Energy Department Selects First Projects in Program to Help Small Oil Producers Apply New Technologies

Projects are Part of Secretary Richardson's Initiatives to Keep Domestic Oil Fields in Production; Program Still Open to Independents

Secretary of Energy Bill Richardson has announced the first seven companies chosen to receive federal grants in a program to assist the nation's small independent oil producers.

Each company, all with 50 employees or less, will receive up to $75,000 to experiment with innovative methods and technologies that could boost oil production and prevent the premature shut down of some of the nation's most endangered oil fields. Additional companies will be selected in future rounds of competition that will run through November.

"Domestic oil production is key to our economic, energy and national security, with independent production playing a more and more important role," said Secretary Richardson. "These grants will help develop and deploy technologies to lower the production costs of our domestic producers and help keep oil flowing from America's oil fields."

The technical assistance effort is one of several initiatives announced this past February by Energy Secretary Richardson as part of the administration's efforts to preserve domestic oil production capacity.

The projects, selected from 25 proposals received in the initial response to the department's solicitation, are:

For more information on each project, click on project name

• American Warrior, Inc., Garden City, Kan., which will use onsite natural gas reserves that are otherwise unsuitable for commercial use to generate low-cost electricity to power oil field equipment;

• Patriot Resources, LLC, Bakersfield, Calif., which proposes to use tracers and computer simulations to determine how natural gas migrates through an oil reservoir. Results will be used to predict the effectiveness of flooding the reservoir with water and gas to increase oil production.

• Bob L. Watkins & Associates (DBA) Oil & Gas Properties, Midland, Tex., which will apply a new water-jet technology to drill lateral holes to drain additional oil from a reservoir.

• MNA Enterprises LTD Co., Hobbs, N.M., which will use advanced techniques, including computer simulations, to analyze the geologic characteristics of an oil reservoir and determine why past waterflood injections have not spread properly through the reservoir.

• The Hunter Living Trust, Santa Barbara, Calif., which proposes to save labor costs and improve operating efficiencies in an oil field by installing inexpensive but effective remotely monitored wireless transmitters, computers, and software, powered in some cases by solar cells, to gather well operating data.

• J.P. Oil Company, Lafayette, La., which will implement an oil recovery approach called "CO2 huff and puff." This approach cycles carbon dioxide injection into wells, then produces oil from the same wells. These wells are typically low producers when other types of carbon dioxide injection processes are applied.

• St. James Oil Company, Laguna Hills, Calif., which proposes a new approach using phosphoric acid for more effective, longer lasting cleaning of the scale and small particles that can plug the flow of oil into a wellbore from a sandstone reservoir.

The Energy Department's funding will provide up to half of the costs of the projects. In some cases, the companies are offering to more than match the federal dollars. In total, private sector cost-sharing for the first projects is expected to amount to nearly $800,000.

The projects are the first in a series of federal funding awards the Energy Department intends to make this year. A second round of projects will be announced soon from proposals submitted by June 1.

Independent oil producers still have until August 31 and November 30 to submit applications for the program. Proposals should be submitted to the Energy Department's National Petroleum Technology Office in Tulsa, OK. The contacts at the Tulsa office are: Herb Tiedemann, 918-699-2017, and Jim Barnes, 918-699-2076.

-End of TechLine-

Technology Development with Independents

Project Profiles

1999 Program - 1st Round

American Warrior, Inc., Garden City KS
Project: Use of onsite natural gas to generate electricity to power oil field, Schaben Field, Ness County KS - Lowered oil prices and production costs have necessitated the shutting in of three wells at American Warrior's Schaben Field, in Ness County, Kansas. The 11 remaining wells are close to the breakeven point, with several pumping below normal efficiency because of the lack of funds for repair. American Warrior proposes to significantly reduce production costs by using available onsite natural gas to power generators that will provide the electricity to run the 14 wells. The company estimates a 65% reduction in electricity costs.

The onsite gas reserves contain a high proportion of nitrogen, making them unfit for commercial pipeline use. The manufacturers of equipment to be used, however, have certified it as a satisfactory fuel source. A temporarily abandoned gas source well will be perforated and stimulated with acid and a gas line installed. The new generator output will be integrated into the existing overhead wiring network, augmented where necessary, and new transformers and electric motors will be installed to eliminate cyclic loading on the generator.

By utilizing an available clean fuel source that is presently of no commercial value, the company estimates a cost saving of $7525 per month, which will allow resumed production on the 3 shut-in wells, and increased production on several others. Once proven, the technology can be applied to numerous wells in the area.

American Warrior will provide $164,000 in cost sharing to the 12-month project, with DOE contributing $75,000. The contact is Scott Corsair at 785-398-2270.

Patriot Resources, LLC, Bakersfield CA
Project: Use tracers with natural gas from deeper zone to plot reservoir characteristics such as transportation properties to optimize future waterflood/gas injection strategies, Cascade Oil Field, Los Angeles County CA - Patriot Resources intends to increase injection pressure in both the water flood and the gas cap in Cascade Zone of the Los Angeles Cascade Oil Field.. However, because of concerns about the pattern of gas flow from well to well, the possibilities of just cycling gas without the desired increased pressure, or of losing oil displaced into the gas cap, Patriot is going to introduce tracers into gas produced from a deeper zone to characterize the reservoir characteristics for information that will help optimize the future water flood/gas injection project. Trace samples, collected at various points throughout the Cascade Zone, will be analyzed with computer simulation to determine the number of layers as well as the porosity and permeability of various sand strings in the zone. The movement of the tracer throughout the reservoir will increase the understanding of the complex Cascade Zone geology and enable Patriot Resources to use the reservoir volume for maximally efficient water and gas inject to increase oil production.

Patriot Resources, LLC, and its partner, Tracer Technologies International, Inc., will contribute $56,000 and $6,000 respectively in cost sharing, and DOE will fund $50,000. The contact is Richard Bennett at 661-589-7728

Bob L. Watkins & Associates (DBA) Oil & Gas Properties, Midland TX
Project: Apply water-jet production-enhancement technology to drill and acidize lateral drain holes, Tedbit Field, Gaines County TX - Watkins & Associates will use a new water jet production enhancement technology to drill 300-600 foot lateral holes in the 5000-foot deep San Andres carbonate producing zone. The lateral holes will be stimulated with hydrochloric acid to remove fine material and asphaltines, clean up borehole surface damage, and enhance near-wellbore natural permeability. Watkins estimates more than twofold increase in production from successful project (from 135-150 barrels per month to 400-600 barrels per month).

Watkins & Associates will contribute $31,000 dollars in cost sharing, and DOE will fund an equal amount. The contact is Bob Watkins at 915-682-1357.

MNA Enterprises LTD, Co., Hobbs NM
Project: Apply advanced reservoir characterization and simulation study to optimize water injection pattern, North Shugart Queen Field, Eddy County NM - The low production rate, 100 barrels per month, for MNA Enterprises' 5-well unit in the North Shugart Queen Field is due to poor waterflood pattern development and low water injection rates. MNA Enterprises will conduct a comprehensive advanced reservoir characterization study of the unit, including computer simulations, to improve areal sweep efficiency of the waterflood by optimizing injection patterns and strategies. MNA expects that the two-year project, if successful, will increase production more than 10-fold.

MNA Enterprises will contribute $219,500 in cost sharing, and DOE will fund $75,000. The contact is Daniel Alexander at 505-392-2702.

The Hunter Living Trust, Santa Barbara CA
Project: Marginal Expense Oil Well Wireless Monitoring, Edison Field, Kern County CA - The Hunter Living Trust's 225 marginal wells in the Kern County Edison Field all operate on time clocks, and produce into co-mingled flow lines, which obviates cost-effective checking of well production efficiency. Hunter proposes to evaluate, install and test state-of-the-art remote monitoringequipment, including wireless transmitters, computers and software, that will record remotely sensed well operation data, saving significant labor costs and providing useful production efficiency information that is not now being gathered. Hunter will evaluate various sensor types, power supplies, meters, and communications equipment, design a 30-well field test to evaluate a variety of effective but low cost technologies, and install, evaluate and share results of the project.

Hunter estimates that successful operation of the system will result in monthly improvements of up to 1,000 barrels of oil per month over the current 30,000 barrels per month, and an additional 735,000 cubic feet per month of natural gas over the current 21 million cubic feet. Hunter expects additional environmental benefits to accrue from lower greenhouse gas emissions due to reduced power consumption by the more efficient pumping units and solar powered instruments, and reduced automotive traffic for visual inspection.

The Hunter Living Trust will provide $75,000 in cost sharing, and DOE will match it with funding of $75,000. The contact is Kenneth Hunter III at 805-969-4703.

J. P. Oil Company, Lafayette, LA
Project: Apply CO2 "huff and puff" technology to accelerate production response of "slow" wells, Little Creek Field, (Lincoln and Pike Counties, MS) - J. P. Oil Company is experiencing the problems of underperforming wells in their three Mississippi carbon dioxide (CO2) miscible flood projects. Slow-to-respond wells can cause premature CO2 breakthrough in adjacent responding wells. To correct the problem, J. P. Oil proposes to implement the cyclic "CO2 huff and puff" technology to accelerate response in the underperforming wells. Following a nine-month testing period for each of three wells, J. P. Oil anticipates cost reduction of approximately $3 per barrel from 1998 levels due to production increases.

J. P. Oil Company will provide $159,000 in cost sharing, and DOE will fund 75,000. The contact is Boyd Steven Getz, 318-234-1170, ext. 217

St. James Oil Company, Laguna Hills CA
Project: New acid stimulation treatment to sustain production, Los Angeles Downtown Oil Field - St. James Oil Company proposes to correct abnormal production declines observed in many California sand formations following hydrochloric and hydrofluoric acid stimulation, which commonly has as average improvement life of less than six months. St. James Oil will use a new approach that adds a phosphoric acid to the standard treatment. The phosphoric acid creates a protective film that allows deeper penetration of the hydrofluoric acid to react with and eliminate migrating fine particles that interfere with oil movement. The new acid also inhibits the formation of calcium carbonate scale in the wellbore that decreases production efficiency. Four wells will be treated during the nearly one-year project. St. James Oil estimates that successful treatment will provide monthly lease production increases from 12,458 barrels of oil to 14,938 barrels, and from 17,363 thousand cubic feet (MCF) of natural gas to 20,836 MCF.

St. James Oil Company will provide $82,000 in cost-sharing, and DOE will fund $75,000. The contact is Richard Russell (949) 461-5213

For more information, contact:
Herb Tiedemann, 918-699-2017, FAX 918-699-2005; e-mail htiedema@npto.doe.gov

Technical Contact:
Jim Barnes, 918-699-2076, FAX 918-699-2005; e-mail jbarnes@npto.doe.gov