November 24, 2014
GlassPoint Solar, the leader in solar enhanced oil recovery (EOR), recently released a new Society of Petroleum Engineers (SPE) paper entitled, “Economics of Steam Generation for Thermal EOR.” The SPE paper examines the economics of generating steam for thermal EOR using three methods deployed at oilfields in the Gulf region. Findings show under what conditions solar steam generators deliver the lowest-cost steam compared to steam produced from fuel-fired alternatives.
University of Oxford Middle East energy expert Justin Dargin commented, “The economics of steam generation hinge on the cost of the fuel source. Most Gulf countries are facing gas supply shortages, yet have high fuel subsidies that alter the retail price of gas—often to a fraction of the production cost of complex, non-associated gas. To fully understand the economics of generating steam, we must look at the marginal fuel value, which for some countries in the Gulf can be the price of imported LNG, diesel or other liquid fuels. These countries may pay more than $13 per MMBtu for fuel needed to meet future demand for thermal EOR, industrial development and power generation.”
“With gas becoming increasingly constrained and expensive to produce throughout the Gulf region, it is imperative that governments and national oil companies consider the impact of steam generation for EOR on a country’s long-term economic growth,” Dargin concluded.
The paper presents detailed performance and economic models for solar steam generators, gas-fired once-through steam generators (OTSG) and cogeneration using waste heat from a power plant to fuel a once-through heat recovery steam generator (OT-HRSG). Using $13 per MMBtu as the marginal fuel cost and $6 per MMBtu as a representative domestic production cost of gas in the Gulf, the models were used to calculate the Levelized Cost of Energy (LCOE) and the Fuel Break Even (FBE) price for each of the methods.
Milton Venetos, a specialist in thermodynamics and modeling, explained that economic and environmental burdens must be applied to fuel-fired steam generators to account for true macro-economic implications and create a fair comparison base.
Venetos further added, “Many believe waste heat from a power plant is free, and therefore the steam it produces is also free. In reality, producing steam from cogeneration is dependent on the price of natural gas, since the waste heat could be used to produce more power or to desalinate water without consuming additional fuel. An economic burden must be applied for steam produced from cogeneration that is equal to the opportunity cost for using the waste heat to produce additional power and water. The environmental burden applied to steam from gas-fired generators and from cogeneration considers the average cost of carbon used by oil majors.”
Findings concluded that at a fuel price of $6 per MMBtu, solar steam generators produce the lowest cost steam at $17 per ton of steam, compared to $20 per ton from cogeneration using a fully burdened OT-HRSG and $27 per ton for an environmentally burdened gas-fired OTSG.
GlassPoint Vice President Daniel Palmer said, “Thermal EOR projects underway in Oman, Kuwait and the Neutral Zone will represent some of the largest steam flooding projects in the world. These projects will require steam for several decades affecting a country’s entire economic position. Solar can provide the vast majority of a field’s steam needs at the lowest cost, freeing valuable gas resources for LNG export, power generation or industrial development.”
Marwan Chaar, GlassPoint Senior Manager of Business Development and lead author of the paper, presented the findings earlier this month at the Abu Dhabi International Petroleum and Exhibition Conference (ADIPEC). Dargin, Venetos and Palmer also contributed to the paper. For more information on the models and analysis, download the full paper SPE 172004 from OnePetro.
About GlassPoint Solar
GlassPoint is the leading provider of solar steam generators to the oil and gas industry for applications such as Enhanced Oil Recovery (EOR). Oil operators worldwide deploy EOR to boost well productivity by up to 300 percent. By replacing gas-fired steam generation with solar, GlassPoint can reduce EOR gas consumption by up to 80 percent. The gas saved can be redirected to higher value uses such as LNG export, industrial development and power generation. GlassPoint’s projects operate in global markets ranging from the Middle East to California. For more information, GlassPoint.com