Release Date: July 31, 2001

TULSA, OK - With America's oil production increasingly being supplied by small independent producers, the U.S. Department of Energy is continuing its efforts to help the smallest of these companies test higher-risk technologies that could keep oil flowing from thousands of marginal wells.

This week, the department added three more projects to its "Technology Development with Independents Program." Since 1999, this program has provided small businesses in 13 states -- each with less than 50 employees -- the financial backing to test new techniques that might otherwise have remain untried.

The program is one of several initiatives in the Energy Department's fossil energy program that is working to slow or halt the decline in U.S. oil production. Today, small independent businesses account for 50 percent of domestic petroleum production in the lower 48 states. Most are facing increasing economic and technical difficulties associated with harder-to-recover resources.

The Department's Fossil Energy Oil Technology Program provides matching grants of up to $75,000 to companies willing to apply innovative approaches that can lower operating costs and extend the life of marginally producing fields.

Companies that achieve success in prolonging the productive life of their fields convey the techniques to other small producers facing similar difficulties.

This round of selected projects includes (click on project for additional details):

• Benson-Montin-Greer Drilling Corporation, Farmington, NM, will use new log interpretation methods based on artificial intelligence and neural networks to evaluate oil well recompletion opportunities in the Mesa Verde formation of New Mexico's San Juan Basin.
• American Energies Corporation, Wichita, KS, will design and implement a low-cost, effective waterflood in the Mississippian formation of the Wellington West Field, Sumner County KS, that demonstrates application of inexpensive but modern tools to build an integrated reservoir model, based on geologic, geophysical, and engineering characterization techniques.
• Beard Oil Company, Dewey OK, will install and test a new type of low-volume submersible pump to evaluate its ability to lower operating costs in a typical low-production marginal oil field.. Ten new submersibles will be compared with ten conventional rod pumps in a test of comparative pump efficiencies and operating costs.

The Energy Department is encouraging other small companies to apply for future rounds of technical assistance grants. Producers have until August 15 and December 24 to submit applications for the final two rounds of the current program. The program is funded through the department's National Energy Technology Laboratory. The Laboratory's petroleum research arm, the National Petroleum Technology Office in Tulsa OK, evaluates the applications and manages the projects.

Technology Development with Independents
Project Profile

Benson-Montin-Greer Drilling Corporation, Farmington, NM

Project: A New Log Evaluation Method to Appraise Mesa Verde Recompletion Opportunities - Benson-Montin-Greer Drilling Corporation (BMG), with subcontractor Correlations Company, Socorro NM, will use new log interpretation methods based on artificial intelligence and neural networks to evaluate well recompletion opportunities in Gavilan and West Puerto Chiquito Mancos fields which are operated by BMG in New Mexico's San Juan Basin.

Recent activity by offset operators in the Basin suggests that new oil and associated gas production may be obtainable from zones in the Mesaverde group of reservoirs. A recent success in one of BMG's wells indicates the need to reanalyze other Mesaverde openhole well logs. The reinterpretation will be accomplished using methods based on artificial intelligence developed under DOE-funded research at New Mexico Tech's Petroleum Recovery Research Center. The method can be used where five or more tracts of logged wells are available from which to select the logs that best correlate with bulk volume oil (BVO) as measured in cores or estimated from logs in wells with commercial production. The logs with the best correlations are then used as input to a neural network that can be used to predict a pseudo-BVO log in other wells that have cores or commercial production.

Pseudo-BVO logs will be generated for about 25 wells in offsetting townships and correlated with the respective well production. These data will then be used in the trained neural network to generate pseudo-BVO logs and production correlation estimates for BMG's 63 wells in the Gavilan and West Puerto Chiquito Mancos fields, providing BMG with reliable estimates of the producing rate of Mesa Verde zones behind pipe. BMG expects that the use of the artificial intelligence ability to learn, recall, and generalize from training patterns or data, match and classify patterns, and forecast reservoir properties from wireline log signatures will provide a rapid assessment of the estimated oil potential of their Mesaverde wells, and allow BMG to spend the time required to evaluate the mechanical risk of potential downhole problems associated with recompletion of the old wells.

Benson-Montin-Greer will contribute $75,000 in cost sharing to the 2-year project, and the Department of Energy will fund an equal amount.

The project contact is Al Greer, 505-325-8874.

Technology Development with Independents
Project Profile

American Energies Corporation, Wichita, KS

Project: Waterflood Design and Implementation in a South-Central Kansas Mississippian Carbonate Reservoir Using Cost-Effective Reservoir Characterization and Simulation - Production from Mississippian carbonate reservoirs in Kansas, representing about 40% of the state's annual oil production, is predominately by small independent producers. Recovery efficiencies estimated as low as 12% are attributed to the variable nature of the reservoirs, insufficient reservoir drive, and primary production without pressure support. Residual oil in the Mississippian may be as great as seven billion barrels. Recovery improvement of even 10% would yield an additional 700 million barrels of domestic production.

American Energies Corporation (AEC), in cooperation with the Kansas Geological Survey (KGS) and the North Midcontinent Petroleum Technology Transfer Council (PTTC), will design and implement a low-cost, effective waterflood of the Mississippian formation in the 15-well Wellington West Field in Sumner County. The project will demonstrate application of inexpensive but modern tools to build an integrated reservoir model, based on geologic, geophysical, and engineering characterization techniques. Successful waterfloods in similar fields in the region have demonstrated that proper reservoir characterization and operational design can result in significant incremental recovery. AEC's efforts will emphasize documentation of the methods used, including new tools that are easily available and affordable to small independents.

The KGS spreadsheet-based log analysis package ? PfEFFER ? will use pattern recognition to integrate log and core data, relating them to production performance of wells to identify flow units and to obtain representative petrophysical properties of the reservoir. Special analyses and monitoring techniques will be used to document core studies, production-rate decline, and elements of the reservoir drive mechanism. These data will be incorporated in a model of reservoir variability and distribution of flow units. PC-Based reservoir simulation will be used to map mobile oil saturation and predict waterflood pattern performance. Based on these studies, the optimum operational strategy will be implemented to rejuvenate the Wellington West field, which is presently at its economic limit.

An aggressive technology transfer program in cooperation with the PTTC will be targeted to small independents with similar fields, emphasizing Internet-based information dissemination, including a reservoir rock catalog. The selected waterflood pattern will also be simulated using DOE's BOAST98 software to demonstrate the applicability of inexpensive reservoir simulation. Successful demonstration of using low-cost, modern tools to implement an effective waterflood at the Wellington West field will provide a model for other independent producers to exploit residual reserves from their mature Mississippian carbonate fields.

American Energies Corporation will provide $173,534 in cost sharing for the 12-month project, and the Department of Energy will provide federal funding of $75,000. The project contact is Alan DeGood, 316-262-5785.

Technology Development with Independents
Project Profile

Beard Oil Company, Dewey Oklahoma

Project: Field Trials of a Newly Developed Positive Displacement Submersible Pump - Beard Oil Company will install and test a new type of low-volume submersible pump to evaluate its ability to lower operating costs in a typical low-production marginal oil field. These types of fields commonly become uneconomical because of frequent expensive maintenance required on pumping equipment. Corrosion and aging of equipment have increased the rate of failure in recent years. The Weber field in Dewey, Oklahoma, is exemplary in that its sucker-rod pumps produce a 1% oil cut from depths of 1,000 to 2,000 feet. An average sucker rod run rate of six months could render the operation unprofitable and force the field to be shut in.

To keep such fields in production in marginally producing areas, Beard Oil Company will experiment with the use of low-volume submersible pumps. The project will be a comparative test of pump efficiencies and costs involving ten new submersible and ten conventional rod pumps, with some of the submersible pumps installed on continuous plastic tubing to further reduce string and installation costs. All costs and performance data will be recorded to assess the extent of the improvements to costs and operations, and pump run histories will be developed to assess the durability of the pump under real world conditions.

Pumping Solutions Incorporated is providing the electrical submersible pumps, which operate on a hydraulic diaphragm principle for use in low-volume, low-cost applications such as Weber field. The pumps are new, and have little performance history available. If, as advertised, they can reduce operating costs by around 50%, it would enable Weber and similar fields to continue profitable operation, and other fields to be reopened.

Beard Oil Company and the Department of Energy will each provide funding of $70,000 for the 12-month project.

The project contact is Rob Beard, 918-534-2020.