E&P Notes (January 2015)

Abstract

E&P Notes New Oil Sands Technology Debuts in Utah, Promises Low Environmental Impact Trent Jacobs, JPT Technology Writer In the northeastern desert of Utah, a new type of oil sands extraction technology has been born. The company behind it claims the process is the most cost-effective and environmentally sound way to develop oil sands. “Nothing goes out onto the ground, nothing goes up into the air, and there is no water involved,” said Gerald Bailey, the chief executive officer of MCW Energy Group. “We finish up with 99.9% clean sand that you can just lay out on the ground.” Bailey said the efficiency of the technology is backed up by permits issued by the US Environmental Protection Agency allowing MCW to reintroduce the sands to the source area. Oil sands surface mining has become a controversial extraction method because it results in large quantities of hydrocarbon and chemical-laced tailing ponds that can take decades to remediate. Another method, steam-assisted gravity drainage, does not come with the environmental drawbacks of surface mining but it does require large volumes of water and energy, usually from natural gas, to generate steam for the in-situ production process. The key to the emerging technology is MCW’s solvent that acts as a surfactant. Made from a strain of common organic alcohols, Bailey said the solvent strips more than 99% of the hydrocarbons from the oil sands, which have an original content of 12% oil. The quality of Utah’s oil sands is approximately 22 °API, considered the upper limit of heavy oil by the US Energy Information Administration. MCW also said its extraction technology requires no water for the process, emits no greenhouse gases, and does not require high pressures or temperatures to separate the hydrocarbons from the oil sands. The process is continuous but it can be turned off and on with the flick of a switch. “There is no decline curve. It is not a well depletes,” Bailey said. “You are just taking a raw material, putting it in a chemical, and getting oil.” US Regulator Seeking More Assurance for Offshore Decommissioning Costs Jack Betz, JPT Staff Writer As decommissioning costs mount in the US Gulf of Mexico, the Bureau of Ocean Energy Management (BOEM) is looking to change financial requirements for lessees and operators in federal waters for the first time in more than 20 years. While all lessees will be asked to show that they can cover the cost of plugging wells and removing other infrastructure, smaller operators are likely to feel the effect most. From the regulator perspective, the main threat to taxpayers is bankruptcy of companies with wells and facilities in federal waters, said Joshua Joyce, a BOEM bond expert who spoke at the Houston Association of Professional Landmen’s November 2014 Offshore Seminar. At issue are financial standards used to review whether companies have the money on hand for the decommissioning of offshore facilities, as required under US lease rules. BOEM uses a financial test to determine if a lessee has the resources in hand for self-insurance, or needs to turn to a third party and secure extra bonding, which can require operators to put up collateral, often in the form of cash. Its figures show that approximately 90% of leases in federal waters are self-insured. BOEM’s goal is to prevent more vulnerable companies from leaving behind obligations for US taxpayers.