SPE-175162-MS

Economics of Steam Generation for Thermal EOR

Marwan Chaar, GlassPoint Solar; Milton Venetos, Wyatt Enterprises; Justin Dargin, University of Oxford;
Daniel Palmer, GlassPoint Solar

Copyright 2015, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Kuwait Oil & Gas Show and Conference held in Mishref, Kuwait, 11–14 October 2015.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
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Abstract
The thermal EOR steam generation projects in Gulf oilfields are on such a large scale that they affect an
entire country’s economic position. As such, the policies related to oilfield steam generation should be
decided at the national level using the cost of the marginal fuel. This paper calculates the steam cost for
three methods: 1) once-through steam generator (OTSG) 2) once-through heat recovery steam generator
(OT-HRSG) and 3) solar steam generator (SSG).
We have created detailed performance and economic models of the steam generation methods and used
them to calculate the levelized cost of energy and the Fuel Break Even (FBE). We explore the
environmental and economic burdens on the cost of steam generation. The effect of fuel price on the cost
of steam is also analyzed with a focus on the marginal fuel price.
The analysis shows that the fully burdened steam costs using $6/MMBTU fuel, for OTSG, OT-HRSG,
and SSG are $27/ton, $20/ton, and $17/ton, respectively. The FBE for SSG vs. OTSG is $4.95/MMBTU
when the OTSG is unburdened and decreases to $2.25/MMBTU when the environmental burden of
Carbon Cost is added. The FBE for SSG vs. OT-HRSG is $7.70/MMBTU when burdened with Power
Opportunity Cost and $4.50/MMBTU when the additional burdens of Carbon Cost and Water Opportunity
Cost are accounted for.
Finally, we analyze the limitations of OT-HRSG in an isolated oilfield where the electric:thermal
demand necessitiates electricity-matched cogeneration. This limitation along with the steam cost at the
marginal fuel price provides the decision-maker with a steam supply curve.

Introduction/Global Oil Outlook

Of the remaining oil reserves in the world, only 30% is considered ⬙conventional⬙ or ⬙light oil⬙ (with API
of 22 or lighter), while the remaining 70% is heavy1. According to the IEA, boosting oil recovery of these
heavier crudes could unlock around 300 billion barrels of oil.
There are three main categories of EOR: 1) thermal 2) miscible gas injection 3) chemical. Thermal
methods are mainly applicable to heavier crudes, at shallower depths, and these thermal methods represent
the majority of global EOR production, accounting for 2.3 million barrels per day in 20132.
Some of the largest Thermal EOR projects in the world are in Canada, Russia, Venezuela, Indonesia,
California, Oman, and soon to be Kuwait. The steam generated for Thermal EOR consumes 1.7 TCF per
2 SPE-175162-MS

year of natural gas. Thermal EOR projects tend to be very long-term projects by oilfield standards. In
California many of the oldest steam flood projects have been running for 40 or 50 years. The super giant
heavy oilfields of the Middle East may produce for a century or more. With natural gas becoming
increasingly constrained and expensive in many parts of the world, there is a need to better understand the
economics of steam generation.
As this paper discusses the combination of traditional sources of generating steam with solar steam
generation, we will focus on countries with sufficient sunshine and constrained natural gas supply, such
as Oman, Kuwait, Sauid Arabia, Bahrain, and Egypt. The EOR potential of these countries is estimated
at 475 billion barrels of oil3.

Steam Generation For Thermal EOR

We have considered three methods of steam generation:
1. Fuel-fired once through steam generator (OTSG)
2. Co-generation with a power plant using a once-through heat recovery steam generator (OT-HRSG)
3. Solar steam generator (SSG) using concentrating solar power (CSP)
The first method, OTSG, directly burns fuel to generate steam. OTSGs have the most flexible
operations but are most dependent on fuel costs.
The second method uses the gas turbine’s high temperature flue gas as ⬙waste heat⬙ to produce steam
in a once-through heat recovery steam generator. The OT-HRSG’s steam production is linked to the GT’s
power production. Operators sometimes add supplementary firing to the OT-HRSG, called Duct Burners.
The steam produced from duct burning has the advantage of re-balancing the electricity vs. thermal
demand but it is directly linked to fuel price.
The third method, SSG, uses mirrors to concentrate the sun’s energy to generate steam. The three
operating plants are: the 21Z (2011) and Amal SSGP (2012) projects use Enclosed Trough technology and
the Coalinga project (2011) uses Tower technology. SSG has the highest CAPEX of the methods
considered but consumes no fuel.

The pros and cons of these three methods are summarized below:
SPE-175162-MS 3

Method Pros Cons

OTSG - Low capital cost per ton of steam produced - Cost of steam highly dependent on fuel price
- Short construction time
- Flexible and controllable steam output

OT-HRSG - Low capital cost per ton of steam produced - Linked directly to power generation
- Increases system efficiency of simple-cycle power plant4 - Indirectly consumes natural gas
- Duct burning dependent on fuel price

SSG - Does not consume fuel - High capital cost

- Does not produce GHG emissions - Dependent on weather
- Can extend field life5

Middle East Fuel Pricing

The fuel price throughout the countries in the GCC and the broader Middle East vary greatly, but the
common theme is its subsidization. While the current cost of production in the Gulf non-associated fields
is approximately $5-8/MMBTU6 the price at which gas is sold to the end user is typically a fraction of
that price, averaging just $1.50/MMBTU in the GCC region7.
Justin Dargin, has written extensively on the topic of gas pricing in the region and has argued that
price reform is an essential step to increasing availability of natural gas and improving energy efficiency
in these countries.
Another factor facing these countries is the price of the marginal fuel. Countries like Oman and Kuwait
are gas-constrained and the marginal fuel is either imported LNG8 (or lower LNG exports) or diesel &
other liquid fuels.
For the reasons above, we have chosen to run our economic analysis using two tiers of gas prices; the
first is representative of true gas production costs in the region for non-associated gas fields and is taken
to be an average of $6/MMBTU. The second is the LNG market price (or opportunity cost9), taken to be
$13/MMBTU10. In addition to pricing, the region is facing a shortage of fuel availability.
Economic & Environmental Concerns
There are two significant concerns of fuel-fired steam generation. The first is the broader nationwide
implication of diverting natural gas from steam generation to economic development. An increase in the
amount of gas available for domestic use will allow for investments in industry and subsequent job
creation. The second concern is the environmental impact of greenhouse gas emissions. These two
concerns are addressed in the Economic Burden and the Environmental Burden sections below.
Economics Of Steam Generation
The first step in analyzing the cost of steam generated from the various methods is to calculate each on
a stand-alone basis. We have chosen to compare the methods using the real Levelized Cost Of Energy
(LCOE) of the steam produced, as calculated by the Solar Advisor Model (SAM):

The inputs to the numerator include cost data (CAPEX, OPEX, and fuel cost) as well as economic and
environmental burdens (discussed in Sections 2.1.1 & 2.1.2 below). The input to the denominator is the
steam produced, which is dependent on the performance of the method chosen (discussed in Section 2.2
below). A fair comparison between the three methods of steam production can only be achieved if all
methods are ⬙fully burdened.⬙ The burdens considered are economic and environmental.
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Economic Burden
The economic burden considered for the OT-HRSG is the opportunity cost of the ⬙waste heat⬙ from the
GT exhaust. The decision maker may assume that waste heat into the OT-HRSG is free. This is not
accurate. In reality, the OT-HRSG is dependent on the price of natural gas by its direct connection to
power generation. The waste heat has an economic value that is equal to the opportunity cost of producing
more power and water in an optimized plant configuration.
Fig. 1 above illustrates the energy flow for two different scenarios of fuel use. On the left, a Simple
Cycle (SC) power plant is connected to the OT-HRSG to produce steam. On the right, a Combined Cycle
(CC) power plant produces more power for the same fuel consumption and it can also produce water with
no additional energy use.

Figure 1—Energy Flow For Different Scenarios Of Electricity Production

The Power Opportunity Cost is calculated by comparing the economic value created with the more
efficient CC power plant (PP) with the SC configuration using an OT-HRSG. This Opportunity Cost is
a result of two factors: 1) the LCOE of power generated by a CC PP (LCOECC) is lower than that of a
SC power plant (LCOESC) and 2) for the same amount of fuel, the CC PP will produce more electricity
than SC, calculated by the inverse of the Heat Rate (1/HR). Thus, the formula for the Power Opportunity
Cost is:

The Water Opportunity Cost is calculated by comparing the Cost of Water (CW) produced by a
combined water and power plant using a thermal desalination method, such as Multi-Effect Distillation
(MED), with an independent water plant using an electrical desalination method, such as Reverse Osmosis
(RO). We assumed that the MED plant will replace the condenser in the CC PP and is sized accordingly.
We then compared the CW of the cogeneration MED plant with a stand-alone RO plant where its cost of
electricity is LCOESC. The difference in the CW for the two configurations is then multiplied by the total
potential water production in the combined water and power plant configuration to calculate the Water
Opportunity Cost for the Fuel Consumed. Thus, the formula for the Water Opportunity Cost11 is:

Another indirect benefit of displacing natural gas from steam generation is the direct and indirect jobs
it creates. This has not been considered here. No economic burdens have been applied to the OTSG.
SPE-175162-MS 5

Environmental Burden
The environmental burden considered is the Carbon Cost and it is applied to the OTSG and OT-HRSG
methods. The emissions are calculated using the Emission Factors as defined in (EPA AP42)12. For the
OT-HRSG, since fuel is burned (and carbon emitted) in the GT, it is necessary to allocate the emissions
fairly between power and steam. We assume that in the cogeneration plant (GT/OT-HRSG) the emissions
allocated to electricity production are calculated using the emissions intensity of a more efficient CC PP
(tons CO2 per MWh). Therefore, the emissions allocated to steam production are the difference between
the total emissions of the SC PP and the calculation mentioned above. Thus, the formula for the OT-HRSG
Carbon Cost is:

The OTSG Carbon Cost is simply the Emissions & Carbon Cost per Ton.
We have used a carbon cost of $40 per ton/CO2, based on the range of internal carbon prices used by
the oil majors (Total: $34, Shell & BP: $40, Exxon Mobil: $6013).
Performance Models
The denominator of the LCOE calculation is the total energy produced by the various methods. To
accurately calculate the LCOE of the various steam generation methods, it was necessary to build
performance models that take into account regional weather data.
The combined cycle power plant and OT-HRSG systems analyzed in this paper both rely on heavy duty
gas turbine engines from General Electric to obtain the waste heat they utilize to generate steam. Gas
turbine performance is heavily dependent on the prevailing ambient conditions, particularly ambient
temperature. The tables below show the impact of ambient temperature on the performance of the GE
9E.03 (PG9171E) and 9F.05 engines that were chosen for our analysis:

GE 9E.03 Performance Data

15C 40C 59F 104F

Net Power 130,000.0 108,506.0 kW 130,000.0 108,506.0 kW

Heat Rate (LHV) 10,403.0 10,933.0 kJ/kWh 9,860.0 10,362.0 BTU/kWh
Heat Cons. (LHV) 1,352.4 1,186.3 GJ/hr 1,281.8 1,124.4 MMBTU/hr
Exhaust Flow 1,496.8 1,330.7 ⫻10^3 kg/hr 3,300.0 2,934.0 ⫻10^3 lb/hr
Exhaust Tempreture 541.7 560.0 Deg.C 1,007.0 1,040.0 Deg. F

GE 9F.05 Performance Data

15C 40C 59F 104F

Net Power 299,000.0 235,660.0 kW 299,000.0 235,660.0 kW

Heat Rate (LHV) 9,295.0 9,880.0 kJ/kWh 8,810.0 9,364.0 BTU/kWh
Heat Cons. (LHV) 2,779.2 2,328.2 GJ/hr 2,634.2 2,206.7 MMBTU/hr
Exhaust Flow 2,400.2 2,075.9 ⫻10^3 kg/hr 5,292.0 4,577.0 ⫻10^3 lb/hr
Exhaust Temperature 643.5 657.2 Deg. C 1,190.0 1,215.0 Deg. F

The 9E.03 was chosen as the prime mover for the OT-HRSG due to its use in similar projects around
the world and its ability to produce about 6,000 TPSD of 100 bar, 80% quality EOR steam. The 9F.05 was
chosen as the prime mover for our reference 2 ⫻ 1 combined cycle power plant since it represents a power
plant with a net LHV efficiency of just over 58%, which is comparable to the efficiency of recently built
combined cycle plants in the GCC region.
6 SPE-175162-MS

As a result of the impact that ambient conditions have on gas turbine power, heat rate, exhaust flow
rate and exhaust temperature a model that can predict the response of the whole plant is needed to
accurately assess plant performance on an annual basis. We used the EBSILON Professional heat and
mass balance software14 from STEAG Energy Services in Germany in conjunction with the VTU Energy
OEM Gas Turbine library add-in15 for EBSILON to build steady state heat and mass balance models of
an OT-HRSG boiler and a 2 x 1 combined cycle power plant. These models were then run to predict fuel
consumption, electricity output, steam production and other key parameters for every hour of a year using
hourly TMY3 format ambient condition data for Amal, Oman. We chose Amal as the reference point
because we have SSG performance data from that site and wanted to make sure all methods of steam
generation are compared at the same location. The following key results were obtained from these model
runs:

OT-HRSG Heat Balance Model Results GT @ 85% Load

Annual Fuel Consumption 9,378,095 MMBtu/yr
Annual Steam Production 2,192,081 metric tons/yr
Annual Net Electricity Production 882,079 MWhe/yr
Net GT Average Annual Net LHV Efficiency 32.4 %
GT Average Net LHV Heat Rate 10,538 Btu/kW-hr

The results above are for 100% availability. In the LCOE model, we applied an availability of 92%
bringing the total annual steam production down to 2,016,715 metric tons, or 5,525 tons per day. Also,
the OT-HRSG model assumes an operation at 85% load, which is common practice in the oilfield. We also
ran the OT-HRSG model at 100% load and the results are shown in Endnotes16.
The OT-HRSG model is an unfired system with a low pressure economizer section and recirculation
to keep the stack temperature above the sulfuric acid dew point. The design point was chosen so that the
boiler could produce 75.7 kg/s of 100 bar 80% exit quality steam with 5C ambient air and 55C produced
water from the oil field. The EBSILON process flow diagram from the model is shown below:

Figure 2—EBSILON Model of EOR OT-HRSG

SPE-175162-MS 7

The EOR OT-HRSG model incorporates assumptions listed in the Endnotes.17

An EBSILON heat and mass balance model of an unfired, 2 ⫻ 2 ⫻ 1 (2GTs/2HRSGs/1ST) combined
cycle power plant was constructed based upon GE’s 9F.05 300 MWe class heavy duty gas turbine engines.
The plant utilizes two, unfired, 3 pressure level (High Pressure (HP), Intermediate Pressure (IP) and Low
Pressure (LP)) reheat Heat Recovery Steam Generators (HRSGs) to raise steam for a single, 305 MWe
condensing steam turbine with once through sea water cooling. Basic design parameters for this plant were
chosen from experience and some GE Reference (GER) papers18,19 on GE’s Steam and Gas (STAG)
power plant product line.

2 ⴛ 1 9F.05 Based CCGT Heat Balance Model Results

Annual Fuel Consumption 42,689,075 MMBtu/yr
Annual Net Electricity Production 7,147,863 MWhe/yr
Plant Average Annual LHV Net Efficiency 57.12 %
Plant Average Annual Net LHV Heat Rate 5,974 Btu/kW-hr

The plant’s process flow diagram is shown in the Endnotes20. The CCGT model incorporates the
assumptions shown in the Endnotes21.
The SSG performance model is built off GlassPoint’s proprietary model and operating experience at
the SSGP plant in Amal, Oman22.

LCOE Models
The LCOE models for the OTSG, OT-HRSG, and SSG have been built to provide a fair comparison of
the methods. One factor affecting the LCOE is the size of the project. We have assumed the SSG and
OTSG are built to match the size of the OT-HRSG, which, as discussed above, produces 5,525 TSPD, on
an annual average. Also, the same macro-economic assumptions were used for all methods of steam
generation, such as nominal discount rate (8%), inflation (3%), and project life (25 years).

SSG Model
To match the steam generated by the OT-HRSG, we require 32 blocks of GlassPoint solar steam
generators. We assume an availability of 99% based on GlassPoint’s experience at SSGP. The CAPEX
used is based on GlassPoint’s estimate of a project this size.
The SSG steam LCOE was calculated to be $17 per ton of steam.

OTSG Model
We have assumed each OTSG has a firing rate of 85MMBTU/h, which corresponds to 800 TSPD. To
match the steam generated by the OT-HRSG and to account for an availability of 90%, we require 8
OTSGs. The OTSG efficiency is assumed to be 85%.
The OTSG steam LCOE was calculated with and without the environmental burden of Carbon Cost
and the results are displayed in Fig. 3 below:
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Figure 3—LCOE Of OTSG Steam Generation

OT-HRSG Model
The OT-HRSG CAPEX was based on estimating software and a premium added for installation at an
oilfield (due to higher costs of HSE and logistics).
The OT-HRSG LCOE model is also affected by the power plant models generated for the SC and CC
configurations (Power Opportunity Cost). For the power plants, heat rates were taken from the EBSILON
Professional heat balance models built for this study. Overnight capital costs were from various press
releases on similar projects and from EIA’s April 2013 Capital Cost Estimates for Utility Scale Electricity
Generating Plants Report23. Fixed and Variable Operations & Maintenance costs were also taken from the
EIA report. CAPEX and OPEX for the SC/OT-HRSG plant were escalated to account for higher
installation and operation costs at the oilfield. Capacity factors were from our models or EIA’s Annual
Energy Outlook 201424. The PP LCOE calculated is the real LCOE calculated using the National
Renewable Energy Lab (NREL) method25.
This LCOE calculation neglects taxes, tax incentives, government subsidies and capital expenditures
not directly related to the cost to procure and install the plant equipment. It represents the minimum price
at which energy from the project must be sold in order for the project to cover its costs. It is a useful metric
for fairly comparing one project to another.
Also, the OT-HRSG LCOE is affected by the water model, described in the Water Opportunity Cost
and whose input is taken from the Fichtner MENA Regional Water Outlook.
The OT-HRSG steam LCOE was calculated with and without the economic and environmental burdens
and the results are displayed in Fig. 4.
SPE-175162-MS 9

Figure 4 —OT-HRSG Steam Generation Cost

We also calculated the OT-HRSG burdened and unburdened steam costs across a range of fuel prices
as shown in Fig. 5.

Figure 5—OT-HRSG Steam Generation Cost vs. Fuel Cost

10 SPE-175162-MS

Summary Of LCOE Results

Fig. 6 shows a summary of the fully burdened LCOE for the three methods of steam generation and their
relationship to the fuel price.

Figure 6 —LCOE vs. Fuel Cost

What is clear in Fig. 6 is that the question of ⬙which method of steam generation is best?⬙ is answered
only by another question ⬙what is the fuel cost?⬙ These questions should be considered at the countrywide
level using the marginal fuel. As mentioned in Section 1.3 many countries in the Gulf region have
multi-tiered and subsidized fuel costs, which do not reflect the true economic value. If a country is
subsidizing gas to, say, $1.50/MMBTU and is also importing LNG at $13/MMBTU, the fuel price that
should be used in decision making should be the marginal cost, which is LNG.
From Fig. 6, we can see that at current market prices of diesel26, the fully burdened costs of steam from
an OTSG and OT-HRSG are $58 per ton and $38 per ton respectively. At current market prices of LNG,
these costs are $45 and $31 per ton for the OTSG and OT-HRSG, respectively. The cost of steam from
SSG is independent of fuel price and is $17 per ton of steam.
The LCOE for all scenarios are shown in the Table below:
SPE-175162-MS 11

FBE Models
A useful economic indicator that allows a decision maker to compare the fully burdened cost of steam
from the mentioned methods is the Fuel-Break Even price, or FBE. This fuel price is where the total cost
of ownership from the fuel-fired steam generation method (either OTSG or OT-HRSG) is equal to that of
the SSG. The FBE allows a decision maker to compare the economics of the various methods of steam
generation based on the marginal cost of fuel.
The FBE for SSG when compared with a fully burdened OTSG is only $2.25/MMBTU and the FBE
for SSG when compared with a fully burdened OT-HRSG is $4.5/MMBTU. The FBE for various burden
scenarios is shown in the Table below:

Note: As discussed above, the unburdened OT-HRSG has no dependence on fuel price therefore it is
not possible to calculate its FBE. Similarly, the OTSG does not have Power or Water Opportunity Costs
so they were not calculated.
Factors Affecting The Economics Of Steam Generation
The economic calculations above are all based on the specified assumptions. However, the economics of
steam generation is dependent on various inputs ans sensitivities should be calculated in order to refine
the output. Some of these factors include:

OTSG OT-HRSG SSG

Marginal Fuel Price Solar Radiation

Carbon Price Project Size

Oilfield energy requirements

Once the economics of the various methods of steam generation are calculated, it is necessary to determine
the mix of the various methods of steam generation. To do so, the decision maker needs to understand the
energy requirements and limitations at the oilfield. Mike Welch summarized the decision-making process
for steam generation methods as follows:
. . .a gas turbine cannot exactly match the electrical load required and provide all the heat required. This gives the
Operator a choice of whether to install a heat-matched system or an electricity-matched system. In a heat-matched
system, the Gas Turbine is selected on the basis of its ability to provide all the heat required, which means that it is likely
to generate far more electrical power than the production facilities themselves require. This necessitates the export of
surplus electrical power to the local power network. In an electricity-matched system, the Gas Turbine is selected to
provide just the power required by the production facilities, while the shortfall in steam is made up by installing
additional conventional fired boilers.27
12 SPE-175162-MS

Macro-Economic Planning
The analysis of the economics of steam generation has to be considered in the broader macro-economic
policy and planning of a government or its national oil company. The first step is to understand the
decision-maker’s marginal fuel cost, which will specify the preferable method of steam generation. The
next step is to understand the limitations to producing steam from the OT-HRSG. By definition, steam
from cogeneration is linked to electricity production, which is constrained by the oilfield power demand
or the ability to export power to the grid.
It is necessary for the decision maker to analyze the combination of steam generation methods using
two different lenses: 1) Isolated Oilfield or 2) Connected Oilfield.
Isolated Oilfield
In this scenario, the ability to generate steam using an OT-HRSG is limited by the total power requirement
in the oilfield. This necessitates an electricity-matched system.
The isolated oilfield’s energy split between thermal and electrical demand is highly dependent on the
type of field (how much heavy oil vs lighter crude) and its boundary (how many reservoirs are operated
within the field boundary). For a stand alone heavy oilfield upstream electricity demand may be only 2%
of total energy demand during a steam flood. In an electricity-matched system, the power plant is sized
to deliver the power required by the field. The Electrical:Thermal energy split delivered by a cogeneration
plant is approximately 1:1.528. To illustrate the limitations of the isolate oilfield, we have assumed that
10% of the field’s energy requirements is electric29. Fig 7 illustrates this scenario where the cogeneration
plant is electricity-matched (delivers all electric energy demand) and delivers an additional 15% of total
energy demand as thermal energy. Thus, the cogeneration OT-HRSG delivers 17% of thermal energy
demand. The remaining 83% of thermal demand must be satisfied with another method of steam
generation, either OTSG or SSG.

Figure 7—Electricity-matched Cogen System

Connected Oilfield
In this scenario, we assume that the entire country (or region) is connected to the same power grid as the
oilfield. The oilfield can use a heat-matched system and export the surplus power to the grid.
Brandt and Unnasch have studied30 the energy requirements at various California thermal EOR fields
and found that the average operator generates only 40% from its steam from cogeneration using
OT-HRSG. The implementation of large-scale cogeneration for thermal EOR in a grid-connected oilfield
SPE-175162-MS 13

has macro-economic implimcations that should be studied further and should be considered the topic of
another paper.
Hybrid Steam Generation
Steam produced by SSGs is inherently dependent on solar radiation and will produce variable output. Two
SPE papers out of Petroleum Development Oman31 and Stanford32 studied the effect of rate injection rate
variation on oil production and concluded that the recovery rate and ultimate recovery is not affected.
However, night-time steam is required for two primary reasons: 1) Health & Safety: to prevent backflow
of H2S. 2) Maintenance & Lifetime: limit thermal cycling of well casings. Without the use of storage, the
requirement of night-time steaming implies a limit to the total solar fraction, roughly 80% in the Gulf
region.
The decision-maker is faced with three different steam supply sources and has to select a combination
of them to suit the energy needs of the oilfield. We can create a hypothetical example based on the
discussion above for an electricity-matched Isolated Oilfield, where the marginal fuel cost is $6/MMBTU.
The decision-maker will always select the most economic source of steam to fill as much of their supply
as possible. At $6/MMBTU, the SSG is the lowest cost at $17/ton; next is the fully-burdened OT-HRSG
at $20/ton; and, finally the OTSG is most expensive at $27/ton and will supply the remaining steam
demand. This is shown in Fig 9.

Figure 9 —Steam Supply Curves for $6/MMBTU fuel price

Solar For EOR Vs. Solar For Power Generation

Several countries in the Gulf region have announced targets for solar power, for example Kuwait is aiming
for at leat 15% of its power needs from renewable sources by 203033. Similarly, Saudi Arabia is aiming
to install 25GW of CSP by 203234.
CSP is more effective in producing steam than it is for power generation. The capital expenditure in
solar EOR for each unit of gas saved is significantly lower than solar for power generation. This analysis
should be considered in further works.
Solar For Electricity Production
PV has benefits for power production in the oilfield. At current market prices for PV, its electricity
generated is cost competitive with fuel prices as low as $5/MMBTU.
14 SPE-175162-MS

Figure 10 —Economics of power generation in the oilfield35

Conclusions
Thermal EOR projects provide very good ultimate recovery and increase production. However the fuel gas
consumption is a problem. The thermal EOR steam generation projects in Gulf oilfields are on such a large
scale that they affect an entire country’s economic position. The field development may entail steam
injection for many decades. Thus the power / gas requirements have an important impact at a national
level. Proper consideration of full economic cost, and the future impact on gas consumption is essential.
Furthermore, the costs of the three methods of steam generation considered should be fully burdened
to accurately account for the true macro-economic implications. At a fuel price of $6/MMBTU, SSG is
the cheapest method of steam generation at $17/ton. Next is the fully burdened OT-HRSG at $20/ton. The
most expensvie source is the fully burdened OTSG, which is $27/ton.
Finally, the limitations of OT-HRSG steam as a result of the oilfield’s electric:thermal demand ratio
will determine the ideal steam supply curve based on the marginal fuel cost.

References/Endnotes
1. Kovscek, A., Stanford Thermal Oil Recovery course, August 2013
2. Kokal, S. and Al-Kaabi, A., Enhanced oil recovery: challenges & opportunities, World Petroleum
Council, 2010
3. Manaar Consulting, EOR and IOR in the Middle East, http://www.manaarco.com/images/presen-
tations/Fleming%20Gulf%20Manaar%20EOR%20Abu%20Dhabi%20March%202013.pdf (ac-
cessed 30 October 2013)
4. A Simple Cycle power plant is ~30-35% efficient. When an OT-HRSG is added the system
efficiency increases to ~75-80%.
5. Production from a thermal EOR reservoir doesn’t stop when there is no more oil. Instead,
production is ⬙shut-in⬙ when the oil is no longer economic to produce. Since fuel for steam
purchase is the largest component of operating costs in a heavy oil field, eliminating fuel costs
extends the economic life of the field. Simulations show that the ultimate recovery fraction can
be increased by 12% of Original Oil in Place (OOIP) if 20% of the steam for the field is produced
from solar.
6. Dargin, J. 2013. Development and Industrialization in the Arabian Gulf Region. Harvard Journal
of Middle East Politics and Policy
7. Dargin, J. and Vladimirov, M. 2012. Energy intensity: a time bomb for the Middle East? Energy
in the Middle East.
SPE-175162-MS 15

8. According to the IEA, Kuwait imported as LNG 25% of its gas consumption in 2011.
9. The ⬙opportunity cost⬙ for countries such as Oman that are LNG exporters is the decrease exports
that will result in a decrease in gas availability in the country. The assumed LNG export price is
the Asia spot market.
10. Used Asia spot price from BG Group http://www.bg-group.com/480/about-us/lng/global-lng-
market-overview-2013-14/ (accessed August 20 2014).
11. The assumptions for the CW calculations were taken from Fichtner, MENA Regional Water
Outlook, Part II Desalination Using Renewable Energy, March 2011. Calculation Results: at
$6/MMBTU fuel price, CWRO ⫽ $1.07/m3 and CWMED ⫽ $0.77/m3.
12. http://www.epa.gov/ttnchie1/ap42/
13. CDP North America, Use of internal carbon price by companies as incentive and strategic
planning tool, December 2013.
14. http://www.steag-systemtechnologies.com/ebsilon_professional⫹M52087573ab0.html
15. http://www.vtu-energy.com/1_PDFs_2009/ENVTUEnergyGasTurbineLibrary.pdf
16.

17. Feedwater for EOR OT-HRSG is always 55C. EOR OT-HRSG exit quality is always 80%. Water
leaving the EOR OT-HRSG’s economizer section is recirculated to its inlet to maintain an
economizer water inlet temperature of 135C in order to prevent sulfuric acid condensation on the
economizer tubes. No preheating of incoming natural gas. Fuel to the gas turbine is sour natural
gas with 4 PPM H2S and the following composition:

18. http://site.ge-energy.com/prod_serv/products/tech_docs/en/downloads/ger3767c.pdf
19. http://site.ge-energy.com/prod_serv/products/tech_docs/en/downloads/ger3574g.pdf
16 SPE-175162-MS

20.

21. Main steam conditions of 1815 psia / 1050F or 125 Bara / 565C. Hot Reheat steam conditions of
390 psia / 1050F or 27 bara / 565C. Design point condenser pressure of 2 in. HgA or 68 mbar.
Natural gas to gas turbines is preheated to 365F / 185C. Cooling water temperature for the CCGT
plant’s condenser was assumed to be ambient temperature ⫹ 10C unless that would put it over
35C or under 20C in which case it was pegged to either 20C or 35C. Design point cooling water
temperature rise of 20F / 11C. Natural gas composition for the CCGT model was the same as that
for the EOR OT-HRSG model. the plant performance at ISO conditions (15C, 60% relative
humidity and 1.013 bara) is as follows:

22. Palmer, D. and O’Donnell, J. 2014. Construction, Operations and Performance of the First
Enclosed Trough Solar Steam Generation Pilot for EOR Applications. SPE 169745-MS.
23. http://www.eia.gov/forecasts/capitalcost/pdf/updated_capcost.pdf
24. http://www.eia.gov/forecasts/aeo/electricity_generation.cfm
25. From http://www.nrel.gov/analysis/tech_lcoe_documentation.html: Levelized Cost of Energy
(LCOE, also called Levelized Energy Cost or LEC) is a cost of generating energy (usually
electricity) for a particular system. It is an economic assessment of the cost of the energy-
generating system including all the costs over its lifetime: initial investment, operations and
maintenance, cost of fuel, cost of capital. A net present value calculation is performed and solved
in such a way that for the value of the LCOE chosen, the project’s net present value becomes zero.
26. Diesel market price taken as $2.80/gallon based on NYMEX No. 2 Heating Oil as of September
9, 2014.
SPE-175162-MS 17

27. Welch, M. 2011. Greener EOR: Employing Cogeneration to Improve the Energy Efficiency of
Thermal EOR projects. SPE 144224
28. Assumption based on the Frame 9E/OT-HRSG modeled in this paper.
29. Sigworth, H.W., Horman, B.W., and Knowles, C.W. 1983. Cogeneration Experience in Steam
EOR Applications. SPE 12196
30. Brandt, A. and Unnasch, S., Energy Intensity and Greenhouse Gas Emissions from Thermal
Enhanced Oil Recovery, Energy Fuels, 2010
31. Van Heel, A.P.G., van Wunnik, J.N.M., Bentouati, S., and Terres, R. 2010. The Impact Of Daily
And Seasonal Cycles In Solar-Generated Steam On Oil Recovery. SPE 129225-MS.
32. Sandler, J., Fowler, G., Cheng, K., and Kovscek, A. 2012. Solar-Generated Steam for Oil
Recovery: Reservoir Simulation, Economic Analysis, and Life Cycle Assessment. SPE 153806
33. http://www.oxfordbusinessgroup.com/economic_updates/kuwait-new-renewable-energy-project-works
34. KA CARE, Saudi Arabia’s Renewable Energy Strategy and Solar Energy Deployment Roadmap
35. Based on 2014 US PV projects including adjusted to Gulf conditions weather and cost.