Future for oil and gas production
Some experts see today’s high oil prices as cyclical, and likely to return to more reasonable levels. On the other hand, it seems maybe 15 years ago, when it was difficult to have cheap oil reach $30-35/barrel, compared to today and under $100/barrel – when the producers which I worked for (some years ago) said they needed prices to be at least the mid $30 per barrel of oil to make economics favourable for EOR.
Today we are at truly much higher levels, and perhaps high oil prices will be truly sustained. Oil prices, in any event, are at a point and will be at a point in the long-term, which should precipitate viable economics for the capital investment and returns necessary to make many EOR projects economically viable, assuming all other physical data work for the project in question. Again, traditionally EOR has not been the domain of the CO2 companies, due to the oil companies controlling and operating these projects, which are only the domain of the oil producers, not the gas companies.
However, some of the government-sponsored awards for tests and pilot operations have included some industrial gas concerns. As mentioned earlier, the frac projects are the domain of the industrial gas companies, since they supply the CO2 commodity, along with distribution and portable storage – and require the expertise of the service companies for compression and application. They will continue to work with the oilfield companies to achieve the ultimate end – that being, selling CO2.
CBM has a way to go in terms of being applied on a successfully-broad approach; and have better definitions available to the coal beds under consideration and treatment. Long-term, both EOR and CBM will continue to be excellent forms of carbon sequestration – and as the pressure mounts for America’s energy independence and a need to reduce & sequester carbon emissions, these applications will only grow.
The same applies to all other regions of the globe where imported and scarce oil are such a valuable commodity, along with the need to sequester carbon. Over the decades, with my work in the merchant trade and as a consultant, frac has been a market which has expanded and contracted according to natural gas requirements and selling prices; however, the application will always be around, and gain greater favour, when economics and demands for natural gas strengthen.
Today shale gas is in favour, along with horizontal drilling, and growth in shale gas continues to strengthen, at least for the time being. It is felt this source of natural gas will be truly bountiful and so, in the long-term, sufficient natural gas supplies will be available.