The following is an excerpt from THE BIG PICTURE SPECULATOR (Sept. 15th) … courtesy of author, Jim Letourneau. If you would like to subscribe to his highly regarded newsletter, go to
All of the improvements in oil recovery are based on changing the type of fluid injected. This can become quite expensive but it is economic to do so when oil prices are high. What is novel about Wavefront's Powerwave process is that it improves the injection process. Injection rates increase dramatically (as much as 6 times higher than conventional rates) and the fluids are more uniformly emplaced for a better sweep efficiency. Powerwave provides great benefits by improving water injection or the injection of other fluids.
Give us an example
Wavefront provided these numbers in a press release today: Recent results have shown that Powerwave can increase oil production rates by over 80% as well as reducing overall production decline by more than 2% per month. These results signal a significant increase in recoverable reserves and Wavefront is confident Powerwave will increase ultimate oil recovery by 10 to 20%. What this means is that implementing Powerwave increases production rates and increases the ultimate oil recovery. It is extremely difficult to increase cash flow and reserves at the same time in an existing field. Implementing Powerwave has a low capital cost while providing a high impact solution to declining oil production.
Why does this matter?
Not too many people appreciate the implications of increasing ultimate oil recovery. I've talked about the "Coming Boom in Enhanced Oil Recovery" at several investment conferences but people might be more interested in what Tony Meggs, British Petroleum's group vice president for technology has to say. The worldwide average recovery factor for conventional oil reservoirs is around 35% of the original oil in place, although some individual fields achieve 50-60% recovery. Clearly any improvement on this, even by small increments, could have significant benefits.
For example, a one% increase in recovery factor from BP's reservoirs would yield an additional two billion boe, notes Meggs. On a worldwide basis, a conservative five% increase in recovery would yield an additional 300-600 billion boe.
Conclusions: Wavefront is confident that Powerwave will increase ultimate oil recovery by 10-20%. What does that really mean? To a company like BP it's worth an "easy" 20-40 billion barrels according to their numbers. Worldwide it is over a trillion barrels. Wavefront has supporting data from clients like Encana that are making follow-up sales easier.
We know that Encana obtains great results using Powerwave so we might expect them to deploy more systems. We know management is talking with PeMex and we know PeMex desperately wants to increase oil production. Any of their existing client base (BP, Encana, etc.) could place significant new orders as well.
