Published by the DTI Oil & Gas Directorate for the reservoir engineering and IOR community in the UK.
Send comments on this issue and contributions for next issue to iornewsletter@senergyltd.com by 15 August 2002.

Introduction

Welcome to the second issue of the IOR eNewsletter. The first issue has been well received, as borne out in David Hughes' analysis of the number of 'hits' and 'visits' made to the site. In summary we have had around 150 visits per week, which is good going for a first issue. The majority of the hits have been from the UK, with a fair proportion from Norway, and USA. Let's hope the future issues will be equally popular.

In the previous issue, the "Talking Points" section had Prof Anton Ziolkowki's emotive article on the lack of funding for geophysical research in the UKCS. Anton estimates some £10 million/year as the amount needed for geophysical research for Exploration in the Atlantic Margin and Location of By-passed Oil and Gas in Existing Fields. This is a very large amount by UK standards and happens to be very similar to the total funding that goes annually into all R&D in the upstream oil and gas sector, from the government and industry combined. As Anton observes the risks involved are too great for the oil industry and they can better invest the funds elsewhere in the world, and for this reason the DTI should step in and bear the entire cost. It can also be argued that the same risk/reward scenario holds for the government as well and tax payers' funds may be better employed elsewhere. If someone in the DTI were to attempt to make a business case for this expenditure, on a sole risk basis, he would be on extremely shaky ground.

Nevertheless, there are several avenues through which research in this area is presently conducted, albeit on a more modest scale. There are the JIP consortia - the Rockall Margin consortium is one of them. NERC's Ocean Margins LINK thematic programme can be a route for funding. The SHARP programme may co-sponsor such JIPs on recommendation by its Advisory Committee. The Licensees themselves sponsor exploration R&D, some within their own organisations, but most carried out by various contractors and universities. This R&D will be tax deductible and may also qualify for a R&D tax credit leading to further reduction in tax.

The tax incentives issue will be of interest to other parts of the oil sector as well and there has been a spurt of queries on account of the tax changes announced recently. Admittedly this is a complicated topic, and anyone interested in investigating as to what R&D will qualify for tax credits is advised to visit the website:

http://www.inlandrevenue.gov.uk/manuals/oto/rfctmanual/rf032600.htm

"Not hydrocarbon gas!" is the message that is coming through with respect to miscible gas injection and WAG IOR projects in the North Sea. Hydrocarbon gas is now a valuable and highly marketable commodity that such IOR projects will need to look for alternative gases. CO2 is probably the front runner for this as it is miscible in most North Sea oils at reservoir conditions, and is also favoured by our environmental colleagues who would like to see as much of it as possible put away underground. Of course it is still early days and much work has to be done and is being done on all fronts in order to make it an attractive option.

After attending the SPE/DOE IOR Symposium in Tulsa OK this April, I took the opportunity to mosey across to West Texas and New Mexico to visit Phillips' East Vac field and Kinder Morgan's SACROC unit, along with two colleagues from Sintef (Erik Lindeberg and Arild Moen). These fields have been under CO2 flood (WAG schemes) going after residual oil, since the mid 1980s and there is a wealth of practical experience to be tapped. The question that came to mind straightaway was, how are we going to get all this extra plant for CO2 injection onto an offshore platform? Erik, who has worked on this subject for many years, assures me that the more recent designs are much smaller and with some further R&D it would be quite feasible to retrofit them on an offshore platform. It was interesting to note that carbon steel is used for the tubulars in the producing wells. In the case of the injection wells the individual CO2 and water lines are carbon steel, but after the dual isolation valves the common lines into the well are of stainless steel. The long term integrity of the casing cement under reservoir conditions with CO2 present is of concern to the European bodies that are interested in putting away large quantities of CO2 in underground reservoirs. The fields we visited have not had any problems with the cements they use, but as we are looking at very long time spans (thousands of years?) the subject obviously needs careful study.


The figure shows a typical injection well in SACROC. The carbon steel water and CO2 injection lines can be seen in the foreground. The stainless steel common line can be seen alongside operations engineer Becky Larkin who is taking a reading of the background CO2 level at the christmas tree

At this juncture I would like to draw your attention to the DTI IOR Dissemination Seminar, planned for 25th June 02, in the Aberdeen Exhibition and Conference Centre. In addition to some interesting presentations on very current IOR topics there will be a special thematic session on CO2 EOR with five presentations on the subject. We look forward to meeting many of you at the IOR seminar in Aberdeen.

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