The Oil Drum

This post reflects collaboration between Don, also known as 1observer, and myself. Don is an arms-length investor in Petrobank Energy and Resources Ltd., the company that patented THAI. Otherwise, he has no ties with the company. This post is based on an analysis of publicly available documents. I want to thank Don for all of his hard work that went into this.

1. What is toe to heel air injection technology?

Toe to heel air injection (THAI) is a new method of extracting oil from heavy oil deposits which may have significant advantages over existing methods. The method was developed by Malcolm Greaves of the University of Bath and has been patented by Petrobank. According to the Petrobank website:

Following on from Khebab's posts (Jan 2007 and July 2006) I wanted to put some production geology flesh on the bones of Mexican oil production. The main points I want to make are:

1. Forecast production decline of 14% per annum in Cantarell sounds alarming but it is in fact the result of planned reservoir management.
2. The forecast decline of Cantarell is due in part to the diversion of nitrogen injection from Cantarell to the neighbouring Ku-Maloob-Zaap (KMZ) complex of fields. Production at KMZ is forecast to rise to around 800 MBD and this will partly offset production falls at Cantarell.
3. Cantarell / Mexican production is predominantly heavy crude, and it is postulated that any production declines in Mexico may be met by additoinal production of Saudi Arabian heavy crude forward to 2012.
4. Notwithstanding point 3, Mexican oil production decline means that 4 out of 5 major OECD producers are now in decline (Norway, UK, USA and Mexico), leaving only Canada with growing production and this presents the OECD with a growing problem of energy security.
5. The Hubbert Linearisation (HL) for Mexico reflects reservoir management (gas lift and nitrogen injection) and new field developments but the interpretation remains equivocal. A brief description is given of why Pemex have used gas lift and nitrogen injection to boost production at Cantarell.

In testimony before the House subcommittee on Energy & Resources in June, 2004, Vello A. Kuuskraa, president of Advanced Resources International (ARI), presented a graphic to members of congress showing huge potentially recoverable domestic reserves of stranded oil. This oil would be recovered by use of CO2 EOR (enhanced oil recovery). Here's an updated version of that graphic—from Undeveloped US oil resources: A big target for enhanced oil recovery — published in World Oil, August, 2006.

Figure 1

However, the problem of declining domestic oil production is not due to a lack of resources. We still have nearly 400 billion barrels of oil that is being left behind, "stranded". This is because our primary and secondary recovery methods recover only about one-third of the original oil in-place from our domestic oil fields, [Figure 1 above].

Numerous approaches are being tried to recover a portion of this "stranded" oil. The one with the highest, but still unrealized, potential is using CO2-enhanced oil recovery (CO2-EOR). Twenty years ago, enthusiasm for this idea was high.

Let's talk about what's going on here, considering the impact it will have on future U.S. domestic oil production and energy independence.

* With a Note on Bolivia

Update [2006-5-27 19:2:44 by Dave]: Gulf News reports yesterday PDVSA expects 3.4m bpd output

"We should be closing the year with a production ... of 3.4 million barrels per day," Vierma told reporters. "The average production for this month has been almost 3.3 million barrels per day."

The US Department of Energy and Wall Street analysts say Venezuela's total oil production is only around 2.6 million bpd.

It's time to check in with Venezuela and some other events in South America as Hugo's Bolivarian Revolution goes forward. Apparently, he strives to be Fidel Castro only with oil and without the beard.

Bolivarian Republic of Venezuela

There's lot to report on--oil shenanigans in Venezuela, nationalization of the oil & gas industry in Bolivia, Hugo's deals with China and the escalating conflict between Hugo and the United States.