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Explosion Of Geopolitical Risk Isn’t Moving Oil

Explosion Of Geopolitical Risk Isn’t Moving Oil

Oil markets remain well supplied,…

How Renewables Can Boost Crude Oil Production

If you’re an oil state needing to generate heat to help extract heavy crude, you use the oil or gas that you’ve already got to get the job done. But if you’re Oman, you turn to solar energy.

Petroleum Development Oman (PDO), the government-run national energy company, has approved GlassPoint Solar Inc. of Fremont, Calif., to build one of the largest solar plants in the world at the Amal West oilfield in southern Oman. It will consist of parabolic mirrors arrayed over eight-tenths of a square mile.

The mirrors will heat more than 1,000 megawatts of steam to be injected underground to soften the viscosity of Oman’s heavy oil. Ordinarily this job is done with the resources readily available in Oman – oil and gas – but by relying instead on solar power, the Persian Gulf sultanate can use more of that oil for export.

Related: OPEC Still Holds All The Cards In Oil Price Game

GlassPoint issued a statement July 7 saying its steam generators can help extract heavy oil from Oman’s underground rock formations by using up to 1/3 less natural gas. Until now the process was much less efficient and more expensive because it took the oil or gas equivalent of one barrel of oil to produce five barrels of heavy oil.

It appears that GlassPoint is well-suited for the job. Fields of heavy crude are common in its home state of California as well as in the Middle East and Venezuela. “It’s a real vote of confidence in GlassPoint,” said Jenny Chase, chief solar analyst at Bloomberg New Energy Finance in Zurich. “If it’s successful, it could spread solar-thermal technology to other applications where heat is used.”

GassPoint is building the project in partnership with Petroleum Development Oman, the largest oil producer in Oman and a joint venture between the government, Shell, Total and Partex.

The facility, called Miraah – “mirror” in Arabic – Is projected to generate steam from the first glasshouse module in 2017, and is expected to be responsible for about one-third of Oman’s total oil production by 2023.

Oman is the largest oil producer in the Middle East that isn’t a member of OPEC. But it appears that the Muscat government had little choice but to find an alternative source of energy to return production to its potential. The sultanate has been struggling to reverse a decline in oil output, which accounts for about three-quarters of the government’s revenues and about half its gross domestic product.

But Oman, like many other oil countries, already has recovered much of its lighter oil, which is easier to extract, so in recent years it has turned to “enhanced oil recovery” techniques to extract its heavier oil. These method helped the country increase production from about 700,000 barrels per day in 2007 to more than 950,000 barrels per day in 2014, according to the U.S. Energy Information Administration.

Related: When Can We Expect The Next Oil Shock?

But the expense and inefficiency of the enhanced techniques have made them not suitable as a permanent solution. “The use of solar for oil recovery is a long-term solution,” said Raoul Restucci, PDO’s managing director.

As for the role of solar energy in oil production, the chief of GlassPoint says its time has come. “The oil and gas industry is the next major market for solar energy,” said Rod MacGregor, the company's president and CEO.

By Andy Tully Of Oilprice.com

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  • Lee James on July 12 2015 said:
    Although in its infancy, I find it very encouraging that some oil companies are beginning to incorporate renewable energy in their operations. I hope Oman, Stadt Oil, Total and the Saudis (pv-generated electricity) have a successful outcome.
  • John on July 09 2015 said:
    Let's run some numbers. Single Tesla Powerwall battery $7000 (inc inverter and installation), which rated at 7kWh probably actually provides about 5.6kWh after inversion (assuming 80% inverter efficiency). A typical home air conditioner uses about 3.5kW, so a single Powerwall battery would run your air conditioning (and nothing else) for about 1.5 hours. So you're going to need several batteries if you want to run air conditioning in hot Spain. And these batteries are going to degrade and need replacing after 5-10 years. It all sounds pretty expensive to me.

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