New Technologies Drive Oil Boom in U.S.

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Oil production in the U.S. is increasing, often driven by new ways of getting the black stuff out of the ground. Start-up companies are trying out new techniques, while larger, established players are giving a second look to older methods that weren't profitable years ago.

The high price of fuel is one reason. The late 1990s saw a glut of oil, with the average (inflation-adjusted) price dropping to about $17 per barrel. In 2012, the average has hit $93, and could go higher.

The International Energy Agency concluded, in a new report released earlier this month, that the United States could overtake Saudi Arabia as the world's leading oil producer in five years, becoming an oil exporter by 2030. Some experts think this is overly optimistic, though, because unconventional oil production can drop off faster than traditional oil.

[Why US Oil Dominance Won't Lower Gas Prices]

Heavy oil

Philip Bell is one of the entrepreneurs exploring new ways to get oil from fields abandoned because they stopped producing. His company, ElectroPetroleum, based in Wayne Pa., uses electricity to extract heavier oil once considered unprofitable due to the expense and effort needed to extract and refine it. The company has one pilot project in the United States and one in Canada.

ElectroPetroleum's method involves two electrodes. One, positively charged, remains near the surface, while a negatively charged one descends to a well-bore far below. Electric current runs through the electrodes, also transmitting through the rock.

The electrodes heat up, like a soldering iron. Oil-bearing rock formations usually contain a lot of water, and that water transmits the heat to the oil, which then becomes less viscous and easier to extract. The electric current actually breaks off some parts of the hydrocarbon molecules, reducing the density of the oil. Without the combination of heat and electricity reducing the oil's density it would be nearly impossible to pump.

Meanwhile, the positive and negative charges on the electrodes create a driving force that moves the water and oil towards the negatively charged electrode. The oil can then be pumped out of the well.

Bell says a big advantage of the process is that it doesn't require water. Ordinarily, extracting heavy oils from the rock requires high-pressure steam. 

Giving old tech a second look

Bell is also an executive at a conventional oil exploration company, Temblor Petroleum, which uses more standard technologies. But there, too, previously pricey endeavors have become worthwhile due to the skyrocketing price of oil. Temblor uses hydraulic fracturing technology, or “fracking” – similar to the method used in the gas industry – to break the rock in shale formations and release petroleum.

"That's the biggest game-changer going," he said. His company operates on the Monterrey shale in California, where he said there's something of a land rush.

N-Solv also uses a new technique to get more oil, employing solvents as an alternative to steam for extracting oil from Alberta's tar sands. Conventional extraction uses two horizontal wells, a producer and an extractor. The top one is filled with high-pressure steam at 230 degrees centigrade (446 Fahrenheit). That makes the oil in the sands less viscous and allows it to flow, via gravity, to the producer-well below.

The solvents N-Solv uses reduce the oil's viscosity, and can operate at much lower temperatures, on the order of 50 degrees C (100 F). The process also uses a lot less water than conventional methods.

"I think the hard reality is the global feedstock of crude oil going to refineries is getting heavier and heavier. Refineries [are] working on ways to accept heavier crude," said Alexander Stickler, vice president of operations at N-Solv. "Lots of guys are working on ways to access heavy oil viably."

Start-ups aren’t the only ones pushing the technological envelope. Chevron's Tahiti project, in the Gulf of Mexico, is adapting an old technique called water flooding for use in its offshore wells. Under the method, water pumped into the oil reservoir pushes the remaining crude out. It's been used extensively on land, but only recently have oil companies applied it to the deepest offshore projects.

Meanwhile, Shell has developed low-salinity water flooding as a way of boosting recovery by controlling the ionic composition of the water. The low-salinity water prevents oil from "sticking" to the surrounding rock as the pressure pushes it out. The company has refit the water-flooding systems on some of its platforms in the Gulf, extending by a decade the life of those oil fields. BP has also adopted a variant of this technology.

Several companies are also looking at extracting oil from shale. The process usually involves digging up the shale and exposing it to hot gases, at temperatures of hundreds of degrees. Shell Oil has a pilot project in Colorado that heats the shale in place, by sinking heating elements into the ground. The oil then flows up from the rock.

Other techniques, such as horizontal drilling and the injection of carbon dioxide, have also boosted oil production in previously unprofitable wells.  Horizontal drilling is exactly what it sounds like. The idea is to get to parts of an oil field that a vertical well wouldn't reach, without having to dig new ones. Carbon dioxide injection involves pushing the gas into the well, so that the pressure pushes more oil out of the rock.  

Party won’t last forever

All these technologies might boost U.S. production of oil, and even marginal increases add up when you include many fields. But that doesn't necessarily mean the party will last long, said Robert Rapier, author of Power Plays: Energy Options in the Age of Peak Oil.

The problem, he said, is that every oil field produces for a while, then declines. In conventional oil drilling, the decline takes place over many years. Unconventional oils will likely decline more quickly. That means that, even if production increases enough for the United States to overtake Saudi Arabia – something he thinks unlikely -- that level of production won't last.

Furthermore, high prices are what make extracting this harder-to-get oil worth it. But more production could depress the price of oil enough to make such methods unprofitable again. "Fracking technologies have improved, but the real game-changer is simply oil price,” Rapier said in an email. “The marginal production cost for oil right now is reportedly around $90, and if oil prices fall, so will drilling activity.”

[Plentiful US Oil Won’t Kill Renewable Energy]

Then, there is the issue of fuel prices. Oil is sold in a global market, so it isn't unusual for a barrel of Alaskan crude oil to end up in Europe or Asia, and vice versa. The price at the pump is driven by a combination of global prices, refining costs, subsidies and taxes. Domestic policy can only affect the last two factors. That means that producing oil domestically is unlikely to lower gas prices, unless the U.S. produced enough oil to depress prices globally anyway.

Meanwhile, given that the market is global, the U.S. would still be importing some amount of oil, even if it were less. One reason is demand: U.S. consumers will probably still use more than can be produced at home. So true "energy independence" is a long shot unless there is a massive change in the way Americans use oil, like by switching to hybrid or electric cars.

Last, but not least, there's global warming, which suggests we shouldn't burn all those fossil fuels at all. More than one environmentalist would say that the cost of oil should increase to reflect the costs of climate change.

This story was provided by TechNewsDaily, a sister site to LiveScience. Follow TechNewsDaily on Twitter @TechNewsDaily. We're also on Facebook & Google+.