Solar enhanced
oil recovery
An in-country value
assessment for Oman
January 2014
Executive summary
In 2012 the Sultanate of Oman (Oman)
produced 920,000 barrels per day (bbl/d)
of crude oil, ranking 21st in global oil
production by country . It also produced
2.8 billion cubic feet (bcf) of natural gas,
making it the 5th largest gas producer
in the Middle East and the 26th largest
in the world .
1
Solar EOR is likely to play an important
role in the mix of EOR technologies.
Instead of burning natural gas to
produce steam, solar EOR involves
the use of concentrating solar power
(CSP) technology to produce steam.
2
Over the last ten years, due to the maturity of its
has increasingly relied on enhanced oil recovery
(EOR) technologies. Several techniques have been
deployed, although thermal EOR, the focus of this
report, dominates. The main thermal EOR technique
entails burning natural gas to produce steam,
which is injected into the reservoir to heat heavy
oil and reduce its viscosity. The process increases
both the rate of production and the amount of oil
that can ultimately be recovered.
concentrate sunlight onto receivers
that collect solar energy and then
convert it to heat. The heat is then
used to produce steam from water.
in 2012 that EOR would grow from 3% of current oil
production to 25% of total liquids production by 2020.
Solar EOR can generate the same
quality and temperature of steam
as natural gas . Therefore, the use
of solar EOR could reduce demand for
natural gas required for EOR, which
can be re-directed to other economic
activities such as power generation,
water desalination and as feedstock
and energy for industrial processes .
1
3
in EOR. Petroleum Development Oman (PDO), which
2
2
“Oman Country Analysis,” US Energy Information Administration,
30 October 2013.
BP Statistical Review of World Energy 2013, http://www.bp.com/
content/dam/bp/pdf/statistical-review/statistical_review_of_world_
energy_2013.pdf, accessed 30 October 2013.
3
4
4
Sunil Kokal and Abdulaziz Al-Kaabi, “Enhanced oil recovery:
challenges and opportunities,” EXPEC Advanced Research
Centre, Saudi Aramco, http://www.world-petroleum.org/
docs/docs/publications/2010yearbook/P64-69_KokalAl_Kaabi.pdf, accessed 30 October 2013.
Ibid.
Solar enhanced oil recovery An in-country value assessment for Oman
Executive summary
Deploying solar EOR could provide a hedge that reduces
steam generated using solar energy is independent of
the cost and availability of natural gas. Moreover, it also
secures the long-term cost of steam once the system
is installed since solar steam generators can produce
at low operations cost5.
with limited availability of natural gas, thereby providing
a way to create and inject steam for EOR with no
capital investment in gas infrastructure and allowing
the development of many of Oman’s ‘stranded assets’.
Moreover, owing to minimal operating expenses, use
of solar EOR could enable producers to steam wells
for a longer period of time compared to using gasof a reservoir.
PDO began investigating solar steam generation in
2005 because of a recognition that EOR’s strategic
importance to Oman was going to create a long-term
We have also assumed that solar EOR accounts for
varying proportions of this growth in thermal EOR
production.
The “Steady growth” scenario assumes solar
EOR accounts for only 22% of the total thermal
EOR by the end of the deployment period.
The “Leadership” scenario assumes solar EOR
accounts for half of total thermal EOR. In this
scenario we assume that the Sultanate of Oman
accelerates the deployment of solar EOR and
targets industry leadership with potential export
opportunities to other Gulf Cooperation Council
(GCC) countries.
The “Full-scale deployment” scenario assumes
deployment that stretches the solar EOR technology
to its technical limit, i.e., 80% of all thermal EOR
coming from solar by the end of the deployment
period.
of solar EOR in Oman.
tender process. This resulted in an award to GlassPoint
Solar in August 2011 for the construction of a 7MWth
The pilot has delivered its targets so far and large-scale
deployment is contemplated.
Oman currently uses 22% of its natural gas resources
for EOR6. The continuous increase in domestic demand
for natural gas makes the deployment of solar EOR
technology an attractive economic proposition for the
Sultanate of Oman.
We have assessed the uptake of solar EOR under
three alternative scenarios for 2014–23, analyzing
the direct and indirect impact on jobs and economic
value added. These scenarios assume that by 2020,
approximately 35% of the total oil production in Oman,
or 370,000 bbl/d will result from the deployment of
thermal EOR technologies. This is in line with EOR
production estimates from PDO, Occidental Petroleum
Corporation (Oxy) and other industry stakeholders.
5
6
The installation of the solar EOR systems will have
a direct effect on economic activity and job creation
in the Omani manufacturing and services sectors.
The amount of natural gas displaced due to the
substitution by solar EOR technology could be
re-injected into the economy. This can be done either
by enabling alternative industrial projects or feeding
other thermal EOR projects, thereby enabling the
extraction of more oil. Alternatively, it could simply
improve Oman’s balance of payments and enhance
the Sultanate’s security of energy supply.
Stuart Heisler, “Oil and Gas Production: Emergence of Solar
Enhanced Oil Recovery,” Oilandgasiq.com, accessed 30 October
2013.
Idris Kathiwalla, “Omani Oil and Gas Sector Note,” Oman Arab Bank,
Investment Management Group, April 2013, http://www.oabinvest.
com/Reports/Omani Oil Sector Note.pdf, accessed 30 October
2013.
Solar enhanced oil recovery An in-country value assessment for Oman
3
Executive summary
Table 1 below summarizes the contribution this solar EOR
project could make to the Omani economy over the period
2014–23 under the Leadership deployment scenario.
The roll-out of solar EOR technology
under the Leadership scenario would
Table 1: of solar EOR possible future contribution to the Omani
economy7,8
in the following aspects:
It could lead to the creation of up to
196,000 jobs, including c.41,600 jobs
for Omani nationals over the next
decade and add up to USD 7.52 billion
to Omani GDP over the same period:
Source: EY analysis
Leadership scenario, 2014–23
portion of EOR steam from solar: 50%
Contribution to the Omani economy*
9
USD,
present value
Direct
3.28b
Indirect
2.83b
Induced
1.41b
Total contribution (GVA)
7.52b
10
gas savings, of approximately 331,796
MMBTU per day at the end of the
deployment phase. Depending on the
way they are channelled, these savings
could either lead to:
Natural gas savings
Displaced natural gas
(MMBTU per day at end of period)
331,796
Cumulative savings on thermal EOR
costs over deployment period (USD m)
c.722 m
Creation of c. 30,000 jobs and
an additional contribution to GDP
Employment
Omani nationals
41,574
Total jobs created
196,012
Capital expenditure per job
(discounted USD)8
c.42,000
7
of industrial projects:
Up to USD 11 billion of additional
oil revenue through more EOR
output.
Note: *Gross value added (GVA), i.e., sum of value of all domestic
economic outputs minus intermediate consumption. Excluding
potential direct and indirect contribution linked to the alternative
use of displaced natural gas for industrial projects. Induced impact
related to job creation through industrial projects enabled by gas
savings is included, however, assuming 100% of gas savings
are used to enable industrial projects.
7
8
4
Maximum number of direct, indirect or induced manufacturing
jobs created assuming that 100% gas savings are used to enable
new industrial projects (including non-Omani) and excluding
construction of industrial facilities enabled by gas savings.
Direct investment in solar EOR roll-out (direct nominal output
discounted at 8.2% annually) divided by total job creation.
Up to USD 722 million of additional
gas exports/reduced net gas
imports for the country over
the next decade.
9
10
Assuming 100% of natural gas savings accrued below are
channelled into the wider economy and excluding jobs related to the
construction of the industrial facilities enabled by gas savings.
Excluding potential contribution made by industrial projects enabled
by gas savings.
Solar enhanced oil recovery An in-country value assessment for Oman
Executive summary
Table 2: Summary of the economic impact of various deployment scenarios11
Source: EY analysis
Steady
Leadership
Full-scale
22%
50%
80%
146,060
331,796
531,048
Direct
3,872
8,246
13,170
Indirect
3,208
6,832
10,911
Induced
2,634
5,753
9,178
Total output
9,714
20,831
33,259
Direct
1,539
3,277
5,234
Indirect
1,329
2,831
4,521
Induced
660
1,409
2,253
3,528
7,517
12,008
Total, among which
58,251
165,847
251,277
Construction-related jobs
20,976
59,746
90,483
Total, among which
10,173
30,165
51,611
Direct industrial jobs
5,948
17,637
30,176
Indirect and induced jobs
4,225
12,528
21,435
Total job creation
68,424
196,012
302,888
Total Omani jobs
14,560
41,574
63,825
Solar fraction of EOR steam
Gas savings (MMBTU/day at scale)
Output (USD millions)
9
GVA (USD millions)9
Total GVA
Job creation directly enabled by solar EOR roll-out
10
Job creation enabled by gas savings8
11
Direct, indirect and induced.
Solar enhanced oil recovery An in-country value assessment for Oman
5
Executive summary
An alternative use of CSP technology is for power
generation. Other countries such as the United
Arab Emirates (UAE) have taken this path with
power station, a 100MW parabolic trough CSP plant.
Saudi Arabia is also targeting a capacity of 25GW
of CSP by 203212.
By comparing gas savings per dollar of capital
expenditure from the use of solar energy in power
saves up to six times as much gas per unit of capital
expenditure as saved by a CSP plant.
Omani content, which will serve as a platform for the
development of skills and innovation in the Sultanate.
A large sustained deployment will expose local
engineers to solar technology and its supply chain,
enabling them to bridge skills from the existing oil
and gas base in Oman and to widen their expertise
to skills applicable across a variety of sectors.
Experience in solar technology would also transfer
to other uses, e.g., power generation, desalination
and process steam, creating a technologically
cross-skilled local workforce. Deployment of solar
technology also provides scope for global leadership
partnerships and through funding of research into
different areas such as subsurface effects and
behaviour of solar power-generated steam at rock
model, lab and simulator levels; and understanding
of the local environmental conditions and solar energy;
as well as primary research on materials, durability
of equipment and construction methods.
Technical and commercial leadership in solar EOR
could also allow Oman to tap regional and global export
opportunities likely to open up in the next decade.
Although the volume of EOR production in the Gulf
Cooperation Council (GCC) countries outside of Oman
is currently minuscule, EOR potential is estimated at
475 billion barrels of oil13
this opportunity will be thermal EOR, for which solar
EOR is likely to compete. The most likely immediate
12
13
6
steam injection project led by Chevron that is under
injection is expected to begin in 2017 and to produce
up to 80,000 bbl/d with subsequent phases boosting
production to more than 500,000 bbl/d. The expected
thermal EOR production in this project alone is almost
comparable to Oman’s current EOR production and
may provide an immediate export opportunity.
Substitution of natural gas by solar EOR will contribute
to reduction in emissions of CO2 and other polluting
agents. Considering the volume of natural gas saved
and the average emissions from burning natural gas,
we estimate emission abatement of 8.1 million tons
of CO2 on an annual basis in the leadership deployment
scenario when the systems are fully deployed.
In addition, the technology currently deployed
in the pilot project by GlassPoint and PDO does not
have the environmental costs normally associated
with large CSP systems such as consumption of large
quantities of water. Moreover, the ecological and visual
impacts due to large land footprint typically caused
by CSP is also limited due to the relative compactness
of the technology (three times less acreage compared
to standard parabolic systems) but also because
At a macro level, solar EOR will improve both shortterm and long-term energy security for Oman. It will
reduce long-term risk of scarcity of gas, if deployed
Natural Gas (LNG) cargoes which are subject to sudden
short-term changes in availability and costs. Given
Oman’s growing dependence on natural gas and its USD
60 billion LNG deal with Iran for the next 25 years, both
its long-term and short-term security of energy supply
require consideration. Use of solar EOR carries obvious
advantages in terms of security of energy supply for
Oman as it limits exposure to imports and frees up
natural gas for other uses in Oman’s industrial sectors,
thereby reducing the risk inherent in reliance on Iran
KA-CARE, Saudi Arabia’s Renewable Energy Strategy and Solar
Energy Deployment.
Manaar Consulting: “EOR and IOR in the Middle East,” http://
www.manaarco.com/images/presentations/Fleming%20Gulf%20
Manaar%20EOR%20Abu%20Dhabi%20March%202013.pdf, accessed
30 October 2013.
Solar enhanced oil recovery An in-country value assessment for Oman