Replace Unconventional Shale Oil Production with Portable CO2 EOR Oil Production
By Larry Shultz, COO Fossil Bay Energy LLC
At half the cost and 8-10 times the ultimate oil recovery: Thermal + Chemical + Exhaust Gas Injection CO2 EOR (Enhanced Oil Recovery) can revitalize oil production in hundreds of thousands of currently closed and non-producing oil fields to replace the decline in shale oil production due to the collapse in the global price of oil.
Over the last six years, the American oil industry and Wall Street Investors worked together to increase U.S. shale oil production from less than 500,000 barrels per day in 2008 to over 4 million barrels per day of additional domestic oil production in 2014.
This exponential growth in tight oil production was driven by cheap money (QE Quantitative Easing by the U.S. Federal Reserves) and high oil prices greater than $80-$100 per barrel – all of which diverted attention from all the many negative problems of fracking oil from hard rock shale beyond just the environmental issues.
Financially speaking, extracting oil from shale is expensive; depending on the shale type, it can cost more than $60-$80 a barrel just for an oil company to break even; it suffers terminal decline rates of more than 80% over 3 years; and it has proven itself economically unsustainable because shale oil extraction technologies can barely extract just 2%-7% of the available oil contained in the shale.!
These are horrible numbers for an investor – you would think! Yet, this is what the biggest investors on Wall Street invested in.
So, if the oil industry and Wall Street could successfully promote aggregate investments of more than $500-billion in the U.S. shale oil industry over the last 5 years for the lousy ROIs they are getting today from their shale investments, given the price of oil crashing below $50 a barrel…
Then certainly the oil industry and Wall Street should be able to realize the alue in being able to produce a new barrel of oil in America at a cost less than $25 per barrel – which can generate profits for mineral rights owners, lease holders, operators and investors even if the WTI selling price of oil falls as low as $35 per barrel:
• By re-entering, re-pressurizing and revitalizing old oil wells to produce new oil supplies using the latest available thermal, chemical and portable gas injection CO2 EOR technologies.
What most Accredited Investors don’t realize is that the best place to find new sources of oil is in old oil fields.
Even though these old oil wells became pressure-depleted or water-cut, and then were closed years ago (when the sales value of the oil being recovered became worth less than the aggregate costs to lift it out of the ground, separate the oil from the water and then re-inject the dirty water back into the ground, which is expensive) – they still contain significant amounts of recoverable stranded oil using the latest CO2 EOR technologies.
The Big American Oil Secret is that for every barrel of oil taken out of a conventional permeable oil field during the primary oil recovery phase, more than 3-4 barrels of residual stranded oil still remains in the ground (waiting for a lot of smart American oil vets to remove it).
What America has needed for the last decade is a low cost portable CO2 EOR solution to mobilize the stranded oil underground in order to extract it; a CO2 EOR injection system that is not restricted by the high cost and regulatory nightmares of getting a permit to build a CO2 pipeline – yet is mobile and can bring a much-needed low-cost supply of CO2 injectants to any EOR-worthy oil field in America that has no nearby CO2 pipeline!
Now that need has been fulfilled with portable CO2 EOR services provided by www.FossilBayEnergy.com.
Owners and operators of EOR-worthy oil fields will no longer need to dream about a CO2 pipeline in order to revitalize oil production in their old oil wells with new portable CO2 EOR services.
Using the latest combined thermal, chemical and gas injection CO2 EOR technologies, ultimate recoveries of more 35%-65% of the stranded oil from the ground can be newly achieved at an all-in horizontal injection & production well drilling, completion and tertiary Injectant operating cost of less than $25 per barrel of oil recovered.
If there is already properly operating equipment on site — and no new horizontal injection or production wells need to be drilled – then the cost of portable CO2 EOR revitalization can fall to less than $15 per barrel.
With the price of oil at $45, oil lease operators can generate gross profits of $15-$25 per barrel before paying royalties and production costs – which can thereby produce a total return-on-investment ROI of more than 500% to its 50% Working Interest owners/investors.
If and when the price of oil settles back to a $65 per barrel price, the 50% Working Interest owners in the EOR America Fund’s EOR leases can enjoy annual ROIs averaging over 100% per year.
Fortunately, the consensus is that the WTI price of oil should rebound within the next year to more than $60 a barrel (after all the hedged oil contracts expire and decline in U.S. shale production begins).
Either way, Fossil Bay’s portable CO2 EOR technologies can enable investors to profit from an investment in a CO2 EOR Project – and at the same time earn generous tax-deductions.
In order to encourage investment by Accredited Investors in a Tertiary Enhanced Oil Project that can increase domestic oil production, reduce foreign oil imports, and keep billions of American fuel-dollars here at home each year:
Congress granted generous tax-deductions that enable investors to deduct 100% of the Intangible Drilling Costs and 100% of the Qualified Tertiary Gas Injection EOR costs of a CO2 EOR project from the active ordinary income of its investors, according to IRS rules.
These deductions can enable first-year tax-deductions to Investors of greater than 75%-80% of capital invested (multiplied by the tax-payer’s tax bracket rate) – reducing investment risk by virtually guaranteeing investors almost a 25% return on their investment in CO2 EOR projects.
Fortunately for American investors, there are 100s of 1000s of old, aging and abandoned oil wells and oil fields whose geological characteristics and past production history make them the best candidates for portable CO2 EOR, whose daily oil production contributions can one day make America Energy Independent from foreign oil imports.