Soaring oil prices are turning some energy companies into accidental environmentalists: They are building clean, solar-powered systems to pull crude out of their aging wells.

But this is no public relations move by big polluters seeking to green their images. Having spent heavily on energy-intensive technology to increase output from depleted fields, companies including Chevron Corp and Berry Petroleum Co are using solar power to lower the cost of creating steam that is injected into the wells to improve the flow of heavy oil.

Yes, in this instance going solar is actually going cheaper. While electricity generated by solar panels is more expensive than that created by fossil fuels, using the sun to heat water and create steam for so-called enhanced oil recovery costs less than natural gas, even at today’s low prices.

Rising oil prices and a dearth of new areas for exploration have increased investment in EOR, which refers to techniques used to boost crude production from mature fields, usually by injecting steam or gas into the well. Up to 60 percent of a reservoir’s original oil can be extracted with EOR, compared with 20 percent to 40 percent using primary and secondary methods, according to the U.S. Department of Energy.

About 60 percent of the oil produced in California is the result of some form of injection, according to the state Division of Oil, Gas & Geothermal Resources.

GlassPoint Solar Inc operates the only commercial solar EOR project, at a Berry oilfield in McKittrick, California.

The company said its technology generated steam at the equivalent of about $4 per thousand cubic feet — about even with today’s gas prices. Including U.S. incentives for solar power, however, that drops to about $2.80 per Mcf in California. In the sunnier Persian Gulf, the price could be as low as $2 per Mcf.

In the Middle East, where much of the gas is imported in liquid form, solar thermal has the potential to generate even greater cost savings as liquefied natural gas prices stand at about $12 per Mcf.

“We’re not selling on a platform of what I would call green goodness,” GlassPoint Chief Executive Officer Rod MacGregor said in an interview. “Our proposition is entirely economic.”

According to Raymond James analyst Pavel Molchanov, the technology also provides a hedge against price increases for gas, which he forecasts at $5 per Mcf long-term.

Because solar thermal technology is powered by sunlight, the cost of deploying it is entirely upfront.

source: reuters

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