Business plan and structure pg.5
United States Market
The United States relied on net imports (imports minus exports) for about 40% of the petroleum (crude oil and petroleum products) that the United States consumed in 2012. Just over half of these imports came from the Western Hemisphere. The United States dependence on foreign petroleum has declined since peaking in 2005.
The United States consumed 18.6 million barrels per day (MMbd) of petroleum products during 2012, making the United States the world's largest petroleum consumer. The United States was third in crude oil production at 6.5 MMbd. Crude oil alone, however, does not constitute all U.S. petroleum supplies. Significant gains occur because crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and the United States have other sources of liquid fuel, including biofuels. These additional supplies totaled 4.8 MMbd in 2012.
The United States imported 11.0 MMbd of crude oil and refined petroleum products in 2012. The United States also exported 3.2 MMbd of crude oil and petroleum products, so the United States net imports (imports minus exports) equaled 7.4 MMbd.[1]
In 2012, the United States imported 2.1 MMbd of petroleum products such as gasoline, diesel fuel, heating oil, jet fuel, and other products while exporting 3.1 MMbd of products, making the United States a net exporter of petroleum products.[1]
Top sources of net crude oil and petroleum product imports
·Canada (28%)[1]
·Saudi Arabia (13%)[1]
·Mexico (10%)[1]
·Venezuela (9%)[1]
·Russia (5%)[1]
[1] Source EIA, link (current August 24, 2013): http://www.eia.gov/energy_in_brief/article/foreign_oil_dependence.cfm
Crude oil imports from the top five foreign suppliers to the United States—which in 2012 were Canada, Saudi Arabia, Mexico, Venezuela, and Iraq, in that order—accounted for almost 72% of total U.S. net crude oil imports, the highest proportion since 1997. The import share of the top five suppliers increased by 8 percentage points over the past three years despite a decline in total U.S. import volumes as the United States reduced its total crude oil imports in response to higher domestic oil production.[2]
U.S. net crude oil imports from the five countries averaged almost 6.1 million barrels per day (bbl/d) in 2012, even as total U.S. crude oil imports fell to their lowest level since 1997. Crude oil from the five countries accounted for a bigger share of overall U.S. net crude oil imports in 2012 than in previous years, at almost 72%, according to EIA's Petroleum Supply Monthly report. That share is up from around 64% in 2009, when the economic recession resulted in declining U.S. crude oil demand, and the highest share since reaching almost 73% in 1997. During 2012, Iraq replaced Nigeria as the fifth-largest supplier of U.S. crude oil imports.
Highlights from the major crude oil supplying countries to the United States in 2012 included:
·Canada - Crude oil imports by the United States averaged a record 2.4 million bbl/d, up 8% from their 2011 level.
·Saudi Arabia - Crude oil imports averaged almost 1.4 million bbl/d, up 14% from their 2011 level, and were the highest since 2008.
·Mexico - Crude oil imports of 972,000 bbl/d were down almost 12%, and fell below 1 million bbl/day for the first time since 1994, reflecting the steady decline in Mexico's crude oil production.
·
Venezuela - Crude oil imports rose 4% to 906,000 bbl/d, the first increase since 2007. Venezuela's state oil company sent more crude to U.S. refineries, which exported more gasoline and other petroleum products back to Venezuela.
·Iraq. Crude oil imports of 474,000 bbl/d were up slightly more than 3% from 2011, moving Iraq ahead of Nigeria as the fifth-largest oil supplier to the United States for the first time since 1999. Iraq's crude oil production in the second half of last year topped 3 million bbl/d for first time since the end of the Gulf War in 1990.
·
Nigeria. Crude oil imports of 405,000 bbl/d were down 42% from the year before and the lowest since 1985. Growing domestic production of light sweet crude oil of similar quality to Nigerian crude and lower demand for light sweet crude from United States East Coast refineries contributed to the decline.
U.S. production of liquid fuels (mostly oil) will increase for the next 29 years by 108.11% of 2011 production levels by 2040 peaking by year 2020 with an annual production of 7.47 million barrels per day, an increase of 131.7% compared to 2011 domestic crude oil production, according to the Energy Information Administration (EIA)
Projected crude oil production in the United States ranges from 6 to 8 million barrels per day (bbl/d) over the next 30 years in the Annual Energy Outlook 2013 (AEO2013) Reference case projection. However, under greater supply assumptions, crude oil production is sustained at a higher level of about 10 million bbl/d between 2020 and 2040
In this higher resource scenario, total U.S. liquid fuels production (which includes crude oil, natural gas liquids (NGL), refinery gains, biofuels, and other liquid fuels) increases to more than 18 million bbl/d in 2040, compared to 12 million bbl/d in the Reference case. That level of domestic production reduces net imports to 7% or less of total demand compared to 40% in 2012. Production projections inevitably reflect many uncertainties regarding the actual level of crude oil resources available, the difficulty or ease in extracting them, and the evolution of the technologies (and associated costs) used to recover them.
The EIA developed a High Oil and Gas Resource case as part of the AEO2013 to examine the effects of higher domestic production on energy demand, imports, and prices. This alternative case presents a scenario in which U.S. crude oil production continues to expand after 2020, driven primarily by tight oil production. This increased production results from assumed greater technically recoverable tight oil resources, as well as undiscovered resources in Alaska and the offshore Lower 48 states. In addition, the maximum penetration rate for gas-to-liquids (GTL) is increased and kerogen (oil shale) is assumed to begin development. In the High Oil and Gas Resource case, NGL production increases from 2.2 million bbl/d in 2011 to 5.0 million bbl/d in 2040, compared to just under 3 million bb/d in 2040 in the Reference case. GTL output reaches about 0.6 million bbl/d, compared to about 0.2 million bbl/d in the Reference case.
Estimates of technically recoverable resources from the rapidly developing tight oil formations are particularly uncertain and change over time as new information is gained through drilling, production, and technology experimentation. Projections embody many assumptions that might not prove to be valid over the long term and over all tight and shale formations. In the High Oil and Gas Resource case, the tight oil resources are increased by changing the estimated ultimate recovery (EUR) per well and assuming closer well spacing.
4.4 Market Growth
US Oil And Gas Industry Employment Growing Much Faster Than Total Private Sector Employment
From the start of 2007 through the end of 2012, total U.S. private sector employment increased by more than one million jobs, about 1%. Over the same period, the oil and natural gas industry increased by more than 162,000 jobs, a 40% increase.[6]
4.5 Customer Profile
US East Coast oil refineries enjoy a stirring comeback:
Alarm bells rang along the US Eastern Seaboard not too long ago that the region would face fuel shortages due to refinery closures in the region, but the dynamics changed with the entrance of some new players as well as domestic crude supply via rail from the Bakken Shale play.
The region is study in contrasts in a matter of a few short years. A couple of years ago, it seemed three major plants might close: the then Sunoco-owned refineries in Marcus Hook and Philadelphia, Pennsylvania, and the then ConocoPhillips-owned Trainer, Pennsylvania, refinery. All that came amid Hess and partner PDVSA initially scaling back operations of the Hovensa refinery on St. Croix, which exported to the US Atlantic Coast, to 350,000 b/d in 2011 before shutting it in January 2012.
The US Energy Information Administration focused on the potential problem in an initial report in late 2011 that was updated in the spring of last year. One thrust was EIA noting that if the Philadelphia, Marcus Hook and Trainer plants went offline, that would result in the loss of 50% of East Coast refining capacity (as of August 2011).
But, Philadelphia Energy Solutions now runs the 330,000 b/d Philadelphia refinery while a subsidiary of Delta Airlines runs the 185,000 b/d Trainer refinery, having bought it in June 2012 to recalibrate the plant to produce more jet fuel. Trainer also supplies refined products to Phillips 66 and BP. The 175,000 b/d Marcus Hook refinery was idled at the end of 2011 and now serves as a Sunoco Logistics tank farm storing gasoline and middle distillates.
While some refineries have stopped producing fuel in the region — Hess’ 70,000 FCC plant in Port Reading, New Jersey, Sunoco’s 140,000 b/d Eagle Point refinery in Westville, N.J., and the then Western Refining-owned 128,000 b/d Yorktown, Virginia, refinery (all three now serve as terminals) — the net result has hardly been devastating, given that the two Philly biggies stayed online.
The oil refinery in Trainer, Pennsylvania, that closed down nearly one year ago will restart later this month under the new ownership of Delta Air Lines, according to Reuters.
The 185,000 Trainer oil refinery had been forced to close after the previous owners, BP and Phillips 66, failed to find any interested buyers. However, a major effort to save the refinery led to a deal that made Delta the first American airline to own its own jet fuel refining plant.
The airline planned to spend around $100 million to upgrade the facility's jet fuel production capacity to around 52,000 barrels per day, but Monroe Energy, which will operate the plant, has worked out a deal to exchange its gasoline production for jet fuel from BP and Phillips 66. In all, Delta's investment is expected to save the company roughly $300 million each year in fuel costs.
"Monroe Energy is in the process of restart right now, and is on track to begin producing jet fuel at full capacity by the end of the month," said Trebor Banstetter, a spokesman for the airline.
The Associated Press reports that the a key factor in bringing the oil refinery back online is the plan to ship in crude oil from North Dakota's Bakken shale play at much lower prices that the Brent-indexed crude it used previously.
Welcome to American Refining Group, Inc.
Our unique facility is situated on approximately 131 acres in Bradford, Pennsylvania, the heart of McKean County and the birthplace of the U.S. domestic oil industry more than 100 years ago. Our refinery has a rated capacity of 10,000 barrels per day and processes 100% Pennsylvania Grade Crude purchased from sources in Pennsylvania, Ohio, New York and West Virginia.
ARG stocks are converted into high quality waxes, lubricant base oils, gasoline and fuels, as well as a wide variety of specialty products. ARG’s state-of-the-art blending and packaging facilities have the capability of producing a full spectrum of finished lubricant products which can be delivered in bulk by rail and truck, and are available in a broad range of package sizes. Our total commitment to quality is proven through our packaging plant and refinery being ISO 9001:2008 certified.
5. Marketing Plan
• We apply modern production theory and technology to remediate wells that are either non-producing or are marginally producing.
StrandedWells drilled during the boom of the 1980’s have been ‘left behind’
These neglected assets are The Now Corporation opportunityNew theory and technology enables these stranded reserves to be produced with minimal cost.
By using modern technology such as the GasGun™ we are able to significantly boost the production of these fields economically.
The petroleum industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum (oil) is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category.
Petroleum is vital to many industries, and is of importance to the maintenance of industrial civilization in its current configuration, and thus is a critical concern for many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from as low of 32% for Europe and Asia, up to a high of 53% for the Middle East.
Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world consumes 30 billion barrels (4.8 km³) of oil per year, with developed nations being the largest consumers. The United States consumed 25% of the oil produced in 2007.[1] The production, distribution, refining, and retailing of petroleum taken as a whole represents the world's largest industry in terms of dollar value.
Governments such as the United States government provide a heavy public subsidy to petroleum companies, with major tax breaks at virtually every stage of oil exploration and extraction, including for the costs of oil field leases and drilling equipment.
An oil well is a general term for any boring through the Earth's surface that is designed to find and acquire petroleum oil hydrocarbons. Usually some natural gas is produced along with the oil. A well that is designed to produce mainly or only gas may be termed a gas well.
Usually attached to the oil derrick is the Oil well Dog House where the decisions are made for actions taken on the rig floor. Newer oil wells have hydraulic feet that are called Walking Rigs that allow for the rig to move several yards on its own without taking the derrick apart. This saves time as dual laterals can be drilled.
The production stage is the most important stage of a well's life, when the oil and gas are produced. By this time, the oil rigs and workover rigs used to drill and complete the well have moved off the wellbore, and the top is usually outfitted with a collection of valves called a Christmas tree or production tree. These valves regulate pressures, control flows, and allow access to the wellbore in case further completion work is needed. From the outlet valve of the production tree, the flow can be connected to a distribution network of pipelines and tanks to supply the product to refineries, natural gas compressor stations, or oil export terminals.
As long as the pressure in the reservoir remains high enough, the production tree is all that is required to produce the well. If the pressure depletes and it is considered economically viable, an artificial lift method mentioned in the completions section can be employed.
Workovers are often necessary in older wells, which may need smaller diameter tubing, scale or paraffin removal, acid matrix jobs, or completing new zones of interest in a shallower reservoir. Such remedial work can be performed using workover rigs – also known as pulling units, completion rigs or "service rigs" – to pull and replace tubing, or by the use of well intervention techniques utilizing coiled tubing. Depending on the type of lift system and wellhead a rod rig or flushby can be used to change a pump without pulling the tubing.
Enhanced recovery methods such as water flooding, steam flooding, or CO2 flooding may be used to increase reservoir pressure and provide a "sweep" effect to push hydrocarbons out of the reservoir. Such methods require the use of injection wells (often chosen from old production wells in a carefully determined pattern), and are used when facing problems with reservoir pressure depletion, high oil viscosity, or can even be employed early in a field's life. In certain cases – depending on the reservoir's geomechanics – reservoir engineers may determine that ultimate recoverable oil may be increased by applying a waterflooding strategy early in the field's development rather than later. Such enhanced recovery techniques are often called "tertiary recovery".
A report published by the American Petroleum Institute showed a decline in crude oil inventories of 2.6 million barrels with a fall of 900,000 barrels in gasoline supplies and a decline of 700,000 barrels in distillate supplies. Meanwhile, commercial crude inventories have fallen by 2.8 million barrels with the total U.S. commercial crude inventory of 364.2 million barrels. In the previous week, crude oil inventories fell 6.90 million to 367.00 million barrels. The fall in crude supplies is attributed to reduction from Canada as well as increased demand from the WP Whiting Indiana Plant that restarted work. In spite of the drop in the crude stock piles, the inventories are at more than comfortable levels and so is the gasoline supply.
WTI crude price at Brent price levels
For the week that went by, crude imports averaged 327,000 barrels a day up by more than 8 million barrels a day. On the other hand, refineries, for the above period, were reportedly running at 92.3 % of capacity with daily input of sixteen million barrels per day. At least for the domestic refining sector in the US, the present is the best time. One reason for the- recent- narrow price difference between WTI and Brent crude oil prices.
Elsewhere, China's manufacturing has reported an eleven month low this month. Analysts fear of a slowdown in Chinese economy with lesser demand for oil. So the latest weak manufacturing data from the Asian Giant is all it prevents the investors from going hunky-dory over the prices. As if they aren't already high, even with record oil production in the US.
What guarantees the minimum price of oil (and gas)? Surprisingly it's not production costs. Indeed.
Obviously, drilling for oil is pricey. Expensive labor, swelling cost of inputs like diesel fuel, chemicals and steel have all, in various degrees, increased the cost of exploration and production. The supplies from unconventional sources are also expensive. Furthermore, with stringent environmental norms in place, oil companies are forced to shell out more to keep their licenses. According to a research report published last year by Bernstein Research the cost of production in the most expensive (marginal cost of supply) new field has shot up to $92 per barrel, quickly nearing $ 100 per barrel-excusing OPEC and former Soviet Union. In simple economic terms, higher oil prices lure the companies to spend humongous resources on exploration and drilling. If the prices fall below a certain range, it becomes unviable for oil companies to spend energy on future explorations.
Indeed, like bees complaining of honey, oil and gas companies shout of the need to have oil prices between $80 - $85 a barrel for sustained exploration and development. Of course, it's the higher oil prices, as the popular justification goes, that permit oil companies to explore oil sands and shale and recover the higher production cost. And, we are talking about billions of dollars as investment, as profit. Counter intuitive? Well, what about the existing wells? Got you! Don't existing wells produce oil too? In other words, we aren't talking about wells that don't exist, are we? Reel or real? Ans: Real. Productive wells on large reserves continue to process oil and gas. What about them?
Except, we are back to the question: why not lower oil prices? The answer lies in a bunch of reasons, the biggest being the price of political stability.
Drilling activity should remain strong in the US and Canada in 2012 after substantial year-to-year gains in 2011. OGJ looks for a 4% increase in total drilling in the US and an 11.5% hike in Canada in 2012. Operators in the US are for the most part maximizing efforts in plays for oil and wet gas and relaxing capital spending in dry gas areas. Horizontal drilling and hydraulic fracturing continue to be the primary drivers. Shale plays are at the fore of unconventional activity, while low-permeability plays encompass large areas in Texas, Oklahoma, and other states. Few companies had announced 2012 capital spending plans by the time of this writing in mid-December 2011.
The history of the petroleum industry in the United States goes back to the early 19th century, although the indigenous peoples, like many ancient societies, have used petroleum seeps since prehistoric times; where found, these seeps signaled the growth of the industry from the earliest discoveries to the more recent. Petroleum became a major industry following the oil discovery at Oil Creek Pennsylvania in 1859. For much of the 19th and 20th centuries, the US was the largest oil producing country in the world; it is now the 3rd largest. However, the International Energy Agency projected that, due to the recent tight oil boom, the U.S. will surpass both Saudi Arabia and Russia and become the worlds largest oil producer circa 2017-2020. During the oil spike of 2007-08, energy independence returned to the forefront of American politics for the first time since the 1973 oil embargo. One of the critical differences between the United States and other industrialized countries such as Japan or Germany is the U.S. sits upon substantial oil deposits. Six decades ago, the U.S. was a net exporter of oil. While even maximum exploitation of American oil resources could never meet the country's huge demand, there are some benefits to be had in relying more on domestic resources.
THE NOW CORPORATION IS IN PENNSYLVANIA WHERE ONE OF THE BIGGEST PLAYS EXISTS AND NEEDS PROMOTION:
The Marcellus Formation is a black shale that may contain limestone beds and concentrations of iron pyrite (FeS2) and siderite (FeCO3).[7] Its sedimentary structure, or bedding, is moderately well developed. Like most shales, it tends to split easily along the bedding plane, a property known as fissility.[7] Lighter colored shales in the upper portion of the formation tend to split into small thin-edged fragments after exposure.[8] These fragments may have rust stains from exposure of pyrite to air, and tiny gypsum (CaSO4·2H2O) crystals from the reaction between pyrite and limestone particles.[8] Fresh exposures of the pyriteiferous shale may develop the secondary mineralization of orange limonite (FeO(OH)·nH2O), and the pale yellow efflorescence or bloom of sulfur, associated with acid rock drainage.
Maximum thickness of the Marcellus ranges from 270 m (890 ft) in New Jersey,[1] to 12 m (40 ft) in Canada.[25] In West Virginia, the Marcellus Formation is as much as 60 m (200 ft) thick.[68] In extreme eastern Pennsylvania, it is 240 m (790 ft) thick,[39] thinning to the west, becoming only 15 m (49 ft) thick along the Ohio River, and only a few feet in Licking County, Ohio.[4] The thinning, or stratigraphic convergence, from east to west is caused by decreasing grain size in the clastic deposits, which entered the basin from the east.[83] The beds finally "pinch out" westward because deposition was limited by the Cincinnati Arch,[45][92] the bulge that formed the west shore of the basin. Where the formation is relatively thick, it is divided into several members, and as the formation continues to thicken to the east, these members are further divided. Some workers chose to classify the Marcellus as a subgroup, and classify some of the members as separate formations.
Natural Gas
Main article: Marcellus natural gas trend
The Marcellus natural gas trend, which encompasses 104,000 square miles and stretches across Pennsylvania and West Virginia, and into southeast Ohio and upstate New York, is the largest source of natural gas in the United States, and production was still growing rapidly in 2013. The Marcellus is an example of shale gas, natural gas trapped in low-permeability shale, and requires the well completion method of hydraulic fracturing to allow the gas to flow to the well bore. The surge in drilling activity in the Marcellus Shale since 2008 has generated both economic benefits and considerable controversy.
5.1 Competitive Advantage
The SWC is an industry-driven consortium that is focused on the development, demonstration, and deployment of new technologies needed to improve the production performance of natural gas and petroleum stripper wells. SWC is comprised of natural gas and petroleum producers, service companies, industry consultants, universities, and industrial trade organizations. The Strategic Center for Natural Gas and the New York State Energy Research and Development Authority provide base funding and guidance to the consortium. By pooling financial and human resources, the SWC membership can economically develop technologies that will extend the life and production of the nation's stripper wells.
Formation
SWC was established on September 30, 2000 through a cooperative agreement between the U.S. Department of Energy (DOE) and The Pennsylvania State University. This agreement provides approximately $3M of base funding over a three year period. The agreement provides Penn State the overarching management responsibilities for the consortium.
Organizational Structure
SWC is industry-driven and is tailored to meet the needs of its members. Active industrial participation and leadership is key to making the consortium a success. The SWC has a Constitution and Bylaws under which the consortium will be governed to operate. Each SWC member appoints one representative to a Technical Advisory Committee. The Technical Advisory Committee is responsible for steering the technical direction of the consortium and is responsible for electing a seven-member Executive Council. The Executive Council is responsible for selecting proposed research projects that will lead to improving natural gas/ petroleum production from stripper wells. The process of having industry develop, review, and select projects for funding will ensure that the consortium conducts research that is relevant and timely to the natural gas and petroleum industry.
Technology Development
Research will be conducted in three broad areas: reservoir remediation, wellbore clean-up, and surface system optimization. Research outside of these three areas may be considered pending approval of the program sponsors. Specific research projects will be developed by the membership using a standardized proposal template. Proposal submission is limited to full members of the consortium. Collaboration between full members is encouraged. Projects will be funded on an annual basis. Each proposal is required to provide a minimum of 30% cost share which is to be provided by the project participants. Cost share may be in the form of cash and/or in-kind support. The use of Federal funds for cost share is prohibited. Intellectual property provisions will follow Penn State's Cooperative Agreement with DOE.
Successful Oil and Gas Technology Transfer Program Extended to 2015
Long-Term Success of Stripper Well Consortium Supports Small Oil and Gas Producers
Washington, D.C. – The Stripper Well Consortium (SWC) – a program that has successfully provided and
transferred technological advances to small, independent oil and gas operators over the past nine years – has been
extended to 2015 by the U.S. Department of Energy (DOE).
An industry-driven consortium initiated in 2000, SWCÂ’s goal is to keep "stripper wells" productive in an
environmentally safe manner, maximizing the recovery of domestic hydrocarbon resources. The consortium is
managed and administered by The Pennsylvania State University on behalf of DOE; the Office of Fossil EnergyÂ’s
(FE) National Energy Technology Laboratory (NETL) and the New York State Energy Research and Development
Authority provide base funding and technical guidance to the program.
Stripper wells produce less than 10 barrels of oil or 60,000 cubic feet of natural gas per day. More than 396,000
stripper oil wells account for nearly 800,000 barrels of oil per day, or about 10 percent of the lower-48 production,
and more than 322,000 stripper natural gas wells account for over 1.7 trillion cubic feet of annual natural gas
production, or 9 percent of the natural gas produced in the lower 48.
Once a well is plugged and abandoned, the reserves left behind are "lost forever" since it is typically uneconomical to
drill another well to recover these abandoned reserves. Every dollar of stripper oil and natural gas production creates
roughly one dollar of economic activity and nearly 10 jobs result from every million dollars of stripper well oil and
natural gas produced.
Nearly 100 projects have been funded since the initiation of the consortium, which consists of small domestic oil and
natural gas producers, as well as service and supply companies, trade associations, industry consultants, technology
entrepreneurs, and academia. The successful development and commercialization of many of these projects provided
the incentive for DOE to continue program funding. Several of the successes include:
The Gas Operated Automatic Lift (GOAL) PetroPump developed by Brandywine Energy & Development
Company. The pump removes fluid from the wellbore more consistently than currently available plunger lift
systems. Test results on wells in New York showed a 1.5 to 2.3-time increase in gas yield using the GOAL
PetroPump over other casing plunger- type tools. The tool is inexpensive to operate because it requires no
external energy source and limited manpower.
The Vortex Flow Tools LLC vortex flow unit works similar to a tornado, using produced natural gas to
accelerate the water velocity, reduce friction, and assist in lifting and removing fluids. The results of using the
flow unit are increased production while reducing the amount of down-time due to water in gas gathering and
flow lines. Over 200 Vortex surface tools have been installed in gas-gathering and production lines across the
United States.
Pumping Solutions, Inc. (now part of Smith Lift LLC) has developed a new hydraulic diaphragm submersible
pump to continuously clean stripper wells. The pump has been proven to be tolerant of coal and sand fines at
higher concentrations than traditional systems. Among other features, it pumps gas/liquid mixtures, can be
pumped dry without damage (within motor limits), maintains a constant output with depth, and has been
shown to be highly efficient with reduced electric costs.
Tubel Technologies, Inc. developed three technologies for stripper wells. The first was a low-cost, real-time,
down-hole wireless gauge. The gauge primarily measures temperature and pressure, but other parameters
can also be measured. The wireless feature of the system eliminates the need for cables, clamps, and splices
within the wellbore, thus significantly lowering cost and time for system deployment. The second technology
was a plunger lift optimization process, which provides the operator information related to the performance of
DOE - Fossil Energy Techline: http://fossil.energy.gov/news/techlines/2010/PrintVersion_1_38...
1 of 2 6/25/10 10:42 AMthe plunger, identifying wells where the plunger is not operating optimally. The third technology is an upgrade
of the second whereby the information captured at the wellhead is transmitted wirelessly to a control room at
a remote location. This allows the operator to monitor hundreds of wells from a single location and could
identify potential well and plunger lift problems fairly quickly to correct problems with minimum production
loses.
Pre-Pump-Off Controls, a set of technologies developed by Oil Well Sentry, Inc., eliminates fluid level issues in
beam-pumped wells. The system monitors the amount of fluid in the barrel pump at the bottom of the well
and shuts off the beam pump motor or engine when the well is "pumped off." Use of the system has
significantly increased production while decreasing motor/engine energy consumption by 30 percent.
One out of every six barrels of crude oil produced in the United Statescomes from a marginal well - a well whose production has slowed to 10 to 15 barrels a day or less. Over 78 percent of the total number of U.S.oil wells are now classified as marginal wells. There are over 400,000 ofthese wells in the United States, and together they produce nearly 900thousand barrels of oil per day, 15 percent of U.S. production.
Many of these wells are marginally economic and at risk of beingprematurely abandoned. When world oil prices were in the low teens inthe late 1990s, the oil that flowed from marginal wells often cost moreto produce than the price it brought on the market. From 1994 to 2003,approximately 142,000 marginal wells were plugged andabandoned, costing the U.S. more than $3.0 billion in lost oil revenue at the EIA 2003 average world oil price.
When marginal wells are prematurely abandoned, significant quantitiesof oil remain behind. A common misperception is that oil left behindremains readily available for production when oil prices rise again. In
most instances, this is not the case, leaving our nation more dependenton foreign oil imports, even though prices have now recovered andreached record highs in 2004.
When marginal fields are abandoned, the surface infrastructure - the pumps, piping, storage vessels, and other processing equipment - is removed and the lease forfeited. Since much of this equipment wasprobably installed over many years, replacing it over a short periodshould oil prices jump upward, is enormously expensive. Oil prices wouldhave to rise several times higher than their historic highs - and mostimportantly, stay at elevated levels for many years - before there wouldbe sufficient economic justification to bring many marginal fields backinto production. As a result, once a marginal field abandoned, the oilthat remains behind is often lost forever. The costs of re-drilling aplugged well may be as much as or more than drilling a new well.
Estimates are that the marginal wells plugged and abandoned between 1994 and 2003 represented 110 million barrels of crude oil that was still in the ground.
The IOGCC defines a marginal (stripper) well as a well the produces 10 barrels of oil or 60 Mcf of natural gas per day or less. Generally, these wells started their productive life producing much greater volumes using natural pressure. Over time, the pressure decreases and production drops. That is not to say that the reservoirs which feed the wells are necessarily depleted. It has been estimated that in many cases marginal wells may be accessing a reservoir which stills holds two-thirds of its potential value.
Pennsylvania has a long history of producing natural gas from a large number of conventional shallow low-production wells, principally for domestic household use. Only Texas has more currently active wells.[1] Pennsylvania ranks 15th in natural gas production among U.S. states, and it is the largest producer without a severance tax.
The advancement of drilling technology and water treatment has strengthened the economic viability and long-term return on investment of extracting natural gas from the Marcellus Shale formation. Marcellus Shale is a unit of marine sedimentary rock found in eastern North America. It extends throughout much of the Appalachian Basin extending across West Virginia; western Ohio; western, central, and northeastern Pennsylvania; southwestern New York; and small portions of Virginia and Maryland.[2] The shale contains largely untapped natural gas reserves that, according to several studies, could conservatively supply U.S. consumption for nearly two decades.[3] The Marcellus Shale formation is estimated to be 10 times larger than the Barnett Shale formation in Texas and is attracting attention from major Texas-based natural gas production companies and big oil companies.
The United States relied on net imports (imports minus exports) for about 40% of the petroleum (crude oil and petroleum products) that the United States consumed in 2012. Just over half of these imports came from the Western Hemisphere. The United States dependence on foreign petroleum has declined since peaking in 2005.
The United States consumed 18.6 million barrels per day (MMbd) of petroleum products during 2012, making the United States the world's largest petroleum consumer. The United States was third in crude oil production at 6.5 MMbd. Crude oil alone, however, does not constitute all U.S. petroleum supplies. Significant gains occur because crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and the United States have other sources of liquid fuel, including biofuels. These additional supplies totaled 4.8 MMbd in 2012.
The United States imported 11.0 MMbd of crude oil and refined petroleum products in 2012. The United States also exported 3.2 MMbd of crude oil and petroleum products, so the United States net imports (imports minus exports) equaled 7.4 MMbd.[1]
In 2012, the United States imported 2.1 MMbd of petroleum products such as gasoline, diesel fuel, heating oil, jet fuel, and other products while exporting 3.1 MMbd of products, making the United States a net exporter of petroleum products.[1]
Top sources of net crude oil and petroleum product imports
·Canada (28%)[1]
·Saudi Arabia (13%)[1]
·Mexico (10%)[1]
·Venezuela (9%)[1]
·Russia (5%)[1]
[1] Source EIA, link (current August 24, 2013): http://www.eia.gov/energy_in_brief/article/foreign_oil_dependence.cfm
Crude oil imports from the top five foreign suppliers to the United States—which in 2012 were Canada, Saudi Arabia, Mexico, Venezuela, and Iraq, in that order—accounted for almost 72% of total U.S. net crude oil imports, the highest proportion since 1997. The import share of the top five suppliers increased by 8 percentage points over the past three years despite a decline in total U.S. import volumes as the United States reduced its total crude oil imports in response to higher domestic oil production.[2]
U.S. net crude oil imports from the five countries averaged almost 6.1 million barrels per day (bbl/d) in 2012, even as total U.S. crude oil imports fell to their lowest level since 1997. Crude oil from the five countries accounted for a bigger share of overall U.S. net crude oil imports in 2012 than in previous years, at almost 72%, according to EIA's Petroleum Supply Monthly report. That share is up from around 64% in 2009, when the economic recession resulted in declining U.S. crude oil demand, and the highest share since reaching almost 73% in 1997. During 2012, Iraq replaced Nigeria as the fifth-largest supplier of U.S. crude oil imports.
Highlights from the major crude oil supplying countries to the United States in 2012 included:
·Canada - Crude oil imports by the United States averaged a record 2.4 million bbl/d, up 8% from their 2011 level.
·Saudi Arabia - Crude oil imports averaged almost 1.4 million bbl/d, up 14% from their 2011 level, and were the highest since 2008.
·Mexico - Crude oil imports of 972,000 bbl/d were down almost 12%, and fell below 1 million bbl/day for the first time since 1994, reflecting the steady decline in Mexico's crude oil production.
·
Venezuela - Crude oil imports rose 4% to 906,000 bbl/d, the first increase since 2007. Venezuela's state oil company sent more crude to U.S. refineries, which exported more gasoline and other petroleum products back to Venezuela.
·Iraq. Crude oil imports of 474,000 bbl/d were up slightly more than 3% from 2011, moving Iraq ahead of Nigeria as the fifth-largest oil supplier to the United States for the first time since 1999. Iraq's crude oil production in the second half of last year topped 3 million bbl/d for first time since the end of the Gulf War in 1990.
·
Nigeria. Crude oil imports of 405,000 bbl/d were down 42% from the year before and the lowest since 1985. Growing domestic production of light sweet crude oil of similar quality to Nigerian crude and lower demand for light sweet crude from United States East Coast refineries contributed to the decline.
U.S. production of liquid fuels (mostly oil) will increase for the next 29 years by 108.11% of 2011 production levels by 2040 peaking by year 2020 with an annual production of 7.47 million barrels per day, an increase of 131.7% compared to 2011 domestic crude oil production, according to the Energy Information Administration (EIA)
Projected crude oil production in the United States ranges from 6 to 8 million barrels per day (bbl/d) over the next 30 years in the Annual Energy Outlook 2013 (AEO2013) Reference case projection. However, under greater supply assumptions, crude oil production is sustained at a higher level of about 10 million bbl/d between 2020 and 2040
In this higher resource scenario, total U.S. liquid fuels production (which includes crude oil, natural gas liquids (NGL), refinery gains, biofuels, and other liquid fuels) increases to more than 18 million bbl/d in 2040, compared to 12 million bbl/d in the Reference case. That level of domestic production reduces net imports to 7% or less of total demand compared to 40% in 2012. Production projections inevitably reflect many uncertainties regarding the actual level of crude oil resources available, the difficulty or ease in extracting them, and the evolution of the technologies (and associated costs) used to recover them.
The EIA developed a High Oil and Gas Resource case as part of the AEO2013 to examine the effects of higher domestic production on energy demand, imports, and prices. This alternative case presents a scenario in which U.S. crude oil production continues to expand after 2020, driven primarily by tight oil production. This increased production results from assumed greater technically recoverable tight oil resources, as well as undiscovered resources in Alaska and the offshore Lower 48 states. In addition, the maximum penetration rate for gas-to-liquids (GTL) is increased and kerogen (oil shale) is assumed to begin development. In the High Oil and Gas Resource case, NGL production increases from 2.2 million bbl/d in 2011 to 5.0 million bbl/d in 2040, compared to just under 3 million bb/d in 2040 in the Reference case. GTL output reaches about 0.6 million bbl/d, compared to about 0.2 million bbl/d in the Reference case.
Estimates of technically recoverable resources from the rapidly developing tight oil formations are particularly uncertain and change over time as new information is gained through drilling, production, and technology experimentation. Projections embody many assumptions that might not prove to be valid over the long term and over all tight and shale formations. In the High Oil and Gas Resource case, the tight oil resources are increased by changing the estimated ultimate recovery (EUR) per well and assuming closer well spacing.
4.4 Market Growth
US Oil And Gas Industry Employment Growing Much Faster Than Total Private Sector Employment
From the start of 2007 through the end of 2012, total U.S. private sector employment increased by more than one million jobs, about 1%. Over the same period, the oil and natural gas industry increased by more than 162,000 jobs, a 40% increase.[6]
4.5 Customer Profile
US East Coast oil refineries enjoy a stirring comeback:
Alarm bells rang along the US Eastern Seaboard not too long ago that the region would face fuel shortages due to refinery closures in the region, but the dynamics changed with the entrance of some new players as well as domestic crude supply via rail from the Bakken Shale play.
The region is study in contrasts in a matter of a few short years. A couple of years ago, it seemed three major plants might close: the then Sunoco-owned refineries in Marcus Hook and Philadelphia, Pennsylvania, and the then ConocoPhillips-owned Trainer, Pennsylvania, refinery. All that came amid Hess and partner PDVSA initially scaling back operations of the Hovensa refinery on St. Croix, which exported to the US Atlantic Coast, to 350,000 b/d in 2011 before shutting it in January 2012.
The US Energy Information Administration focused on the potential problem in an initial report in late 2011 that was updated in the spring of last year. One thrust was EIA noting that if the Philadelphia, Marcus Hook and Trainer plants went offline, that would result in the loss of 50% of East Coast refining capacity (as of August 2011).
But, Philadelphia Energy Solutions now runs the 330,000 b/d Philadelphia refinery while a subsidiary of Delta Airlines runs the 185,000 b/d Trainer refinery, having bought it in June 2012 to recalibrate the plant to produce more jet fuel. Trainer also supplies refined products to Phillips 66 and BP. The 175,000 b/d Marcus Hook refinery was idled at the end of 2011 and now serves as a Sunoco Logistics tank farm storing gasoline and middle distillates.
While some refineries have stopped producing fuel in the region — Hess’ 70,000 FCC plant in Port Reading, New Jersey, Sunoco’s 140,000 b/d Eagle Point refinery in Westville, N.J., and the then Western Refining-owned 128,000 b/d Yorktown, Virginia, refinery (all three now serve as terminals) — the net result has hardly been devastating, given that the two Philly biggies stayed online.
The oil refinery in Trainer, Pennsylvania, that closed down nearly one year ago will restart later this month under the new ownership of Delta Air Lines, according to Reuters.
The 185,000 Trainer oil refinery had been forced to close after the previous owners, BP and Phillips 66, failed to find any interested buyers. However, a major effort to save the refinery led to a deal that made Delta the first American airline to own its own jet fuel refining plant.
The airline planned to spend around $100 million to upgrade the facility's jet fuel production capacity to around 52,000 barrels per day, but Monroe Energy, which will operate the plant, has worked out a deal to exchange its gasoline production for jet fuel from BP and Phillips 66. In all, Delta's investment is expected to save the company roughly $300 million each year in fuel costs.
"Monroe Energy is in the process of restart right now, and is on track to begin producing jet fuel at full capacity by the end of the month," said Trebor Banstetter, a spokesman for the airline.
The Associated Press reports that the a key factor in bringing the oil refinery back online is the plan to ship in crude oil from North Dakota's Bakken shale play at much lower prices that the Brent-indexed crude it used previously.
Welcome to American Refining Group, Inc.
Our unique facility is situated on approximately 131 acres in Bradford, Pennsylvania, the heart of McKean County and the birthplace of the U.S. domestic oil industry more than 100 years ago. Our refinery has a rated capacity of 10,000 barrels per day and processes 100% Pennsylvania Grade Crude purchased from sources in Pennsylvania, Ohio, New York and West Virginia.
ARG stocks are converted into high quality waxes, lubricant base oils, gasoline and fuels, as well as a wide variety of specialty products. ARG’s state-of-the-art blending and packaging facilities have the capability of producing a full spectrum of finished lubricant products which can be delivered in bulk by rail and truck, and are available in a broad range of package sizes. Our total commitment to quality is proven through our packaging plant and refinery being ISO 9001:2008 certified.
5. Marketing Plan
• We apply modern production theory and technology to remediate wells that are either non-producing or are marginally producing.
StrandedWells drilled during the boom of the 1980’s have been ‘left behind’
These neglected assets are The Now Corporation opportunityNew theory and technology enables these stranded reserves to be produced with minimal cost.
By using modern technology such as the GasGun™ we are able to significantly boost the production of these fields economically.
The petroleum industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum (oil) is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category.
Petroleum is vital to many industries, and is of importance to the maintenance of industrial civilization in its current configuration, and thus is a critical concern for many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from as low of 32% for Europe and Asia, up to a high of 53% for the Middle East.
Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world consumes 30 billion barrels (4.8 km³) of oil per year, with developed nations being the largest consumers. The United States consumed 25% of the oil produced in 2007.[1] The production, distribution, refining, and retailing of petroleum taken as a whole represents the world's largest industry in terms of dollar value.
Governments such as the United States government provide a heavy public subsidy to petroleum companies, with major tax breaks at virtually every stage of oil exploration and extraction, including for the costs of oil field leases and drilling equipment.
An oil well is a general term for any boring through the Earth's surface that is designed to find and acquire petroleum oil hydrocarbons. Usually some natural gas is produced along with the oil. A well that is designed to produce mainly or only gas may be termed a gas well.
Usually attached to the oil derrick is the Oil well Dog House where the decisions are made for actions taken on the rig floor. Newer oil wells have hydraulic feet that are called Walking Rigs that allow for the rig to move several yards on its own without taking the derrick apart. This saves time as dual laterals can be drilled.
The production stage is the most important stage of a well's life, when the oil and gas are produced. By this time, the oil rigs and workover rigs used to drill and complete the well have moved off the wellbore, and the top is usually outfitted with a collection of valves called a Christmas tree or production tree. These valves regulate pressures, control flows, and allow access to the wellbore in case further completion work is needed. From the outlet valve of the production tree, the flow can be connected to a distribution network of pipelines and tanks to supply the product to refineries, natural gas compressor stations, or oil export terminals.
As long as the pressure in the reservoir remains high enough, the production tree is all that is required to produce the well. If the pressure depletes and it is considered economically viable, an artificial lift method mentioned in the completions section can be employed.
Workovers are often necessary in older wells, which may need smaller diameter tubing, scale or paraffin removal, acid matrix jobs, or completing new zones of interest in a shallower reservoir. Such remedial work can be performed using workover rigs – also known as pulling units, completion rigs or "service rigs" – to pull and replace tubing, or by the use of well intervention techniques utilizing coiled tubing. Depending on the type of lift system and wellhead a rod rig or flushby can be used to change a pump without pulling the tubing.
Enhanced recovery methods such as water flooding, steam flooding, or CO2 flooding may be used to increase reservoir pressure and provide a "sweep" effect to push hydrocarbons out of the reservoir. Such methods require the use of injection wells (often chosen from old production wells in a carefully determined pattern), and are used when facing problems with reservoir pressure depletion, high oil viscosity, or can even be employed early in a field's life. In certain cases – depending on the reservoir's geomechanics – reservoir engineers may determine that ultimate recoverable oil may be increased by applying a waterflooding strategy early in the field's development rather than later. Such enhanced recovery techniques are often called "tertiary recovery".
A report published by the American Petroleum Institute showed a decline in crude oil inventories of 2.6 million barrels with a fall of 900,000 barrels in gasoline supplies and a decline of 700,000 barrels in distillate supplies. Meanwhile, commercial crude inventories have fallen by 2.8 million barrels with the total U.S. commercial crude inventory of 364.2 million barrels. In the previous week, crude oil inventories fell 6.90 million to 367.00 million barrels. The fall in crude supplies is attributed to reduction from Canada as well as increased demand from the WP Whiting Indiana Plant that restarted work. In spite of the drop in the crude stock piles, the inventories are at more than comfortable levels and so is the gasoline supply.
WTI crude price at Brent price levels
For the week that went by, crude imports averaged 327,000 barrels a day up by more than 8 million barrels a day. On the other hand, refineries, for the above period, were reportedly running at 92.3 % of capacity with daily input of sixteen million barrels per day. At least for the domestic refining sector in the US, the present is the best time. One reason for the- recent- narrow price difference between WTI and Brent crude oil prices.
Elsewhere, China's manufacturing has reported an eleven month low this month. Analysts fear of a slowdown in Chinese economy with lesser demand for oil. So the latest weak manufacturing data from the Asian Giant is all it prevents the investors from going hunky-dory over the prices. As if they aren't already high, even with record oil production in the US.
What guarantees the minimum price of oil (and gas)? Surprisingly it's not production costs. Indeed.
Obviously, drilling for oil is pricey. Expensive labor, swelling cost of inputs like diesel fuel, chemicals and steel have all, in various degrees, increased the cost of exploration and production. The supplies from unconventional sources are also expensive. Furthermore, with stringent environmental norms in place, oil companies are forced to shell out more to keep their licenses. According to a research report published last year by Bernstein Research the cost of production in the most expensive (marginal cost of supply) new field has shot up to $92 per barrel, quickly nearing $ 100 per barrel-excusing OPEC and former Soviet Union. In simple economic terms, higher oil prices lure the companies to spend humongous resources on exploration and drilling. If the prices fall below a certain range, it becomes unviable for oil companies to spend energy on future explorations.
Indeed, like bees complaining of honey, oil and gas companies shout of the need to have oil prices between $80 - $85 a barrel for sustained exploration and development. Of course, it's the higher oil prices, as the popular justification goes, that permit oil companies to explore oil sands and shale and recover the higher production cost. And, we are talking about billions of dollars as investment, as profit. Counter intuitive? Well, what about the existing wells? Got you! Don't existing wells produce oil too? In other words, we aren't talking about wells that don't exist, are we? Reel or real? Ans: Real. Productive wells on large reserves continue to process oil and gas. What about them?
Except, we are back to the question: why not lower oil prices? The answer lies in a bunch of reasons, the biggest being the price of political stability.
Drilling activity should remain strong in the US and Canada in 2012 after substantial year-to-year gains in 2011. OGJ looks for a 4% increase in total drilling in the US and an 11.5% hike in Canada in 2012. Operators in the US are for the most part maximizing efforts in plays for oil and wet gas and relaxing capital spending in dry gas areas. Horizontal drilling and hydraulic fracturing continue to be the primary drivers. Shale plays are at the fore of unconventional activity, while low-permeability plays encompass large areas in Texas, Oklahoma, and other states. Few companies had announced 2012 capital spending plans by the time of this writing in mid-December 2011.
The history of the petroleum industry in the United States goes back to the early 19th century, although the indigenous peoples, like many ancient societies, have used petroleum seeps since prehistoric times; where found, these seeps signaled the growth of the industry from the earliest discoveries to the more recent. Petroleum became a major industry following the oil discovery at Oil Creek Pennsylvania in 1859. For much of the 19th and 20th centuries, the US was the largest oil producing country in the world; it is now the 3rd largest. However, the International Energy Agency projected that, due to the recent tight oil boom, the U.S. will surpass both Saudi Arabia and Russia and become the worlds largest oil producer circa 2017-2020. During the oil spike of 2007-08, energy independence returned to the forefront of American politics for the first time since the 1973 oil embargo. One of the critical differences between the United States and other industrialized countries such as Japan or Germany is the U.S. sits upon substantial oil deposits. Six decades ago, the U.S. was a net exporter of oil. While even maximum exploitation of American oil resources could never meet the country's huge demand, there are some benefits to be had in relying more on domestic resources.
THE NOW CORPORATION IS IN PENNSYLVANIA WHERE ONE OF THE BIGGEST PLAYS EXISTS AND NEEDS PROMOTION:
The Marcellus Formation is a black shale that may contain limestone beds and concentrations of iron pyrite (FeS2) and siderite (FeCO3).[7] Its sedimentary structure, or bedding, is moderately well developed. Like most shales, it tends to split easily along the bedding plane, a property known as fissility.[7] Lighter colored shales in the upper portion of the formation tend to split into small thin-edged fragments after exposure.[8] These fragments may have rust stains from exposure of pyrite to air, and tiny gypsum (CaSO4·2H2O) crystals from the reaction between pyrite and limestone particles.[8] Fresh exposures of the pyriteiferous shale may develop the secondary mineralization of orange limonite (FeO(OH)·nH2O), and the pale yellow efflorescence or bloom of sulfur, associated with acid rock drainage.
Maximum thickness of the Marcellus ranges from 270 m (890 ft) in New Jersey,[1] to 12 m (40 ft) in Canada.[25] In West Virginia, the Marcellus Formation is as much as 60 m (200 ft) thick.[68] In extreme eastern Pennsylvania, it is 240 m (790 ft) thick,[39] thinning to the west, becoming only 15 m (49 ft) thick along the Ohio River, and only a few feet in Licking County, Ohio.[4] The thinning, or stratigraphic convergence, from east to west is caused by decreasing grain size in the clastic deposits, which entered the basin from the east.[83] The beds finally "pinch out" westward because deposition was limited by the Cincinnati Arch,[45][92] the bulge that formed the west shore of the basin. Where the formation is relatively thick, it is divided into several members, and as the formation continues to thicken to the east, these members are further divided. Some workers chose to classify the Marcellus as a subgroup, and classify some of the members as separate formations.
Natural Gas
Main article: Marcellus natural gas trend
The Marcellus natural gas trend, which encompasses 104,000 square miles and stretches across Pennsylvania and West Virginia, and into southeast Ohio and upstate New York, is the largest source of natural gas in the United States, and production was still growing rapidly in 2013. The Marcellus is an example of shale gas, natural gas trapped in low-permeability shale, and requires the well completion method of hydraulic fracturing to allow the gas to flow to the well bore. The surge in drilling activity in the Marcellus Shale since 2008 has generated both economic benefits and considerable controversy.
5.1 Competitive Advantage
The SWC is an industry-driven consortium that is focused on the development, demonstration, and deployment of new technologies needed to improve the production performance of natural gas and petroleum stripper wells. SWC is comprised of natural gas and petroleum producers, service companies, industry consultants, universities, and industrial trade organizations. The Strategic Center for Natural Gas and the New York State Energy Research and Development Authority provide base funding and guidance to the consortium. By pooling financial and human resources, the SWC membership can economically develop technologies that will extend the life and production of the nation's stripper wells.
Formation
SWC was established on September 30, 2000 through a cooperative agreement between the U.S. Department of Energy (DOE) and The Pennsylvania State University. This agreement provides approximately $3M of base funding over a three year period. The agreement provides Penn State the overarching management responsibilities for the consortium.
Organizational Structure
SWC is industry-driven and is tailored to meet the needs of its members. Active industrial participation and leadership is key to making the consortium a success. The SWC has a Constitution and Bylaws under which the consortium will be governed to operate. Each SWC member appoints one representative to a Technical Advisory Committee. The Technical Advisory Committee is responsible for steering the technical direction of the consortium and is responsible for electing a seven-member Executive Council. The Executive Council is responsible for selecting proposed research projects that will lead to improving natural gas/ petroleum production from stripper wells. The process of having industry develop, review, and select projects for funding will ensure that the consortium conducts research that is relevant and timely to the natural gas and petroleum industry.
Technology Development
Research will be conducted in three broad areas: reservoir remediation, wellbore clean-up, and surface system optimization. Research outside of these three areas may be considered pending approval of the program sponsors. Specific research projects will be developed by the membership using a standardized proposal template. Proposal submission is limited to full members of the consortium. Collaboration between full members is encouraged. Projects will be funded on an annual basis. Each proposal is required to provide a minimum of 30% cost share which is to be provided by the project participants. Cost share may be in the form of cash and/or in-kind support. The use of Federal funds for cost share is prohibited. Intellectual property provisions will follow Penn State's Cooperative Agreement with DOE.
Successful Oil and Gas Technology Transfer Program Extended to 2015
Long-Term Success of Stripper Well Consortium Supports Small Oil and Gas Producers
Washington, D.C. – The Stripper Well Consortium (SWC) – a program that has successfully provided and
transferred technological advances to small, independent oil and gas operators over the past nine years – has been
extended to 2015 by the U.S. Department of Energy (DOE).
An industry-driven consortium initiated in 2000, SWCÂ’s goal is to keep "stripper wells" productive in an
environmentally safe manner, maximizing the recovery of domestic hydrocarbon resources. The consortium is
managed and administered by The Pennsylvania State University on behalf of DOE; the Office of Fossil EnergyÂ’s
(FE) National Energy Technology Laboratory (NETL) and the New York State Energy Research and Development
Authority provide base funding and technical guidance to the program.
Stripper wells produce less than 10 barrels of oil or 60,000 cubic feet of natural gas per day. More than 396,000
stripper oil wells account for nearly 800,000 barrels of oil per day, or about 10 percent of the lower-48 production,
and more than 322,000 stripper natural gas wells account for over 1.7 trillion cubic feet of annual natural gas
production, or 9 percent of the natural gas produced in the lower 48.
Once a well is plugged and abandoned, the reserves left behind are "lost forever" since it is typically uneconomical to
drill another well to recover these abandoned reserves. Every dollar of stripper oil and natural gas production creates
roughly one dollar of economic activity and nearly 10 jobs result from every million dollars of stripper well oil and
natural gas produced.
Nearly 100 projects have been funded since the initiation of the consortium, which consists of small domestic oil and
natural gas producers, as well as service and supply companies, trade associations, industry consultants, technology
entrepreneurs, and academia. The successful development and commercialization of many of these projects provided
the incentive for DOE to continue program funding. Several of the successes include:
The Gas Operated Automatic Lift (GOAL) PetroPump developed by Brandywine Energy & Development
Company. The pump removes fluid from the wellbore more consistently than currently available plunger lift
systems. Test results on wells in New York showed a 1.5 to 2.3-time increase in gas yield using the GOAL
PetroPump over other casing plunger- type tools. The tool is inexpensive to operate because it requires no
external energy source and limited manpower.
The Vortex Flow Tools LLC vortex flow unit works similar to a tornado, using produced natural gas to
accelerate the water velocity, reduce friction, and assist in lifting and removing fluids. The results of using the
flow unit are increased production while reducing the amount of down-time due to water in gas gathering and
flow lines. Over 200 Vortex surface tools have been installed in gas-gathering and production lines across the
United States.
Pumping Solutions, Inc. (now part of Smith Lift LLC) has developed a new hydraulic diaphragm submersible
pump to continuously clean stripper wells. The pump has been proven to be tolerant of coal and sand fines at
higher concentrations than traditional systems. Among other features, it pumps gas/liquid mixtures, can be
pumped dry without damage (within motor limits), maintains a constant output with depth, and has been
shown to be highly efficient with reduced electric costs.
Tubel Technologies, Inc. developed three technologies for stripper wells. The first was a low-cost, real-time,
down-hole wireless gauge. The gauge primarily measures temperature and pressure, but other parameters
can also be measured. The wireless feature of the system eliminates the need for cables, clamps, and splices
within the wellbore, thus significantly lowering cost and time for system deployment. The second technology
was a plunger lift optimization process, which provides the operator information related to the performance of
DOE - Fossil Energy Techline: http://fossil.energy.gov/news/techlines/2010/PrintVersion_1_38...
1 of 2 6/25/10 10:42 AMthe plunger, identifying wells where the plunger is not operating optimally. The third technology is an upgrade
of the second whereby the information captured at the wellhead is transmitted wirelessly to a control room at
a remote location. This allows the operator to monitor hundreds of wells from a single location and could
identify potential well and plunger lift problems fairly quickly to correct problems with minimum production
loses.
Pre-Pump-Off Controls, a set of technologies developed by Oil Well Sentry, Inc., eliminates fluid level issues in
beam-pumped wells. The system monitors the amount of fluid in the barrel pump at the bottom of the well
and shuts off the beam pump motor or engine when the well is "pumped off." Use of the system has
significantly increased production while decreasing motor/engine energy consumption by 30 percent.
One out of every six barrels of crude oil produced in the United Statescomes from a marginal well - a well whose production has slowed to 10 to 15 barrels a day or less. Over 78 percent of the total number of U.S.oil wells are now classified as marginal wells. There are over 400,000 ofthese wells in the United States, and together they produce nearly 900thousand barrels of oil per day, 15 percent of U.S. production.
Many of these wells are marginally economic and at risk of beingprematurely abandoned. When world oil prices were in the low teens inthe late 1990s, the oil that flowed from marginal wells often cost moreto produce than the price it brought on the market. From 1994 to 2003,approximately 142,000 marginal wells were plugged andabandoned, costing the U.S. more than $3.0 billion in lost oil revenue at the EIA 2003 average world oil price.
When marginal wells are prematurely abandoned, significant quantitiesof oil remain behind. A common misperception is that oil left behindremains readily available for production when oil prices rise again. In
most instances, this is not the case, leaving our nation more dependenton foreign oil imports, even though prices have now recovered andreached record highs in 2004.
When marginal fields are abandoned, the surface infrastructure - the pumps, piping, storage vessels, and other processing equipment - is removed and the lease forfeited. Since much of this equipment wasprobably installed over many years, replacing it over a short periodshould oil prices jump upward, is enormously expensive. Oil prices wouldhave to rise several times higher than their historic highs - and mostimportantly, stay at elevated levels for many years - before there wouldbe sufficient economic justification to bring many marginal fields backinto production. As a result, once a marginal field abandoned, the oilthat remains behind is often lost forever. The costs of re-drilling aplugged well may be as much as or more than drilling a new well.
Estimates are that the marginal wells plugged and abandoned between 1994 and 2003 represented 110 million barrels of crude oil that was still in the ground.
The IOGCC defines a marginal (stripper) well as a well the produces 10 barrels of oil or 60 Mcf of natural gas per day or less. Generally, these wells started their productive life producing much greater volumes using natural pressure. Over time, the pressure decreases and production drops. That is not to say that the reservoirs which feed the wells are necessarily depleted. It has been estimated that in many cases marginal wells may be accessing a reservoir which stills holds two-thirds of its potential value.
Pennsylvania has a long history of producing natural gas from a large number of conventional shallow low-production wells, principally for domestic household use. Only Texas has more currently active wells.[1] Pennsylvania ranks 15th in natural gas production among U.S. states, and it is the largest producer without a severance tax.
The advancement of drilling technology and water treatment has strengthened the economic viability and long-term return on investment of extracting natural gas from the Marcellus Shale formation. Marcellus Shale is a unit of marine sedimentary rock found in eastern North America. It extends throughout much of the Appalachian Basin extending across West Virginia; western Ohio; western, central, and northeastern Pennsylvania; southwestern New York; and small portions of Virginia and Maryland.[2] The shale contains largely untapped natural gas reserves that, according to several studies, could conservatively supply U.S. consumption for nearly two decades.[3] The Marcellus Shale formation is estimated to be 10 times larger than the Barnett Shale formation in Texas and is attracting attention from major Texas-based natural gas production companies and big oil companies.