Energy industry isn’t giving up on fossil fuels

In further evidence that the energy industry is not about to let oil production peak, GE Energy Services is moving toward boosting oil and natural gas production from reservoirs unreachable with current technology, which begins to break down at the higher temperatures at greater depths. In 2008, GE Energy asked the US Department of Energy to support its program to develop high temperature electronics required for oilfield and geothermal drilling.

The DOE agreed to fund the program to enable deep well drilling applications for discovering hard-to-reach oil and gas reserves and toward the development of geothermal energy. That funding began in October 2008, with $1.8m from the DOE and, with progress being made, continued into 2009, with $11m in funding. GE has contributed some of its own money, as well.  Brian Palmer, a GE Energy vice president, explains the goal:

Effectively, as you go deeper,  on land or subsea, the temperature increases. The electronics and power of the equipment starts to reach a breaking point at 150-175 degrees Celsius. Those on the market that can go higher will have an edge. We’re starting real development with DOE to get to 300 degrees Celsius.

GE is concentrating efforts on technology that will aid navigation, formation evaluation, and evaluation and logging of reservoir conditions. That the company is trying so hard is just another example of why it is foolish to conclude oil production has peaked. Whether the world chooses to move away from using it is another matter.

The oil industry is betting that will not happen. Take Royal Dutch Shell. It is researching using surfectants, similar to household soaps, which, when combined with water, can literally wash the oil out of reservoirs. This water-based enhanced oil recovery is a technique that can be used on its own, but also could be combined with the horizontal drilling and facturing that has enabled the US onshore natural gas business to boom.

For the past four years, the industry has been using horizontal drilling and hydraulic fracturing of rocks to extract natural gas from rock – mostly shale – boosting estimates of US natural gas from 30 years of supply, with today’s technology, to 100 years’ supply. The process involves drilling a vertical well, up to 20,000 feet, followed by drilling horizontally under the ground, up to 4,500 feet across. Producers then force highly pressurized water into the hole to fracture the rock in multiple places, releasing natural gas.

Raoul LeBlanc, senior director of PFC Energy, a consultancy, says if the industry could do on the oil side even a fraction of what they did on the gas side, that could be quite important.  Indeed, the independents (producers without refining operations) that drill most wells in the US are increasingly applying these techniques to oil fields, with good results.

Mr LeBlanc said more than 80 per cent of the wells drilled in the US last year targeted natural gas. If the hundreds of independents applied this technique to oil trapped in rock with the same zeal, the results could be meaningful. Jeff Fisher, senior vice president of production at Chesapeake Energy, says the process certainly offers a lot of potential, and everybody is looking at it.

At a time when the US government is having difficulties committing to carbon legislation, and the contributions by wind and other renewables to the electricity supply remains miniscule, it does make sense for the oil and gas industry to keep searching for more ways to get fossil fuels out of the ground. Environmentalists are just going to have to hope the oil industry is one day forced to clean up the fuel once they find it. Because it is looking increasingly likely the world is going to be powered on oil and gas for many years to come.

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