DOE SPELLS OUT SHIFT TO NEAR TERM BENEFITS IN OIL AND GAS R&D

The U.S. Department of Energy is shifting its oil research priorities to near term projects in an effort to slow the decline in domestic production.

DOE will give priority to projects designed to maintain production from wells that face the greatest risk of abandonment within the next 5 years.

Henson Moore, deputy energy secretary, said the policy shift largely is prompted by a new study on abandonment rates.

Through most of the 1980's federal oil and gas research programs focused on projects that would not produce commercial benefits until well into the next century.

DOE will present its final research strategies to Congress by Mar. 31. It proposes to spend $40.7 million on oil R&D and $13.7 million on gas R&D in fiscal 1991.

RESOURCE ABANDONMENT

The abandonment study noted that after conventional production, nearly two thirds of the known domestic resource, about 300 billion bbl, could be abandoned in Lower 48 reservoirs.

"This resource is not economically recoverable with currently available technologies," the study said.

"Production of any meaningful portion of this oil will require adequate oil prices and technology advances in such areas as reservoir description and secondary and tertiary recovery.

"Cost effective application of such new or improved technologies depends largely upon the use of existing wells as points of access to the reservoirs containing the remaining oil resource. Existing U.S. wells, however, are being plugged and abandoned at record rates, which impairs economic access to this remaining resource."

The study surveyed eight oil producing states and found 30% of the oil resources had been abandoned before 1980. By 1987 another 40% had been abandoned-at an increasing rate in the more recent years.

It projected that if low oil prices persist and technology advances are delayed, the remaining resource abandonments in the Lower 48 states could reach 65% by 1995 and 75% early in the next century. Even if oil prices are $34/bbl, nearly 60% of the resource could be abandoned by 2000.

BUDGET SHIFT

Moore said, "A healthy, vigorous, domestic oil and gas industry is absolutely essential to our nation's economic strength and strategic security. I am very concerned that this is not the case in the petroleum sector today."

He said U.S. oil production dropped 210,000 b/d in 1988, another 470,000 b/d last year, and will decline another 300,000 b/d this year.

In 1985 DOE allocated about 80% of its fossil fuel research funds to improve basic knowledge and only 20% to preventing abandonments and maximizing recovery. The latter two categories rose to 50% by last year.

Moore said DOE will allocate more than 75% of its R&D funds during the next decade to develop better reservoir knowledge and improved recovery technologies to keep marginal fields productive and increase their production rates.

"Our program does not exclude long term research," he said. "But it recognizes the sobering reality that if we don't slow abandonments and improve production rates in this decade there won't be much of a domestic industry left in the next one to benefit from basic research."

DOE wants to spend $54 million in 1991, $10 million more than Congress appropriated last year.

In the near term DOE has two objectives: to develop reservoir characterization information for all major producing states and begin working with industry to apply more effective recovery technologies in the most threatened fields. DOE also plans to develop a comprehensive gas reservoir data base and work on improving conventional gas production.

"In the midterm we proposed to increase emphasis on unconventional natural gas-field testing techniques for recovery from shales, tight sandstones, and geopressured aquifers," Moore said. "In the long term we may pursue research on recovery from speculative resources like deep source gas and gas hydrates."

TECHNOLOGIES

Michael McElwrath, acting assistant secretary for fossil energy, said DOE will search for technologies that work to maintain production.

"Infill drilling is a top candidate," he said, "particularly when applied with new instrumentation that can reveal reservoir architecture in much greater detail than was possible 10 years ago."

Cased hole logging can yield data that may not have been collected when a field was originally developed, possibly allowing well recompletions in bypassed pay zones.

Other possibilities are improved waterflooding techniques and horizontal drilling.

"Our objective will be to contract operators, service companies, and consultants who have 'success stories' and who can provide detailed, project specific information," McElwrath said. "Then we have to find ways to disseminate that information.

"it is quite likely that we will go back to the experience of the Bureau of Mines in the 1950's when the government organized site tours to fields where the relative new technology of waterflooding was being tried. That gave operators the chance to view firsthand what methods are working and where."

DOE also plans to start a network of state oil and gas extension agents who will work with small producers to help them solve operations problems and disseminate information on more efficient technologies and practices.