At the intersection of “Drill More” and “Produce More” lies an economic conundrum for Permian producers. Yes, there are still plenty of good prospects to drill—but there is also plenty of oil left in existing wells if drilling isn’t followed up with further treatments. Balancing the economics between the two is getting more interesting as new EOR methods get more effective, more cost-efficient, and more eco-friendly.
Three companies active in the Permian are offering three widely divergent systems that check those kinds of boxes. Two have been certified by the Texas Railroad Commission as applicable to Statewide Rule 50’s H13 severance tax credit. Under this rule, producers using thus-certified environmentally friendly EOR treatments on a continual basis can save 50 percent off their severance taxes for 10 years, with savings starting after one full year of using an approved treatment. Severance taxes are imposed on the extraction of non-renewable resources from state lands.
Locus BioEnergy’s AssurEOR STIM treatment was listed as H13 compliant in 2020. And on November 8, it received another environmental certification, this one from nationally-recognized testing, inspection, and certification company SGS. SGS has verified that the treatment complies with ISO-14064, meaning that it meets international standards for lowering carbon intensity, while at the same time boosting production. Locus states that this is the “first EOR technology certified to multiple standards that reduces the negative environmental impact of oil and gas production….”
How to Be Certified
For the SGS certification, the process must not only be green—and AssurEOR STIM is made with 100 percent renewable raw materials—it must also improve production. The latter was determined using public-record results over the time period between 2017 and 2021, said the company’s marketing manager, Mary Swanniutt. In addition, she says the procedure is cost-effective.
Swanniutt notes that not all green solutions on the market are cost-effective. “In the oilfield, green chemistry often has the reputation of low performance and high cost,” she said. “[But] Our biosurfactant technology, including AssurEOR STIM, enables operators to achieve production objectives with lower dosage rates and faster returns—plus the added advantage of minimizing their environmental footprint.”
Getting this to promote earth green as well as balance sheet black comes from the product’s blend of specialized biosurfactants, which lower interfacial tension and reduce the capillary pressure that traps oil and leaves the near-wellbore formation preferentially water-wet, she explained. “AssurEOR STIM also effectively removes scale and organic deposits, [and] increases oil permeability in the production zone to improve overall hydrocarbon recovery.”
The product is applied using what’s known as a “huff and puff” system. To explain, EOR for conventional wells can easily utilize one abandoned well to inject water or CO2, to reach all wells in an area. But because shales (unconventional) are tight formations, there is little communication of fluids between wells. Hence the need to treat each one individually by stopping production, pumping in an EOR solution designed to release trapped oil, then leaving it shut in for days or weeks while the solution works. Upon reopening the well, a successful treatment boosts production beyond what it had declined to before the treatment.
Swannuutt said that the Locus treatment requires less dosage than many conventional types, and that reduces the cost both of the product and the application. It is injected with a single, standard-power pump truck and the well is shut in for just 3-5 days. In addition to huff and puff treatments for unconventional wells, it has been added, she said, to waterfloods for continuous injection, with similar success.
She added that the injection procedure’s small footprint reduces the use of water, diesel, sand, and chemicals, all of which are important parts of its environmental advantages.
In the Field
A case study from the Delaware Basin’s Bone Spring formation is among the system’s success stories.
The well in question had been completed using plug-and-perf parameters, with multiple perforation clusters in each stage. As happens with shale wells, its production had declined from more than 1,000 bpd to about 25 bpd. As the operator was interested in seeing if AssurEOR STIM could raise that number, Locus technicians recommended pumping 5,000 barrels of water with a 5 percent concentration of STIM. They injected about one barrel of that mixture per foot of lateral, the lateral being 4,700 feet long.
The treatment took about 14 hours, during which the well was shut in. After returning to production, it started back at 100 bbl/d and slowly declined after that. Swanniutt noted that, over five months, production averaged 54 bbl/d, which is a 115 percent increase over the pre-treatment level.
Another way to stimulate production in an H13 certifiably bio-friendly way is to shake it loose without any chemicals. That’s the premise behind Zencor’s elastic wave stimulation tool, which generates seismic waves designed for “dislodging oil that is outside of the conventional flowpaths,” said the company’s president, Bill Wooden. “During and after classic wave stimulation, the engaged oil droplets move into the flowpath and displace water production. This, in effect, increases oil production and lowers water production.”
To some minds, using seismicity to increase oil production might seem counterintuitive, given all the concerns about SWD-induced earthquakes in the Permian Basin. But Wooden assures that these waves are undetectable. He cited studies done by Dr. Mohammed Irfan at the University Teknologi Petronas in Perak, Malaysia, which found that this treatment “appears capable of increasing efficiency of oil production in depleted reservoirs without [any] damaging seismicity effects, such as micro-earthquakes.”
Zencor’s is another low-cost treatment because it involves only the installation of a single tool in an abandoned well to treat a significant area. Also, the company has made it possible to install and use the tool at no cost during the first year as the producer waits to receive their first severance tax discount. The first payment to Zencor can come out of the severance tax discount, meaning, in a sense, the producer has no out-of-pocket costs for the tool, Wooden explained.
How Does It Work?
As stated, the elastic wave stimulation tool is installed in an abandoned well near the middle of the field to be treated. Installation takes about three hours. The system is powered by a standard pumping unit. It involves two plungers of dissimilar sizes, which squeeze a certain amount of water between them, building up pressure. When that pressure evacuates the smaller plunger as it exits the lower barrel, it releases high energy elastic waves in milliseconds. The cycle repeats at six strokes per minute, and each stroke’s wave lasts about 10 seconds, generating 2 megawatts of power.
Wooden reports the waves cover about a 1.4 mile stimulation radius, across “disparate flow barriers, both in the vertical plane over multiple zones and in the horizontal plane across multiple planes,” making a single tool viable for as many wells as there are in that space. He points out that this system involves no shutting in of individual wells, no chemicals or pumps, no surface or underground water pollution, and no reservoir damage. A single tool typically runs for about two years before needing replacement—which is done at no additional cost to the producer under the rental agreement.
Background of the Seismic Shift
Research for this technology began in the mid-1990s in Russia’s Samotlor field, the world’s sixth-largest, by Dr. Sergey Kostrov. He came to the United States in 1998, met Wooden, and the pair formed Zencor’s predecessor, Applied Seismic Research Corporation (ASR). Since 2000, Wooden says the company has deployed more than 200 of these tools “in carbonates, diatomites, sandstones, and shales in Texas” and in oilfields around the world. Wooden notes that testing and development on the tools continues.
In the Field
In the San Andres Carbonate, a field’s historic oil decline rate was calculated at 14 percent, but under the elastic wave EOR treatment it dropped in half, to 7 percent. Oil production increased by 215 bbl/d, a 45 percent uptick (see chart). Total oil recovered over a seven-year period was 254,000 bbl, giving the company a severance tax credit of $3.3 million, in addition to revenue from the greater oil production.
Shale Ingenuity’s Liquids-Based Treatment
This company invented, developed, and patented two novel shale EOR methods, said Shale Ingenuity founder and CEO Robert Downey. Using a tuned liquid hydrocarbon solution in a “huff and puff” cycle, the methods—SuperEOR and UltraEOR—have seen production increases as high as 500 percent over the first five years of EOR operation, and up to 700 percent over 10 years.
These systems’ liquid hydrocarbons offer several improvements over many previous systems, which inject natural gas CO2, Downey said. “They recover far more oil, much faster, and at a much lower cost; they use a closed loop system in which the wells are either on liquid solvent injection or are flowing back gaseous solvent with produced oil and gas; the solvent is completely recoverable during each flowback or puff part of the cycle; and artificial lift is not needed. Plus, they can reduce GHG emissions and water production by up to 75 percent.”
The exact composition of the solvent is adjusted to fit the specs of the formation and its oil, measures that are determined with the use of compositional reservoir stimulation and core testing, Downey explained.
UltraEOR’s added feature is that it creates a large number of shear fractures at the beginning, which improves the solvent’s contact with the shale rock matrix. That, said Downey, “enables much greater oil recovery,” which can reach the stated 500 percent increases.
The Back Story
Downey recalled that college-days lab work combined with real-world research showed him that EOR projects using liquids-rich natural gas did better than those using lean gas. From there he narrowed down which hydrocarbon components were most efficient at extracting oil from shale.
Deep research across North American shales, including the Permian, taught Downey that “the solvent solution must be tuned to the specific characteristics of the shale formation and the fluids in the formation in order to optimize oil recovery. Plus, it enables far more oil recovery, faster, than pumping natural gas, CO2, or untuned mixtures of hydrocarbon liquids.”
Better Early than Late
Many shale producers wait until the decline curve is near the bottom before applying any EOR treatment, but Downey says they could be sacrificing production that way. “If the process is implemented earlier, the incremental EOR oil is produced earlier, improving the overall NPV,” he said. Also, early implementation would “mitigate movement of the injected solvent into fractures and reduce water production.” In the Permian that is key because shales there have extensive natural fractures that are usually filled with water.
So, “Implementing SuperEOR earlier will help contain the solvent injection into the near-wellbore shale matrix and reduce the water production, because the higher reservoir pressure will help contain the process to the well drainage area.
All three companies are continuing to experiment and improve their recovery methods. But the heyday of EOR in the Permian lies in the future, as it is the one North American field that still offers significant undrilled production areas. So many Permian E&Ps are focusing on new prospects. But EOR companies continue to operate where they can, while believing that one day the Permian may ascend the EOR ladder of priority.
Paul Wiseman writes in the oil and gas sector. His email address is firstname.lastname@example.org.