wells in old formations as management teams fine tune their use of these new technologies.

It’s amazing how technology is lowering operating costs – and increasing profits – for many publicly traded energy companies.

I find the ones who have the capital and the knowledge to be the fastest growing in their area – this usually means they have a large undeveloped land position in an area where either production costs are very low or production rates can be very high.  They are covered by several research analysts, so there is research support and institutional money flow behind them.

And my subscribers and myself are making money from my research.  I eat my own cooking and buy all the stocks I research for subscribers.

I read MANY research reports, and I do a lot of original research – call management teams, talking to my contacts in the oil patch, scour company financials – to find the companies with the best chance to provide investor profits.

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