At the core of the multibillion dollar oil industry are chemical plants known as refineries. There, a yellow-to-black coloured, smelly, viscous liquid is converted mainly into a range of liquid fuels that are distributed to consumers across the globe and provide 35% of primary energy demand.

The major bi-product of this activity is natural gas that has grown to represent a further 23% of primary energy. The industry is dominated by several well-known brands such as Saudi Aramco, ExxonMobil, CNPC, BP, Royal Dutch Shell, Conoco Phillips, and Chevron. The marketing and distribution of refined petroleum products is termed ‘downstream’ and it is there that these majors are most visible.

The ‘upstream’ activities include exploration and extraction. Here two types of companies assist the oil companies to bring the crude oil to their refineries. Drilling companies physically drill and pump the crude oil from undersea or underground reserves and their specialised skills that are often in high demand, are typically contracted by the oil companies as and when required.

Historically, oilfield service companies have provided assistance to the drilling companies to set-up oil and gas wells by manufacturing, repairing and maintaining equipment and providing specialised services such as seismic testing, transport of rigs and equipment, and directional services to ensure that wells are drilled at the required angle.

Drilling, well construction, evaluation, cementing, pressure control, data services and consulting are also among the many services offered by these companies.

Hydraulic fracturing is a specialised service performed as a stimulation treatment frequently applied to both oil and gas wells particularly in the mature phase. Fluid containing proppant, a material such as sand of a specific grain size, is pumped at sufficiently high pressure to open a vertical fracture extending away from the wellbore. The ‘proppant’ remains in place after the hydraulic pressure is removed, to prop open the fracture and enhance flow into the wellbore.

In 2011 the global oil services market is expected to turnover $500bn and predicted to grow by another 15% in 2012. One of the factors driving this is that in the US, the unconventional natural gas business is booming and a further $40-60bn of investment is anticipated over the next 5-6 years. Potential for growth has also been identified in China and parts of Europe including Poland.

It is against this background that General Electric, the largest US-based manufacturing company, appears to have decided to challenge market leaders Schlumberger, Halliburton and Baker Hughes by acquiring three companies who are active in the oil services business.

Boosting petroleum recovery with industrial gases
The joint objective of drilling companies assisted by oilfield services companies is to extract petroleum from natural reservoirs and to process it to meet the specifications required before delivering it to the refineries.

1. Primary Recovery Techniques depend on natural mechanisms to drive conventional oil to the surface, but typically these methods recover only 5-15% of the well’s potential capacity. Pressure is developed to push oil up to the surface firstly by the drainage of natural water displacing oil downward into the well.

Secondly, gas dissolved in the crude oil is released and expands to apply pressure at the top of the reservoir. Finally, gravity drainage of oil within the reservoir from the upper to the lower parts where the wells are located also adds to the available pressure.

2. Secondary Recovery Techniques involve the application of external energy in order to drive the oil up. Recovery factors after both primary and secondary stages are usually in the range 30-50%.

A) Fluid injection like water flooding, natural gas injection or the injection of other gases including air, nitrogen and carbon dioxide. Many onsite air separation plants have been constructed to supply gas for nitrogen injection. Frequently as the field’s life cycle progressed, nitrogen breakthrough into the associated natural gas was evidenced by a rising level of nitrogen in the feed gas, sometimes as high as 80%. A nitrogen rejection unit (NRU) would then be required to upgrade the natural gas to standard specifications.

B) Pumping with either with beam pumps or electric submersible pumps.

3. Tertiary Recovery Techniques involve the application of methods that increase the mobility of the oil and are usually applied to unconventional oil resources such as extra heavy oil or natural bitumen, which are also known as oil sands or tar sands.

These methods are widely known as Enhanced Oil Recovery (EOR) and typically they allow the recovery of an additional 5-20% of the reservoir’s oil, although individual examples have been seen to deliver more impressive results of up to 200%.

A) Thermally Enhanced Oil Recovery (TEOR) includes three methods of applying heat to lower the viscosity of the bitumen:

i. Steam Assisted Gravity Drainage (SAGD) often employs a natural gas fired cogeneration plant to provide electric power and steam. The industrial gas industry has extensive experience in building and operating such cogeneration plants around the world. This technology is extensively applied in the US’ San Joaquin Valley, where despite the very heavy nature of their crude oil, this produces 10% of the US’ domestic oil supply.

ii. Conventional – In Situ Combustion (C-ISC) derives heat from the combustion of coke residues deposited after the heated oil fractions have drained away. The process is started-up by using steam in the optional first stage, to preheat the environment depending on the reservoir temperature and oil viscosity. The benefits of C-ISC are limited by the uncontrolled, rapid advance of the combustion front along the horizontal well.

iii. Toe-to-Heel- Air-Injection (THAI) is an evolution of C-ISC that was developed by Petrobank Energy and Resources Ltd, of Canada. It was evaluated using numerical simulation models and Schlumberger’s ECLIPSE® thermal reservoir simulator to investigate the process variables.

Research demonstrated that by controlling the advance of the combustion front, recovery increased by nearly 30% within the 120 days duration of the C-ISC process and in excess of 300% within two years while sweeping barely half the length. The research included a simulation over a five year period and demonstrated that the THAI™ process can be further optimised by increasing the oxygen concentration of the injected air steam.

The result of enriching the air with industrial oxygen from 21-40% predicted additional recovery of nearly 30%.

B) Surfactant or diluent injection aims to reduce oil viscosity by injecting acids, chemical agents or solvents that require downstream separation.

C) Carbon Dioxide flooding is an effective viscosity lowering technique and is preferred where available at a low price. This application was discussed in more detail in gasworld’s September 2008 feature titled ‘Gases in Energy Production’.

Benefits of EOR are recognised globally
Many of the world’s oil fields have experienced, or are experiencing, a decline in oil production; using EOR has the potential to reverse this downward trend.

Oman’s historical oil production reflects this; between 2001 and 2007 its oil production fell by 27%, but by 2009, due mostly to EOR projects, oil production increased by 17%. Similar results are reported from oilfields in Russia, Mexico, the US and the UAE.

Current and future potential for EOR
In 2005 EOR techniques recovered oil worth a mere $3.1bn, but this has grown dramatically to peak in excess of $80bn in 2008 and exceed $62.5bn in 2009. This clearly illustrates how the economic feasibility of EOR depends on the market price of crude oil. It is forecast to reach $1.3tr (Trillion) by 2015.

Governments are also taking note that besides increasing oil revenue, any increase in their oil production will simultaneously lower their demand for oil imports and therefore EOR has the potential to stimulate economic growth. In Texas, where EOR is now thought to account for 20% of total oil production, the projected additional revenue that EOR production will earn is valued at $200bn and could create 1.5 million jobs.

The potential demand for carbon dioxide for EOR coincides with rising pressure on industries that emit the largest volumes of this greenhouse gas, to either cut their emissions or find ways to capture and sequester it permanently. It is estimated that EOR applications worldwide could potentially absorb the total volume of carbon dioxide emissions during the next four years, which equates to around 130 billion tonnes.

Lower cost alternative
An interesting low cost alternative to carbon dioxide injection that has found application for the recovery of light oil from deep narrow reservoirs, with low permeability, is High Pressure Air Injection (HPAI).

The lighter components of the oil react exothermically with the oxygen in the air producing a flue gas containing nitrogen, carbon dioxide and water. Initially production is stimulated by re-pressurisation and gas-flood effects with the influence of the thermal zone being secondary.

The later benefits of HPAI are attributed to interactions of the light oil and flue gas that result in oil swelling, vaporisation and near-miscible conditions.

Could this application that requires no air separation technology represent a potential threat to the industrial gas industry?