EOR tech significantly boosts reserves in Permian Basin
Combining the residual oil zones in the Permian Basin, there are between 800 billion and 1 trillion barrels of oil still to be extracted thanks to enhanced oil recovery technology, according to Steve Melzer of Melzer Consulting. Previously thought to contain 100 billion barrels of oil, others including the director of the Center for Energy and Economic Diversification have lower predictions however, at 300 billion barrels.
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Technology unlocked millions of barrels of crude oil and natural gas from shale formations across the country, especially in the Permian Basin.

That technology, combined with established enhanced oil recovery technology, promises to unlock billions more currently held in residual oil zones (ROZs), according to research being conducted in the region.

“For the longest time, we’ve thought the Permian had 100 billion barrels of oil in place,” said Steve Melzer of Melzer Consulting, which has worked on two ROZ projects for the Research Partnership to Secure Energy for America project, which operates under contract for the Department of Energy’s National Energy Technology Laboratory.

Combining the region’s unconventional shale and ROZ cones, the Permian could hold 800 billion, perhaps 1 trillion, barrels of oil, Melzer said.

Fellow researcher Bob Trentham, director of the Center for Energy and Economic Diversification and senior lecturer in geology at the University of Texas of the Permian Basin, was more conservative, putting that figure at 300 billion barrels or triple long-held estimates. Both agree the Permian has yielded only 32 billion barrels since commercial production began about 90 years ago. That means rather than producing one-third of the oil in place, only 10 percent or less has been produced, they said.

“Midland and the Permian Basin have been consigned to drying up and blowing away a number of times,” Trentham said.

The ROZs are opening up areas that had been thought to be non-productive, said Russell K. Hall of Russell K. Hall & Associates.

“There have been 65 horizontal wells drilled in Yoakum County and that many more in Andrews County testing ROZs,” Hall said. “They’re getting ne production levels from areas that had been overlooked. Taking horizontal drilling technology and applying it in areas that have been overlooked is getting fantastic results: 9,000 to 10,000 barrels a day from Yoakum County, which three years ago was non-productive.”

These areas are productive at $30 or $40 oil, Hall said. “You don’t have to wait for $70 or $80 oil.”

“Is it economic at $30 or $100 or $60 oil?” Trentham said. “Without a long enough track record, it’s hard to tell, but we’re finding it is economic.”

As Permian Basin oil fields moved from primary production to secondary recovery with waterfloods, those waterflooded intervals still had 20 percent to 40 percent of residual oil in the pore space. Operators then implemented tertiary recovery projects, using CO2 floods to revive those waterflooded intervals.

Researchers say the Permian Basin now produces about 200,000 barrels of oil per day from these CO2 floods. On average, an additional recovery of 10 percent to 20 percent of the original oil in place in a field is possible using CO2.

It is that enhanced oil recovery technology that is opening the door to these residual oil zones.

Trentham said he, Melzer and others have been talking about the zones for about a decade.

“A lot of companies have listened to us. They’re not willing to discuss their work, but a lot of companies have been successful,” Trentham said.

There hasn’t been the time or manpower to study other formations, but Trentham said researchers know ROZs exist in those other formations because of data collected from energy companies and interactions with professionals working in the basin.

Jody Elliott, Occidental Petroleum’s president of Oxy Domestic Oil & Gas, told analysts during the company’s second quarter earnings call that the company continues development of ROZs under its enhanced oil recovery properties.

“As I have mentioned in previous calls, the residual oil zone development, or ROZ, is a vertical expansion of the CO2 flooded interval. The ROZ underlies most of our major EOR properties and can be developed between $3 and $7 a barrel,” Elliott told analysts.

He said capital savings achieved by Occidental’s EOR team will be reinvested in additional wells and CO2 flood expansions.

Year-to-date, the company has completed 74 well deepenings and recompletions along with 28 new wells and ROZ developments, Elliott said. He reported that the company anticipates an additional 30 deepenings and recompletions and 22 new wells and ROZ developments in the second half of 2016.

In the two studies funded by the research partnership, Melzer said researchers looked at several counties to assess how much oil was in place in the zones.

“We have 180 billion barrels of oil in place in the San Andres ROZ; it’s a resource that’s pretty immense,” he said.

The technology of enhanced oil recovery and horizontal drilling “just opened the door to ROZ production,” he said.



Kerry Miller, vice president of Permian Basin operations for Kinder Morgan, said in an email that the company’s ROZ development is an o shoot of its extensive CO2 operations.

Kinder Morgan launched the Tall Cotton project in late 2014 15 miles northwest of Seminole in Gaines County as a pilot study using CO2 technology to recover oil and gas from the San Andres ROZ. It marks the first time CO2 technology is being used for primary production rather than secondary or tertiary recovery.

“Kinder Morgan CO2 has extensive experience in flooding main pay and transition zones in West Texas, and this knowledge has led to the successful development of the Tall Cotton ROZ pilot project,” he said.

Miller said the company is pleased with the project’s results so far. He reports oil production has grown to about 1,500 barrels of oil per day “and we are currently evaluating expansion opportunities.”

ROZs offer opportunities not only for Kinder Morgan but other companies, he said.

“Residual oil zones are extensive throughout the Permian Basin in areas with and without infrastructure. Similar to other geologic horizons, some zones are more conducive to CO2 flooding than others. Kinder Morgan continues to evaluate reservoir properties in several areas, and we think that economics will ultimately determine the pace of ROZ development,” Miller said.

The roots of the ROZs lie in the Permian’s ancient geologic history, Melzer said.

“Mother Nature uplifted the west side and created a ‘flushing’ of most of the oil from the west to the east. It got to the surface of the ancient Gulf of Mexico. That’s the bad news — it got swept to the Gulf of Mexico. The good news is Mother Nature le behind the same amount we leave behind with waterfloods.”

There is Mother Nature’s waterfloods and there are man-made waterfloods, he said.

Melzer said the research hinged on one question: “If we can get oil out with our waterfloods, why can’t we get at Mother Nature’s waterfloods?”

A Kinder Morgan project that began in November 2014 is now making 1,200 barrels of oil a day.

“That zone would make no oil in primary production or in secondary production. It’s all tertiary,” using carbon dioxide flooding, Melzer said.

Researchers have also found that by drilling horizontally into the upper quadrants of the ROZ, they can drop the pressures in the reservoirs, allowing gas to expand and move some of that remaining oil to the surface. In that zone where pressures have been dropped, 100 wells are producing 15,000 barrels of oil a day, Melzer said.

“It’s an exciting day (for the industry). The Permian Basin is leading the world in both depressurization and enhanced oil recovery,” he said.

He a attributes that success to a combination of the service companies at work in the Permian Basin, the infrastructure available and the financing also available.

He said this also includes “the entrepreneurship (of Permian operators) and private mineral ownership. If any of those components is missing, progress would not be made.”

Technology has helped unlock the region’s huge endowment of oil, resulting in a step change in the world’s oil markets, Melzer said.

“OPEC made a huge mistake letting oil prices hit $100,” he said. “That’s when innovators got to work. The question is whether they can compete with our price of oil.”

Middle Eastern oil producers have to consider the social cost, he said, noting that a number of producing countries are planning to reduce or eliminate subsidies funded by their oil production.



“If we’re producing at $45 oil, that tells you something about what the market balancing price should be. If someone’s betting on $70 or $90 oil, that’s probably not a good bet,” Melzer said.

For his part, Hall said residual oil zones are “an exciting prospect for the industry. These are new areas we didn’t know three years ago. There are millions of barrels to be produced. It’s a new development in an area thought to have gotten stale.”

Trentham said the burgeoning development of the ROZs is “just the tip of the iceberg.”

The current slowdown is a good time to evaluate their potential and get ready for the time when the world will need all those additional barrels, he said.

“We will never be completely energy-independent, but to approach it, we need to develop ROZs,” he said.

RESEARCH SUMMARY Initial research began with collecting data and hydrological modeling. Research focused on Pecos, Loving, Ward and Winkler counties in Texas and Eddy and Lea counties in New Mexico as researchers worked to characterize the “fairway” of flushing that led to the ROZ in the San Andres. Zones up to 300 feet thick containing 20 to 40 percent oil in pores of the San Andres dolomite reservoir are present both below and between currently producing fields.

The team working on the initial Research Partnership to Secure Energy for America study found the results pertained not only to the Delaware Basin shelf region but has led to a greater understanding of the prolific dolomite reservoirs throughout the Permian Basin. There has also been a privately funded demonstration project in the Central Basin Platform area with a pilot program utilizing CO2 EOR techniques.

Research has identified three different types of ROZs: those due a late stage regional tilt of the basin; temporary or permanent breach of the sealing formation atop the oil entrapment; and an uplift on one side of a basin that allows for hydrodynamic forces to laterally sweep very slowly through the basin to exit downdip on the other side of the basin. e third type has been extensively studied in the Permian Basin.

In summarizing its first ROZ study for RPSEA, the researchers said careful definition and modeling of present ground water movement, and analysis of the groundwater conditions before major water extraction allowed calculation of rock properties that in a model reliably calculated movement of water in passed geologic time. The model over geologic time concludes that the water charge entered the San Andres in the region west of Artesia, New Mexico.

The Artesia fairway was found to extend from the Northwest Shelf of New Mexico east to the Central Basin Platform and then south along the West side of the platform to Pecos County.

In addition to horizontally dividing the trend based on facies and permeabilities, the trend was divided vertically into a number of different, stratigraphically distinct intervals within the San Andres. The middle–upper San Andres “Judkins” interval has been identified as the “flow path.”

Studies of residual oil zones are expanding beyond the Permian Basin. Similar studies have been performed in the Tensleep sandstone formation of the Big Horn Basin of Wyoming and the Red River formation in the Williston Basin. Countries in Asia and the Arabian Gulf are also interested in ROZ studies.