Research PREVIEW for

Strategic Analysis of North American Enhanced Oil

Recovery Market

Focus on Ultimate Rather Than Immediate

Oil Recovery Crucial for Long-term

Success in North American EOR Market

Key Findings

Source: Frost & Sullivan

• Seventy five percent of oil reserves still exist after primary and secondary oil recovery methods are

employed. This can be extracted through enhanced oil recovery.

• There are three main methods of enhanced oil recovery: gas injection, thermal recovery and

physiochemical methods.

• During the base year (2013), thermal recovery contributed (55%), gas injection (43%) and chemical

injection (2%) in terms of volume in North America.

• Enhanced oil recovery services was valued at US $17.13 billion in 2013 and is expected to grow at a

compound annual growth rate (CAGR) of 22.4% and reach US $70.4 billion by 2020.

• Some of the main drivers for this market include higher oil price, depleting oil wells, focus on ultimate

recovery, and R&D spend on new technologies.

• Some of the restraints include maturity in current new technologies, global economic concerns,

increasing legislations, infrastructure development, and non-availability of suitable injection fluid.

• North America has 450 billion barrels of remaining oil in place (ROIP) after primary and secondary, of

which 84 billion are technically recoverable.

• It is observed that Canada will be a promising market by 2020 mainly due to its oil sands, bitumen

and depleting conventional wells.

• Gas injection EOR market is expected to reach US $18.6 billion by 2020 growing at CAGR of 26.4%.

• This growth is mainly due to large scale development in CO2 capture, storage and sequestration and

the development of pipelines for transportation.

Economic Feasibility Analysis Methodology

EOR

Economic

Model

Dir

ec

t C

os

t

• Drilling & Completion Costs

• Rework Costs

• Injection Fluid Costs

• CAPEX

• O&M/ S&G Expenses

• Recycle Costs

Well

C

ha

rac

teri

sti

cs

• Permeability

• Porosity

• Interfacial Tension

• Viscosity

• Temperature

• Reservoir Type

• Salinity Fe

de

ral L

aw

s • Royalty

• Production Taxes

• Income Taxes

• Any other state taxes

• Carbon Credit Discounts

• Prevailing Oil Price

• Discount Rates

• Gas Injection EOR

• Thermal Injection EOR

• Physiochemical EOR

Net Present Value

Break Even Oil Price

Utilization Factor

Economic Feasibility Analysis and Discussion

Sample Calculation of Net Income for EOR

Current Crude Oil Price USD/bbl 100.0

Less Royalties 17.5 %

• Production Taxes (A) 5 %

• Injection fluid OPEX (B) 13.5 – 30.0

• Recycle Cost (C) 12.0

• Other OPEX (D) 5.0 – 17.1

• O&M costs/G&A (E) 8.00

• Amortized CAPEX (F) 0.25 – 8.1

Total Costs (Add A to F) (G) 65 – 85

Net Cash Margin (100.0-G) 35 – 15

Income Tax (35%)

Net Income USD/bbl 22.75 – 9.75

• Here each cost components will be discussed in

detail with regional cost variation.

• The various cost components are listed below

o Injection fluid OPEX

o Other OPEX

o Amortized CAPEX

o Royalties (17.5% of crude oil price)

o Production Tax and Ad valorem Taxes (5%)

o O&M costs and G&A costs

o Income tax

• The economic feasibility analysis is based upon

the prevailing crude oil price.

• The net cash margin is calculated after deducting

all the cost components mentioned above.

• Royalties production tax and income tax would

remain same, as decided by the federal law.

• Injection cost, recycle cost, other OPEX and

CAPEX would vary depending upon the well

condition and location of the field.

Development in New Technologies

0.5

1.5

3.5

4

5

6.2

10

0 2 4 6 8 10

Field Selection

Process Selection

Geologic studies

Design Parameters

Pilot Testing

Implementation

Initial Response

• The graph shows that most EOR techniques are

either in R&D stage or in demonstration stage.

• Few technologies like hybrid process, microbial,

nitrogen or carbon dioxide foam and crude upgrading

(catalyst) are at a very nascent stage of development.

• It takes 10 years from field selection to get the initial

response in crude oil production.

• 60 percent of the time is consumed in initial

development of technology, Reservoir simulation and

field test.

• According to our estimate it might take another 5 to

10 years for the new technologies to reach their

maturity stage and yield results in the form of

incremental crude oil production.

Reservoir Characteristics for Enhanced Oil Recovery

Projects

Parameters for Selection of EOR Methods

Type of EOR Reservoir Type Oil Gravity API Depth (ft.) Permeability

(mb) Temperature (oC)

CO2 – EOR Sandstone or

Carbonate >25 >2000 NC NC

Hydrocarbon Sandstone or

Carbonate >35 >4000 NC NC

Nitrogen Injection Sandstone or

Carbonate > 35 > 4000 NC NC

ASP Flooding Sandstone > 20 upto 35 > 9000 >10 upto 450 >93 upto 26

Surfactant EOR Sandstone > 20 upto 35 > 9000 >10 upto 450 >93 upto 26

Polymer Flooding Sandstone 20 – 25 5000 – 6000 500 – 5000 > 93 to 60

Steam Injection High porosity

Sandstone > 8 to 13.5 1500 to < 4500 > 200 to 2540 NC

In – Situ High porosity

Sandstone > 10 to 16 3500 to < 11500 > 50 > 37 to 57

SAGD Mineable Tar

Sand 7 to 11 NC NC

Reservoir Characteristics for Enhanced Oil Recovery

Projects (continued)

Parameters for Selection of EOR Methods

Type of EOR Salinity

PPM Porosity % Oil Viscosity (cp)

Interfacial

Tension dyne/cm

Oil Saturation

(% PV)

CO2 – EOR Low 8 – 45 < 15 - > 20 upto 55

Hydrocarbon Low 22 – 32 < 3.0 - >30 upto 80

Nitrogen Injection Low 22 – 32 < 0.4 upto 0.2 - > 40 upto 75

ASP Flooding <20,000 20 – 35 < 35 upto 13 - > 35 upto 53

Surfactant EOR <20,000 20 – 35 < 35 upto 13 - > 35 upto 53

Polymer Flooding <20,000 20 – 35 0.5 – 100 or greater 10-3 >50 to 80

Steam Injection NA 30 – 65 4,500 to < 200,000 - > 44 to 66

In – Situ NA 18 – 35 1200 to < 5000 - > 50 to 72

SAGD NA 30 – 65 Zero cold flow - > 8 wt % sand

Executive Summary — CEO’s Perspective

2

Carbon dioxide injection techniques will be

the biggest contributor in North America, due

to its abundance availability and focus on

carbon capture, storage and sequestration.

3

Thermal EOR would continue to be more

prominent in Canada because of oil sands

and mining of bitumen, where as in US its

share would decrease.

4 Included in full research access.

1

North America will continue to be a strong

market in enhanced oil recovery services, as

conventional wells continue to deplete after

primary and secondary recovery.

Source: Frost & Sullivan

The Full Analysis Features the Following Content

Section Slide Number

Executive Summary 6

Market Overview 11

Challenges and Opportunities in Enhanced Oil Recovery 18

Economic Feasibility Analysis of Enhanced Oil Recovery Methods 20

Technological Advancement and Selection Criteria for various EOR Methods 26

• Development of New Technologies in Enhanced Oil Recovery

• Selection Stages in Enhanced Oil Recovery Technologies

• Reservoir Characteristics for Enhanced Oil Recovery Projects

Total Enhanced Oil Recovery Market -

• Drivers and Restraints 32

• Forecasts and Trends 40

• Value Chain Analysis of Enhanced Oil Recovery 52

Thermal Recovery Segment Analysis 54

• Forecast & Trends

• On – Going and Planned Projects in North America

The Full Analysis Features the Following Content

(continued)

Section Slide Number

Gas Injection Segment Analysis 61

Forecast & Trends

On – Going and Planned Projects in North America

Chemical Injection Segment Analysis 73

Forecast and Trends

On – going and Planned projects in North America

The Last Word 81

Appendix 84

Key Questions the Analysis Answers

Source: Frost & Sullivan analysis.

What is the EOR service market? Is the market growing? How long will it continue to grow, and at

what rate?

Why is enhanced oil recovery required? How will it contribute to future of crude oil production in

North America?

What is the value chain involved in EOR service market? How is the service delivered to the client?

At what price of crude oil will these type of EOR techniques will be feasible and how does the

economic model vary with respect to various EOR methods?

What is the selection methodology for different EOR techniques? What are the reservoir properties

suitable for different type of EOR techniques?

Total Enhanced Oil Recovery Market: Key Questions the Analysis Answers, North America,

2010-2020

Interested in Full Access? Connect With Us

Ariel Brown Corporate Communications – North America

(210) 247.2481

ariel.brown@frost.com

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Research Authors

Mahesh

Radhakrishnan

Industry Analyst

Energy &

Environment

Chirag Rathi

Principal

Consultant

Energy &

Environment

Roberta Gamble

Senior Partner

Energy &

Environment

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