SOURCE: Lux Research

Lux Research

July 22, 2014 07:30 ET

Led by Canada and the Middle East, $500 Million Chemical EOR Market Poised for Expansion

Improved Chemistries Have Enhanced Oil Recovery Rates to Up to 70% While Higher Oil Prices Make the Technology More Economically Viable, Amid Dwindling Production Levels in Major Oilfields Worldwide, Says Lux Research

BOSTON, MA--(Marketwired - Jul 22, 2014) -  Once considered risky and expensive, the $500 million chemical enhanced oil recovery (EOR) market has been revitalized by higher oil prices, improved chemical formulations and advances in laboratory analysis, with Canada and the Middle East leading the way for global expansion, according to Lux Research.

With rising demand for oil and dwindling production, EOR techniques are growing in importance on account of their ability to boost ultimate recovery rates to as high as 70% of the original oil in place (OOIP), compared to 40% for traditional methods. On account of sustained higher oil prices of over $100 a barrel, many of these techniques have become economically viable, too.

"Chemical EOR still only accounts for a tenth of global production from EOR today but is applicable in many fields that are incompatible with other forms of EOR," said Daniel Choi, Lux Research Analyst and the lead author of the report titled, "New Age of Oil Drives Growth of Chemical Enhanced Oil Recovery."

"Besides, changes in the market and improvements to the chemical EOR process have allowed projects once considered uneconomical to now be viable," he added.

Lux Research analysts evaluated advances in chemical EOR and their applications in oilfields worldwide. Among their findings:

  • ASP floods are the frontrunner but no magic bullet. Each reservoir is unique, requiring years of laboratory analysis and field pilots before a project is ready for full-field implementation. Consequently, feasibility is a key determinant of the method employed and there is no "best" chemical EOR method. Still, ASP (Alkaline Surfactant Polymer) floods are gaining momentum due to its high recovery -- ~25% of OOIP -- and relatively low cost.
  • Focus on oilfields in Middle East and Canada. The chemical EOR market has been concentrated in North America and Asia, accounting for 76% of field pilots and 96% of full-field projects since 1985. However, with 57% of oil from the 20 largest conventional oil fields on the decline, chemical EOR adoption is underway in the rest of the world. Major new projects to watch include Marmul in Oman, Abu Al Bukhoosh in Abu Dhabi, Dalia in Angola and Angsi in Malaysia. In Canada, full-field projects are projected to reach an all-time high this year, following a high of pilot projects in 2007.
  • Ultimate EOR, TouGas are poised for growth. With 80 field projects in 25 countries, Surtek is one of the most established players and a key potential partner for those seeking to become chemical suppliers. Tiorco, a joint venture of Stepan and Nalco, has the strongest business execution score, besides boasting a variety of products including the BrightWater nanotechnology and polymer gels for waterfloods. Start-ups with robust chemistries like Ultimate EOR and TouGas are best positioned for growth. Ultimate EOR boasts a patented surfactant formulation, besides a unique business model of licensing; and TouGas has developed robust polymers with the potential to solve many of the industry's unmet needs.

The report, titled "New Age of Oil Drives Growth of Chemical Enhanced Oil Recovery," is part of the Lux Research Exploration & Production Intelligence service.

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