Richardson Announces 10 New Projects to Restart Government-Industry Oil Field Demonstration Program

Fulfills Commitment to Assist Independent Companies Adopt Better Technologies

Energy Secretary Bill Richardson today named 10 projects to spearhead a new wave of technology improvements that could keep many of America's oil fields pumping and, if successful, produce millions of barrels of domestic crude oil that might otherwise be abandoned.

"I am announcing 10 projects that can open the door nationwide to as much as 150 million barrels of crude oil that are at risk of being left in the ground," Richardson said. "Technology assistance was at the core of many of the initiatives we announced in February, and while prices have rebounded, better and lower-cost technology can still mean the difference between continued production or premature shut-in of thousands of U.S. oil wells."

Richardson said the department plans to provide $23 million to the projects and expects to negotiate agreements from the proposers to contribute an additional $46 million. The projects help carry out a commitment made this past February to help sustain the production capability of the U.S. petroleum industry in the wake of unprecedented price swings.

The 10 winning projects will expand a program begun by the Energy Department in 1992. The Reservoir Class Field Demonstration Program, which originally co-funded 29 field projects, has encouraged many domestic oil producers to adopt new technologies. Like the earlier effort, today's projects will take place in geologic classes of U.S. reservoirs that still contain large quantities of crude oil but face an imminent risk of being abandoned.

The 10 winning projects, selected from 27 proposals, were submitted by:

• Ensign Operating Company, Denver, CO, for a project in Texas County, Oklahoma;

• Binger Operations, Oklahoma City, for a project in Caddo County, Oklahoma;

• Venoco, Inc., Santa Barbara, CA, for a project in the California offshore South Ellwood Field;

• University of Alabama, Tuscaloosa, for a project in Choctaw and Clarke Counties, Alabama;

• Luff Exploration Company, Denver, CO, for a project in Bowman County, North Dakota;

• Michigan Technological University, Houghton, MI, for a project in Isabella County, Michigan;

• The University of Tulsa, Tulsa, OK, for a project in Lincoln County, Oklahoma;

• Plains Illinois, Inc., Bridgeport, IL, for a project near Bridgeport, Illinois;

• University of Kansas Center for Research, Inc., Lawrence, KS, for a project in Russell, Kansas;

• Utah Geological Survey, Salt Lake City, UT, for a project in Utah's Paradox Basin.

"The oil industry in the United States is increasingly an industry of smaller companies, many of which are family-owned businesses. These companies account for nearly half the oil produced in the lower 48 states," Richardson said. "Our support will help them develop and deploy technologies that otherwise would probably never make it into the oil field, certainly not on a widespread basis. Our hope is that these projects will show hundreds of other small companies ways to keep their wells flowing."

In addition to heading up five of the 10 projects, independent companies will be partnering with universities and state agencies in most of the others. In all, 23 independent oil producers, consultants, and service companies are involved in the projects.

According to projections contained in the winning proposals, as much as 40 million barrels of additional crude oil will be produced by 2007 as a direct result of the projects. This production alone, the Energy Department estimates, could return more than $100 million in federal taxes and $50 million in state taxes, more than offsetting the federal cost of the program. The real payoff, however, could come if other producers adopt the tools and techniques demonstrated in the projects.

For more information, contact:
Hattie Wolfe, U.S. Department of Energy, Office of Fossil Energy Headquarters, 202-586-6503; e-mail address: hattie.wolfe@hq.doe.gov

Technical Contact:
Herb Tiedemann, Technology Transfer Manager, National Petroleum Technology Office, 918-699-2017; e-mail address: htiedema@npto.doe.gov

Project Details:

The Reservoir Class Revisit program was open to proposals for light and heavy oil recovery in the three geologic classes of reservoirs that comprised the initial program. Together, these classes represent around half of all the remaining recoverable crude oil known to exist in the United States. The three classes are:

• Class I: Fluvial Dominated Deltaic Sandstones. These reservoirs were formed from ancient river deltas and contain more than 28 billion barrels of crude oil.

• Class II: Shallow Shelf Carbonates. These reservoirs were formed from shallow ocean shelves now found as far north as the Canadian border. They originally contained more than 68 billion barrels of crude oil, more than 48 billion barrels of which still remain at risk of being abandoned.

• Class III: Slope and Basin. These reservoirs were created from the sediment deposited in deep ocean basins and are estimated to have once contained nearly 60 billion barrels of crude oil. Most of the remaining 44 billion barrels are in danger of being abandoned.

The new round of field projects include:

• University of Alabama - Tuscaloosa, AL, teaming with two independent companies and three other universities, will apply an integrated, multidisciplinary study of the Womack Hill oil field in Choctaw and Clarke Counties, Alabama, and use the knowledge gained from the reservoir characterization, data integration, and advanced seismic, drilling and other technologies to improve oil flow through the reservoir and extend the productive life of the field.

  Project Team: University of Alabama, Pruet Production Company, University of Mississippi, Mississippi State University, Wayne Stafford & Associates, Texas A&M University.

  Project Title: Improved Oil Recovery from Upper Jurassic Smackover Carbonates Through the Application of Advanced Technologies at Womack Hill Oil Field, Choctaw and Clarke Counties, Alabama, Eastern Gulf Coastal Plain (Class II Reservoir).

  Project Description: The University of Alabama and its research team will conduct a detailed study of reservoir fluid flow, pressure and rock variability problems that restrict oil production in the Womack Hill oil field, near Butler, Alabama. Technologies to be employed include advanced reservoir characterization, data integration, neural networks, 3-D stratigraphic and structural modeling, 3-D seismic imaging, and infill drilling. Field-scale advanced reservoir management will implement techniques to improve oil flow through the reservoir, increase profitability and sustain production in the field.

  The researchers will also apply a variation of a microbial recovery process, termed "immobilized enzyme" technology. In the Womack Hill field, the researchers will provide only enough nutrients to keep the reservoir's indigenous microbes in a sustained, non-reproducing state. When treated with ethyl alcohol, the microbes produce acetic acid, which dissolves the carbonate rock, increasing pore space and connectivity in the formation and facilitating the flow of oil through the reservoir.

  Project Funding: DOE will provide $3 million in federal funding for the six-year project, and the University of Alabama will provide $5 million in cost sharing. The project contact is Dr. Ernest Mancini, 205-348-4319.

• Ensign Operating Company - Denver, CO, with consultants and a geophysical service company, will apply advanced seismic characterization of variations and compartmentalization in reservoir rock to identify optimal fluid flow paths that operators can use to improve waterflood sweep efficiency in the Eva South Unit, Texas County, Oklahoma.

  Project Team: Ensign Operating Company, Western Geophysical, Miller Consulting Services

  Project Title: Advanced Reservoir Characterization and Development Through High-Resolution 3C3D Seismic and Horizontal Drilling: Eva South Morrow Sand Unit, Texas County, OK (Class I Reservoir).

  Project Description: Ensign Operating Company and its research associates will use an advanced reservoir description and development technique comprising three-dimensional seismic surveying methods to improve waterflood sweep efficiency and increase oil production in the Eva South Field in Texas County, Oklahoma.

  The team will apply a potentially lower cost approach to multi-component seismic technology. Multi-component seismic typically measures sound waves both in the direction they are moving (compressional, or p-waves) and at right angles (shear or s-waves). The Ensign team will apply a technology called "three component, three dimensional" (3C3D) seismic technology in which only one of the wave components will be measured directly and the others calculated using sophisticated mathematical algorithms. This approach is expected to provide higher resolution images without the high costs that are often required to detect and measure both types of seismic signals.

  Using the seismic data, the team will determine where horizontal wells should be drilled to provide the most efficient fluid-flow zones and maximize the waterflood's ability to move oil to production wells. Ensign anticipates that three wells will be sufficient to test the effectiveness of the seismic characterization technique which, if successful, could have widespread application throughout the oil industry.

  Project Funding: Ensign Operating will contribute $1.1 million in cost sharing to the one-year project, and DOE will provide federal funding of $640,000. The Ensign Operating contact is David Wheeler, 303-293-9999.

• Michigan Technological University - Houghton, MI, will work with a Michigan independent company and another Michigan university to apply advances in 2-D seismic, geochemical, horizontal drilling and logging technologies to obtain detailed descriptions of reservoir conditions that can facilitate recovery of new and bypassed oil in the Vernon Field, Isabella County, Michigan.

  Project Team: Michigan Technological University, Western Michigan University, Cronus Exploration Co., LLC.

  Project Title: Using Recent Advances in 2-D Seismic Technology and Surface Geochemistry to Economically Redevelop a Shallow-Shelf Carbonate Reservoir, Vernon Field, Isabella County, MI (Class II Reservoir).

  Project Description: Michigan Tech and its research associates will develop and implement an economical and environmentally sensitive plan for recovery of hydrocarbons from an abandoned shallow-shelf carbonate reservoir in Vernon Field, near Mount Pleasant, Michigan. The project will combine recent advances in 2-D seismic and surface geochemistry with multilateral horizontal drilling, coiled tubing technology and well logging to determine reservoir structure, rock alteration and variability for efficient location and recovery of new and bypassed oil.

  Project Funding: Michigan Tech will contribute $3 million in cost sharing for the five-year program, and DOE will provide federal funding of $1.5 million. The Michigan Tech contact is Dr. James R. Wood, 906-487-2531.

• Luff Exploration Company - Denver, CO, and a team of consultants and researchers will use an intelligent computing system to establish relationships between seismic, production, and geological data in the Red River Formation, Bowman County, North Dakota, to locate optimal drilling targets.

  Project Team: Luff Exploration Company, Energy & Geoscience Institute, Mark Sippel Engineering, Inc., Avalon Consulting, Inc.

  Project Title: Intelligent Computing System for Reservoir Analysis and Risk Assessment of Red River Formation, Williston Basin, North Dakota (Class II Reservoir).

  Project Description: Luff Exploration Company and its research consortium will develop an intelligent computing system and apply it to reservoir-production modeling for analysis of seismic and geologic data to locate and produce oil reserves that may not be targeted with existing methodologies. The intelligent computing system will be trained from 3-D and 2-D seismic, lithologic and production data obtained in the Amor Field near Bowman City, North Dakota. Demonstration wells will be drilled near existing producing accumulations under primary depletion. Using this technology to identify relationships between 3-D seismic, production, geological and petrophysical data in the Red River Formation, optimal drilling targets can be located through prediction of stratigraphic development, reservoir compartmentalization, and hydrocarbon entrapment.

  Project Funding: Luff Exploration will contribute $4 million in cost sharing in the three-year project, and DOE will provide federal funding of $2.3 million. The Luff Exploration contact is Kenneth D. Luff, 303-861-2468.

• Binger Operations - Oklahoma City, OK, with two other companies, will assess nitrogen flooding as a recovery process in the East Binger Unit, Caddo County, Oklahoma, and combine detailed reservoir description and computer simulation to locate horizontal wells that can improve nitrogen flood performance by reducing gas breakthrough and cycling.

  Project Team: Binger Operations, LLC, Canyon Oil & Gas Company, International Reservoir Technologies, Inc.

  Project Title: Improved Miscible Nitrogen Flood Performance Utilizing Advanced Reservoir Characterization & Horizontal Laterals in a Class I Reservoir - East Binger (Marchand) Unit (Class I Reservoir).

  Project Description: Binger Operations and its research associates will assess the use of nitrogen as a widely available, cost-effective injectant for miscible floods in the East Binger Unit, Caddo County, Oklahoma. Detailed reservoir description and computer simulation will be used to design the nitrogen flood patterns, and also to locate horizontal wellbores, which utilize the natural forces of gravity segregation and channeling to reduce gas breakthrough and cycling. It is expected that the demonstration in the East Binger Unit of the Anadarko Basin in Oklahoma will lead to implementation of nitrogen injection projects in areas without readily available carbon dioxide sources.

  Project Funding: Binger Operations will contribute $6.7 million in cost sharing to the five-year project, and DOE will provide federal funding of $3.2 million. The Binger contact is Teresa Muhic, 307-587-2445.

• Venoco, Inc. - Santa Barbara, CA, with the University of Southern California and several service companies, will determine the nature of the field-wide fracture patterns and the reservoir fluid flow system in the California offshore South Ellwood Field for optimal location of new wells and downhole water separation units that can reduce water disposal costs by controlling aquifer inflow.

  Project Team: Venoco, Inc., University of Southern California, Baker-Hughes-Centrilift, Schlumberger, Inc., Dynamic Graphics (Class III Reservoir).

  Project Title: An Advanced Fracture Characterization and Well Path Navigation System for Effective Re-Development and Enhancement of Ultimate Recovery from the Complex Monterey Reservoir of the South Ellwood Field, Offshore California

  Project Description: This project is a pilot application using downhole water separation units attached to electric submersible pumps for improving field economics and minimizing water disposal in the South Ellwood Field, offshore Santa Barbara, California. Productivity in the field is primarily affected by the development, orientation and extent of the faulting and fracturing, and the amount of water it introduces into the reservoir. Venoco and its research consortium will identify the field-wide fracture patterns and the reservoir fluid-flow system to establish control of aquifer inflow. An innovative fracture network reservoir simulator will be developed to monitor and manage the aquifer's role in pressure maintenance and water production. The knowledge gained from the reservoir study and simulation will assist in designing the location and path of new wells and implementation of downhole water injection into the aquifer simultaneous with oil production. Numerous fields producing from the Monterey and analogous fractured reservoirs, both onshore and offshore, will benefit from the methodologies developed in this project.

  Project Funding: Venoco will contribute $5.1 million to the five-year project, and DOE will provide federal funding of $3.3 million. The Venoco contact is Gary Orr, 805-884-7460.

• The University of Tulsa - Tulsa, OK, along with the University of Houston, consultants and service companies, will employ core and well log analysis to determine reservoir rock variation and compartmentalization in the West Carney Field, Lincoln County, Oklahoma. The team will assess "huff-n-puff" gas injection techniques as a secondary recovery process and test water production control technologies.

  Project Team: The University of Tulsa, Marjo Operating Company, James R. Derby and Associates, F. Joe Podpechan, University of Houston

  Project Title: Exploitation and Optimization of Reservoir Performance in Hunton Formation, OK (Class II Reservoir).

  Project Description: Wells producing from the Hunton reservoir in the West Carney Field, Lincoln County, Oklahoma, have exhibited rapid fall off in oil recovery throughout the history of the field. The University of Tulsa and its research consortium will analyze the anomalous production characteristics of this reservoir to determine techniques that can optimize recovery. Researchers will investigate the primary production mechanism using core analysis, and cyclic "huff-n-puff" gas injection will be assessed as a secondary recovery mechanism. Modern geological and statistical methods and other sophisticated technologies will be used to determine the variability of reservoir strata, fluid flow characteristics, and the influence of fractures.

  The research team will also address the problem of controlling water production. Water brought to the surface must be disposed of, a costly process involving storage, physical separation and reinjection with the increased risk of surface contamination. New, compact versions of water separation equipment may provide significant cost reductions and reduced environmental risk. The effectiveness and cost savings of compact surface separation technology will be compared to downhole equipment which separates and reinjects water at the producing horizon. This project will help resolve some of the technical challenges still confronting the downhole technology.

  Project Funding: The University of Tulsa will contribute $9.4 million in cost sharing to the five-year project, and DOE will provide federal funding of $3 million. The University of Tulsa contact is Dr. Mohan Kelkar, 918-631-3036.

• Plains Illinois, Inc. - Bridgeport, IL, will team with the Illinois Geological Survey and a service company to test alkaline-surfactant-polymer flooding as a means of improving oil production with more efficient, lower-cost flood patterns in the Lawrence Field, Bridgeport, Illinois.

  Project Team: Plains Illinois, Inc., Illinois State Geological Survey, Surtek

  Project Title: Alkaline-Surfactant-Polymer Flooding and Reservoir Characterization of the Cypress and Bridgeport Reservoirs of the Lawrence Field (Class I Reservoir).

  Project Description: Plains Illinois and its research associates will conduct a 60-acre alkaline-surfactant-polymer (ASP) project in the Lawrence Field, near Bridgeport, Illinois. Utilizing knowledge gained through detailed description of the reservoir, this enhanced oil recovery project will utilize three flood patterns with simultaneous ASP injection into reservoirs which are producing at less than a 3% oil cut and approaching their economic limit. A comparison with results from two previous Lawrence Field flood projects will provide a measure of production improvement. This project will help determine lower-cost flood patterns, comparison of enhanced oil recovery techniques, field expansion, and cost efficiencies of flooding multiple reservoirs simultaneously. Success in the project could extend the number of fields commercially applicable to the ASP process.

  Project Funding: DOE will provide federal funding of $4.1 million to the six-year project, and Plains Illinois will contribute $7.6 million in cost sharing. The Plains Illinois contact is Philip E. Hart. 618-945-8600.

• University of Kansas Center for Research, Inc. - Lawrence, KS, with an independent and a major carbon dioxide (CO2) supplier, will test CO2 flooding as a means of increasing production in the Hall-Gurney Field, Russell, Kansas, one of the central Kansas fields whose reservoirs have been depleted by waterflooding.

  Project Team: The University of Kansas Center for Research, Inc., MV Energy, L. L. C., Shell CO2 Company, Ltd.

  Project Title: Field Demonstration of Carbon Dioxide Miscible Flooding in the Lansing-Kansas City Formation, Central Kansas (Class II Reservoir).

  Project Description: The University of Kansas Center for Research and its research partners will apply carbon dioxide miscible flooding in the Hall-Gurney field near Russell, Kansas. Central Kansas reservoirs have been depleted by effective waterfloods, and the challenge in this region is to implement new recovery technologies before the remaining wells are plugged and abandoned. Carbon dioxide miscible displacement has never been applied in central Kansas reservoirs. Demonstration of the technique in this project will test its ability to mobilize residual oil remaining in these reservoirs.

  Project funding: The University of Kansas will contribute $3.5 million in cost sharing to the six-year project, and DOE will provide federal funding of $1.9 million. The University of Kansas contact is Alan P. Byrnes, 785-864-3965.

• Utah Geological Survey - Salt Lake City, UT, the Colorado Geological Survey and an independent production company will conduct detailed reservoir studies to determine horizontal drilling techniques that can increase well productivity in the Paradox Basin.

  Project Team: Utah Geological Survey, Seeley Oil Company, Colorado Geological Survey

  Project Title: Heterogeneous Shallow-Shelf Carbonate Buildups in the Blanding Sub-Basin of the Paradox Basin, Utah and Colorado: Targets for Increased Oil Production and Reserves Using Horizontal Drilling Techniques (Class II Reservoir).

  Project Description: In most of Utah's Paradox basin fields only 15 to 25 percent of the original oil in place is recoverable during primary production, largely because of incomplete reservoir drainage from conventional vertical development wells. At least 200 million barrels of oil are at risk of being left behind because of inefficient development practices that leave undrained reservoirs. The Utah Geological Survey and its research partners will conduct a geological and reservoir analysis to guide site selection for a demonstration project using the horizontal drilling techniques identified as having the greatest potential for increased well productivity and ultimate recovery. One or more horizontal development wells will be drilled, possibly with multiple horizontal legs, to maximize production. If mechanically and more economically viable, existing wells may be reentered and multiple horizontal laterals drilled to the zones of greatest potential. Reservoir management and production monitoring, economic evaluation of the results, and determination of the application of the project to other similar fields in the Paradox basin and throughout the U.S. will complete the project.

  Project Funding: The Utah Geological Survey will contribute $670,000 in cost sharing to the five-year project, and DOE will provide federal funding of $360,000. The Utah Survey contact is Thomas C. Chidsey, 801-537-3364.

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