TERTIARY RECOVERY

What would price deregulation do for oil production?

Last month, the respected Organization for Economic Cooperation and Development, a research oriented organization of 24 Industrial countries based in Paris, released a twoYolume study of the outlook for oil imports by the Western world for the next 10 years. As for the US, it now imports 6 million b/d, about half of it from the Middle East. What will happen to that figure by 1985, says OECD, depends on the price of domestic oil. At preembargo prices, imports would more than double; at $7.20, they would decrease by l5%, but at $10.80, they would not only stop altogether - the US would actually be exporting more than 1 million b/d. High domestic oil prices would not only stimulate production, predicts OECD, they would also present OPEC with an unusual problem: how to cut oil prices. For by that time governments should regard high oil prices as insurance against Arab extortion and would probably insist on a price floor.

And yet energy production is not all economics. No matter how high the price, years of lead time elapse before a mine, an oil or gas well, a coal gasification plant, refinery, a power plant, or any other energy facility starts producing - even without environmentalist sabotage.

With one exception: secondary and tertiary oil recovery. An oil well never runs completely dry; when the price is right, the oil can be made to flow again by secondary and tertiary recovery, at a higher cost, but with little delay. In secondary recovery, water is injected into the oil field down one well to force the Oil up another. When that is exhausted, more than half the original oil is still down there, and some of it can be recovered by tertiary recovery, using special chemicals (liquids or gases) which will, unlike water, mix with the oil, making it more amenable to waterflooding. When the oil is too thick for waterflooding, it can be thinned by injecting steam, or part of it is ignited to make the rest thin enough. (For continuing coverage, see the Oil & Gas Journal).

The days of "gushers," when the natural pressure of water or gas would force the oil up and out of the well, are gone, and secondary recovery by waterflooding now accounts for about half of domestic oil production.

Tertiary recovery has so far been limited to pilot plants producing only a few thousand barrels/day. Iast year, the number of such projects tripled, and oil companies are spending about $100 million on research. "A year ago," says a Gulf spokesman, "the tests were pure research to establish the technology. But now, more of them are designed to assess the economics."

Since the cost of tertiary recovery projects has been going up almost as fast as oil prices, it is not easy to make it economical, but most oilmen figure that at $11 a barrel, tertiary recovery would be justified. At $5.25 (the present controlled price), not even secondary recovery is justified in many cases.

How much is at stake? A grand total of I05 billion barrels. That is just slightly more than all the oil produced in the history of the US. But the price fixers don't want to let the price of oil go up to $11. And why should they? They can always pay the same money to the Arabs.