The collapse in crude oil prices this year hit U.S. producers hard, and forced them to make big cuts in their capital budgets and drilling plans. But it also helped to prove their resilience. Throughout the Shale Era, and especially since the 2014-15 oil price crash, producers have been increasing their productivity and slashing their production costs, enabling most of them to survive even when prices slipped below $30 and $20/bbl for a while. Not all producers are alike, however — neither is all production. Even with oil prices rebounding to about $40/bbl in recent weeks, production based on enhanced oil recovery (EOR) through carbon-dioxide (CO2) “flooding” has become economically challenged, at least for some producers. Can EOR, with its high production costs, survive in a low-price environment? Today, we take a fresh look at EOR in an era of $40/bbl crude.
Our younger readers may not remember, but not long ago U.S. crude oil production was on the decline — a number of conventional oil plays in the U.S. were viewed as being pretty much tapped out, and the U.S. was becoming increasingly dependent on imported crude. What grabbed all the headlines, of course, was the combination of horizontal drilling and hydraulic fracturing, which in the past decade have freed amazing volumes of mostly light and super-light crude from shale and tight-oil plays like the Bakken, the Denver-Julesburg Basin, and — most important — the Permian. But even before the Shale Era started in earnest, there was a lot of hope that enhanced oil recovery would breathe new life into conventional production areas whose output had dwindled to a trickle.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
EOR, like hydraulic fracturing, is a way to unlock trapped oil. Primary recovery of oil from a conventional well (through natural pressure and pumps) typically recovers only about 10% of a reservoir’s total oil and secondary recovery (mostly by injecting water to displace oil and drive it to a production wellbore) draws out another 20 to 40%, leaving as much as 70% of a reservoir’s original oil in place (OOIP). EOR — also known as tertiary recovery — can recover another 10 to 20% of the OOIP. As we said in an EOR blog series a few years ago, there are two primary EOR techniques: thermal and CO2-EOR. Thermal EOR involves injecting steam to increase the flow of heavy, viscous oil. (Yes, that’s what goes on in Alberta’s oil sands; it’s also used to a much lesser degree to produce oil in California.)
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About the song
"Texas Flood" was written by Larry Davis and Joseph Wade Scott. It appears as the third song on Stevie Ray Vaughan and Double Trouble's debut album of the same name. The song's co-author, Larry Davis, released a single of "Texas Flood" for Duke records in 1958. It was the first of three blues singles he made for the label. Davis's "Texas Flood" also featured the guitar work of Fenton Robinson.
Texas Flood, the album, was recorded by Stevie Ray Vaughan and Double Trouble in three days at Jackson Browne's personal recording studio in downtown Los Angeles in November 1982. Personnel on the album were: Stevie Ray Vaughan (guitar, vocals), Tommy Shannon (bass), and Chris Layton (drums). The LP was produced by Stevie Ray Vaughan and Double Trouble, with Richard Mullen. It was released in June 1983, and went to #38 on the Billboard Top 200 Albums chart. It has been certified 2X Platinum by the Recording Industry Association of America. Two singles were released from the album.
Stevie Ray Vaughan was an American blues guitarist, singer, songwriter, and record producer from Austin, TX. He was best known as the front man for Double Trouble, and for being one of the main ambassadors of Texas blues guitar. Vaughan released six studio albums, seven live albums, nine compilation albums, four EPs, and 33 singles. He has sold more than 15 million albums in the U.S. alone, and has won six Grammy Awards and five W.C. Handy Awards. He, along with Double Trouble, are members of the Rock and Roll Hall of Fame and the Austin Music Hall of Fame. Vaughan died in a helicopter crash after a concert in August 1990 at the age of 35.
