Enhanced Oil Recovery Incentives (And Dis-Incentives) From a Producer's Standpoint

Abstract Enhanced Oil Recovery (EOR) as a group of producing techniques -- here we will restrict ourselves to the four (4) high EOR technologies of micellar-polymer (microemulsion), carbon dioxide, fireflood and deep steam (>2500′ or <10° API) — have had two special economic problems: 1. Rate of Return (ROR) when balanced against technical risk; and 2. Front-End Capital formation for independent oil operators. To illustrate these two problems, and the impact of various past and possible future incentives and disincentives upon them, we use here as a typical example, tertiary micellar-polymer flooding of the Bell Creek Field in southeastern Montana. The reservoir parameters of this field are well suited to the micellar-polymer technique; and, starting in 1976, a micellar-polymer pilot for Bell Creek Unit ‘A’ reservoir (cost-shared with DOE, Contract No. DE-AC03-78SF01802) was carefully designed, deployed and executed, Refs. 1–11. The economics of a full field micellar-polymer flood in Unit ‘A’, based upon this pilot experience, have been developed extensively during the past 3 years and placed in the public domain, Refs. 12 – 16, in order to address the two designated financial problems of ROR vs. risk and capital formation. Thus, there is a body of data for micellar-polymer project economics in Bell Creek Unit ‘A’ and a history of the Working Interest Owner (W.I.O.) group deployment decisions in the light of such economic information. This empirical information -- of what set of economic factors did motivate and (more importantly) what set did not motivate the W.I.O. to move forward with proposed tertiary recovery projects -- will be used to examine the likely impact of future incentives and dis-incentives on the deployment of the high EOR technologies by managements and owners.