Permian CO2-EOR: pushing the boundary?

We see enormous opportunity from CO2-EOR in the Permian. It can double well productivity, generate 15-20% IRRs (at $50 oil) and uplift production potential from the basin by 2.5Mbpd. The mechanism and economics are covered in detail in our deep-dive note, Shale-EOR, Container Class.

But what is happening at the leading edge, as companies try to seize the opportunity?

To deploy CO2-EOR, operators must be confident in the technology. It must be predictable, with well-calibrated models informed by field-tests and laboratory studies.

Excitingly, Occidental Petroleum is developing such models. Its laboratory analysis into CO2-EOR has been published in a new SPE paper, in partnership with CoreLabs.

Oxy is at the forefront of CO2-EOR, according to our screening of patents and technical papers. It has conducted 4 x field trials, with further ambitions to lower decline rates from 2020 and drive value through its Anadarko acquisition.

This note profiles our top five findings from Oxy’s recent technical paper. CO2-EOR’s deployment is supported.

(1) CO2 was found to be “the best solvent” for huff’n’puff in the Permian, after laboratory-testing Wolfcamp cores, with CO2, methane and field gas. Under simulated reservoir conditions, around 3,600psi, bubbles of CO2 immediately began dissolving into the oil, helping to mobilise it.

(2) CO2 swelled the oil by 15-76% under the reservoir conditions tested in the study (below, right). Swollen oil is more likely to dissociate from the reservoir rock and flow into the well.

(3) Accurate ‘Equation of State’ models have been developed, matching the pressure, viscosity and well data from the laboratory study.

(4) Multiple Cycles. Huff’n’puff works by sequentially ‘huffing’ gas into a depleted shale well to entrain residual oil, then ‘puffing’ back the mixture of gas and oil. Ideally, this cycle can be repeated multiple times, recovering more oil each time (illustration below). Oxy’s laboratory study continued recovering material volumes of oil over six cycles. Lighter fractions were recovered in earlier cycles, followed by heavier fractions in later cycles. The authors concluded: “The multi-cycle incremental recovery – even at the small core plug scale – suggests the significant potential for multiple HnP EOR cycles for a future unconventional EOR project design”.

(5) Huge Recovery Factors. What slowed the eventual recovery of oil in the study was the high volume of oil already recovered. Initially, these shale samples contained 10.3% oil (as a percentage of the initial pore volume). By the end of the huff’n’puff trial, they contained just 2.4%, implying c77% of the oil had been drained: an incredibly high number, when compared with c 8-10% recovery factors in most analyst models. The result matches other lab tests we have seen in the technical literature (chart below). The field-scale implications of these studies are discussed in our deep-dive research.

Source: Liu, S., Sahni, V., Tan, J., Beckett, D. & Vo, T. (2019). Laboratory Investigation of EOR Techniques for Organic Rich Shales in the Permian Basin. SPE.

Robot delivery: Unbelievable fuel economy…

Stand on a street corner in Tallinn, in the summer of 2019, and you might encounter the scene below: not one, but two autonomous delivery robots, comfortably passing one-another.

The fuel economy of these small electric machines is truly transformational, around 100x better than a typical motorcycle (the trusty workhorse of take-aways past), around 200x better than a typical car and around 400x better than a typical pick-up.

Large implications follow for energy supply and demand, if such delivery-robots take off…

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Our conclusion is to have found further evidence that transportation technology is evolving. Forward thinking energy companies will be preparing for the change, as evidenced by their patents, their projects and their venturing.

Shale: restoring downstream balance? New opportunities in ethylene and diesel.

We have all heard the criticism that shale oil is “too light”, so its ascent will create a surplus of natural gas liquids and a shortage of heavier distillates. Less discussed is the opportunity in this imbalance. Hence this note highlights one such opportunity, based on an intriguing patent from Chevron, which could convert ethylene into diesel and jet fuel, to maximise value as its shale business ramps up.


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Conclusions and Further Work?

Shale’s light product slate may create opportunities for integrated companies. Chevron’s ethylene-to-diesel patents are one example. But we have also seen a surprising uptick among other Oil Majors in patent filings for GTL, for oxidative coupling of methane and for a process to convert C3-4s into gasoline and diesel range molecules.

Our positive outlook on shale is best illustrated by our deep-dive note, Winner Takes All, but also be recent work focusing on the emerging opportunities with Fibre-Optic Sensing and Shale-EOR.

Can we help? If you would like to register any interest in the topics above, to guide our further work, then please don’t hesitate to contact us.

Shell drives LNG in transport?

Shell is the leading Major in driving new LNG demand, based on patent filings (chart above). As an example, we highlight a leading new technology to promote LNG demand in transportation, by mitigating the problem of boil-off.


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Greenfield LNG: Does Exxon have an edge?

Harnessing better technologies tends to unlock better returns, for large-scale capital projects in a commodity industry.

Hence this 7-page note evaluates ExxonMobil’s technologies for constructing greenfield LNG plants, particularly in remote geographies. Its technical leadership stands out from our analysis of 3,000 patents across the industry. This matters as Exxon progresses new LNG investments in Mozambique, PNG and the US.

Opportunities should arise for investors in Exxon’s LNG projects, and for its partners, resource-owners and other stakeholders to maximise value.

Lost in the Forest?

In 2019, Shell pledged $300M of new investment into forestry. TOTAL, BP and Eni are also pursuing similar schemes. But can they move the needle for CO2? In order to answer this question, we have tabulated our ‘top five’ facts about forestry. We think Oil Majors may drive the energy transition most effectively via developing better energy technologies in their portfolios.


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Good Batteries vs Bad Batteries?

We define a “good battery” as one that enhances the efficiency of the total energy system. Conversely, a “bad battery” diminishes it. This distinction matters and must not be overlooked in the world’s quest for cleaner energy. Electric Vehicles are most favoured, while grid-scale hydrogen is questioned.


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LNG Ships: a new record-setter?

Multiple records have just been broken for an LNG-powered ship, as construction completed at Heerema’s “Sleipnir” heavy-lift vessel (charted above). It substantiates our recent deep-dive note, which sees 40-60MTpa upside to LT LNG demand, from large, fuel-intensive ships, after IMO 2020.


Sleipnir is a record-setting crane-lift vessel, with capacity to pick up 20,000T. This eclipses the prior records in offshore oil and gas, which were around 12,000T, set by the Heerema Thialf and the Saipem 7000. Hence Sleipnir has already lined up 18 contracts, starting with the 15,800T topsides for Israel’s Leviathan gas field, and progressing on to Johan Sverdrup Phase II.

Sleipnir is a record-setting LNG vessel, burning gas as its primary fuel (although it can also burn diesel). With a displacement of 273,700T, we estimate it is the heaviest LNG-powered vessel ever built (eclipsing the largest such container ships, at 220,000T).  With a cost of $1.5bn, we estimate it is also the most expensive LNG-powered ship ever built (eclipsing Carnival’s $1.1bn AidaNova cruise ship). It has the world’s first Type-C LNG tank in an enclosed column. Numbers are updated in our data-file here.

There is upside to LNG demand in large, fuel-intensive ships, especially cruise- and container ships, after IMO 2020. Small-scale LNG may offer an economic “bridge”, while bunkering becomes increasingly attractive as volumes per port scale past c80kTpa. Forward-thinking Majors are already investing to capture the future market.

Finally, for a video of the construction vessel being constructed…

Digital Deflation: How Hard to Save $1/boe?

A typical offshore operator can very readily save $1/boe via continued, digital deflation; which is tantamount to $1bn per annum at a c3Mboed Oil Major.

Our numbers are derived from a case study by Cognite, which is among the leaders in oilfield digitization, collaborating with cutting-edge E&Ps, as described below.

Digitization remains the most promising opportunity to improve offshore economics. But the gains are granular and can only be seen by delving into the detail…


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Perovskites: Lord of Light?

Perovskites are the fastest-improving solar innovation. The best test-cells hit a new record of 28% efficiency last year, with line-of-sight to the mid-30s, i.e., 2x more efficient than today’s silicon photovoltaics. A Major is at the cutting edge.


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