| June 21
June 21 Two-thirds of all the oil ever
discovered would never have seen the light of day if it were not
for enhanced recovery methods, which usually involve injecting
steam or carbon dioxide into wells to force up the liquids.
But the process, which can cost about $13.50 per recovered
barrel, is not cheap.
A far cheaper option, according to Glori Energy Inc Chief
Executive Stuart Page, lies right under the feet of the drillers
in the humble microbes that inhabit oil reservoirs.
Glori and rival Titan Oil Recovery Inc specialize in
microbial enhanced oil recovery, a process that involves
injecting the reservoir with nutrients that make the microbes
grow quickly so they break down the oil into small droplets that
can flow more easily to the surface.
"Because it needs no additional infrastructure or drilling
or any other support, it is very cheap from a capital
expenditure and operating expenses perspective," Page said in an
Glori, which plans to go public, has high-profile backers in
General Electric Co and ConocoPhillips Co, but
it seems Big Oil has yet to be persuaded to think small.
Microbial enhanced oil recovery (EOR), while in use for half
a century, still commands less than 1 percent of the $63 billion
Now, the spotlight is back on new EOR methods as relatively
high crude prices, and the high cost to explore and develop new
resources, prompt companies to try to extract oil from mature
fields that they once would have give up on.
"We are potentially at an inflection point," said Raymond
James analyst Andrew Coleman.
The biggest barrier is convincing oil companies to try
something new when tried and true methods more or less guarantee
success, analysts say. It can take up to a year or more to
complete an EOR cycle, from planning to production. That is time
that companies don't want to gamble away by testing new methods.
"The biggest barrier for microbial EOR is to convince
operators that it will work in the way it is modeled to work and
for the cost that it is modeled at," said Glen Murrell, a
research scientist at University of Wyoming's Enhanced Oil
The stakes are huge. Industrial and energy market research
publisher SBI Energy expects the EOR market to grow at an
average rate of 67 percent annually in the next few years,
totaling $1.3 trillion in 2015. Gas and steam injection account
for about 97 percent of the market.
Microbial EOR costs are between $6 and $10 per incremental
barrel of oil, said Brian Marcotte, a director at Titan Oil
Recovery. This means that at a time when drilling costs are
rising, using the microbial EOR method instead of carbon dioxide
injection can save companies up to $7 per barrel.
"We believe the (microbial EOR) market is gigantic," said
Larry Aschebrook, chief executive of Gentry Financial Corp,
which invests in small to medium entrepreneurial businesses.
"As far as Glori goes, we believe it will be a multi-billion
dollar company in the foreseeable future," said Aschebrook,
whose firm led Glori's latest financing round, raising about $20
Major oil companies, including ConocoPhillips, are more
reserved in their assessment.
"We are investing in technologies that we hope we can
successfully apply to our business in the future," said a
Glori filed with U.S. regulators in October to raise up to
$115 million in an initial public offering of its common stock.
The company, which is also backed by NRG Energy Inc,
said in its preliminary prospectus that apart from
ConocoPhillips its customers include Cenovus Energy Inc
, Plains Exploration and Production Co and
Denbury Resources Inc.
"Our focus and our core business is CO2-enhanced oil
recovery," said Denbury spokesman Jack Collins. "We look at a
lot of different things and talk to different folks. The CO2
process is a proven process."
About half of Denbury's total production comes from CO2
General Electric, however, is optimistic.
"Microbial EOR has a very good chance of being the lowest
cost compared to other technologies," said Kevin Skillern,
managing director of Venture Capital at GE Energy Financial
Titan's Marcotte has a theory about why the adoption rate of
microbial EOR has been slower. He says oil companies more
cautious about adopting the technology than he had anticipated.
The companies' wells, he said, "are like children to a
family - the most valued possession."