Jan. 20 (Bloomberg) -- Solar energy is cheaper than natural gas in powering enhanced oil recovery projects in the Middle East that tap heavy, viscous forms of crude, a developer of the technology said.
Solar power for so-called EOR projects costs about $5 to $7 per million British thermal units of energy, half of the $12 to $18 price for liquefied natural gas, according to Rod Macgregor chief executive officer of California-based GlassPoint Solar Inc., a company offering solar projects to the oil industry.
The region holds about 475 billion barrels of heavy crude, almost double Saudi Arabia’s conventional reserves, according to Ernst & Young. The heavy oil projects require steam or some other method to heat crude before it can flow up into a well. The consultant said many countries are facing a gas shortage and must import supplies from abroad for oil recovery projects.
“If you rely on importing LNG to generate your steam, you will be at the mercy of others and that’s not good for oil supply security,” Macgregor said by phone from Oman. “No one can shut down your sun.”
Oman, the only Middle Eastern nation using steam generated from solar panels to recover oil, currently uses 22 percent of its natural gas to produce steam for enhanced oil recovery projects. Gas demand is also increasing for households, making solar energy “an attractive economic proposition” for the oil industry, McGregor said.
E&Y estimates that by 2020 almost 35 percent of total oil production in Oman, or 370,000 barrels a day, will result from the deployment of technologies that flood oil reservoirs with steam.
If the sultanate generated half of that steam from solar, it could save as much as 332 million cubic feet of gas per day, generate up to 196,000 jobs, and add up to $7.52 billion to Oman’s gross domestic product over the next decade, the consultant said.
Macgregor said that oil companies must produce the equivalent of 4,000 to 7,000 barrels of steam for each 1,000 barrels of heavy oil they unlock in the Middle East.
GlassPoint uses its 7-megawatt enhanced oil recovery plant to produce 50 metric tons of steam a day, which is injected into the Amal oilfield in Southern Oman. The plant is a venture with Petroleum Development Oman.
GlassPoint said in December 2012 it gained funding to expand in places such as the Middle East from a group including Royal Dutch Shell Plc. Kuwait and Bahrain, where Chevron Corp. and Occidental Petroleum Corp. are trying to extract heavy crude from deposits, are targets for Glasspoint, Macgregor said.
--Editors: Reed Landberg, Tony Barrett