Rescuing Oil (0) comments
By Ikenna Okonkwo | Friday, January 16 2009 | Energy
  
 The recent free fall in oil prices has made life a nightmare for countries like Nigeria, where oil accounts for 90 percent of the country’s export earnings. Oil prices are currently hovering over 30 dollars and there appears to be no reprisal in sight. To make matters worse, the country’s oil reserves may dry up in about 45 to 50 years as announced by the nation’s Department of Petroleum Resources (DPR) in their third quarter report the petroleum industry for 2008.
The DPR’s calculations were based on the estimates of Nigeria’s proven plus probable oil reserve which stood at 32.39 billion barrels plus 5.19 billion barrels of condensate as at January 2008. With current production levels at 2.108 million barrels a day and an estimated 730 million barrels per year the DPR expects a 2.23 percent reserves depletion rate and 45.75 years reserve index.
These announcements, alarming as they might sound, are based on current reserves and do not take into account undiscovered reserves in promising areas like the deep offshore Niger Delta and the Anambra and Chad basins and extra oil that may be obtained in the future through enhanced recovery.
The question of how much reserves a country has is usually contentious, as most claims by producing countries are typically unsubstantiated and sometimes even over stated for OPEC’s export allocation reasons.
A country’s Oil Reserves is the estimated quantities (Proved, Probable, and Possible) of crude oil that are claimed to be recoverable under existing economic and operating conditions. Oil reserves are furthermore, a fraction of the Oil in Place: the total estimated amount of oil in an oil reservoir, including both producible and non-producible oil.
Most of the oil in place cannot be extracted because of the reservoir characteristics, limitations in the existing extraction technologies and economical considerations. With secondary and enhanced oil recovery techniques, which make use of different methods to get more of the oil in place, the recovery factor can increase significantly with time.
When a reservoir is tapped and begins to produce petroleum, its natural pressure, which pushes the oil towards the well, begins decline. This natural drive of the reservoir is usually as a result of associated gas found in the reservoir under pressure (gas drive) or water found in the reservoir (water drive).
A time comes when the reservoirs internal pressure is no longer sufficient to force the oil to the well bore and to the surface. At this point only about 20 to 30 percent of the oil in place has been extracted. Secondary and Enhanced Oil recovery techniques are then deployed to get more oil out of the reservoir.
Secondary recovery involves the injection of fluids such as water or gas into to the oil well through injection wells in order to maintain the pressure within the reservoir and push hydrocarbons to the well bore. The most common secondary recovery techniques are gas injection and water flooding. Secondary recovery reaches its limits when considerable amounts of the injected gas or water are being produced by the production well. At this point about 40 percent of the oil in place would have been extracted.
Enhanced oil recovery is the third stage in the production process. It serves not only to restore formation pressure, but also to improve oil displacement or fluid flow in the reservoir. This is achieved by changing properties (usually the viscosity) of the oil inside the reservoir making it easier to be extracted. The means employed are mainly, chemical, thermal and displacement techniques.
The major drawback of these techniques is the cost in carrying them out. Increasing oil prices (at least before the recent crash) have made many of these techniques more worthwhile in squeezing out the extra oil from older reservoirs and to increase reserves. As technology inevitably improves, current methods of enhanced recovery will be improved and even made cheaper with better methods developed.
The DPR’s estimates may end up being too conservative in the end or perhaps it’s time Nigeria looked elsewhere for revenue.
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