US Oil Companies Finding More Oil in Old Fields

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20 August 2008

The price of oil has dropped around 20 percent in recent weeks, but remains more than double what it was just a couple of years ago. The high price has given oil companies the incentive to revisit old fields long ago abandoned as unprofitable. As VOA's Greg Flakus reports from Austin, Texas, new technology has made it possible to extract more oil from these old fields.

In a remote cow pasture near the small town of Dew, Texas, workers are operating around the clock to extract oil from a field that was considered depleted a few decades ago.

Now, with high oil prices as an incentive, companies can use new techniques and equipment to extract still more petroleum from deposits thousands of meters below the surface.

In the School of Geo-Sciences at the University of Texas at Austin, former director of the U.S. Geological Survey, Charles Groat, sees great opportunity for domestic oil companies in these old fields.

"The old fields where people were comfortable with 20 or 30 percent recovery, now they go back in with new technologies and get an extra 20 or 30 percent out and expand the dimensions of the field," he said. "The drive for successful businesses will lead people into these fields as long as they can make money doing it and that has not shown any sign of abating."

One of the men putting together deals to re-enter old fields is Jim Baldauf of Austin-based Apex Resources, Incorporated.

"Texas has a rich tradition of looking for Texas tea, black gold," he said.

Baldauf says many parts of the lone star state were covered with oil derricks 80 years ago when it was relatively easy to drill down, tap a reservoir of oil trapped in subterranean rock and pump it out. But he says the easy oil is long gone and getting more out is difficult and expensive.

One problem, Baldauf says, is that oil tends to be in vertical fractures in the rock that are difficult to hit with a drill.

"If you are trying to drill a vertical well bore, a vertical well bore trying to hit a vertical fracture, the odds are not in your favor," he said. "Odds are you are going to hit to one side or the other."

But Baldauf says new horizontal drilling techniques make these deposits accessible.

"Instead of going down and having to hit one of these vertical fractures, what we can do is go down vertically and then start to build a curve and then kick out and go sideways and intersect four, five or six of these fractures," said Baldauf.

The United States produces more than eight million barrels of oil a day from its domestic wells, but the country uses more than 20 million barrels a day, importing oil from other countries to breach the gap. In spite of decades-long efforts to develop alternative energies, Charles Groat says people are likely to continue needing oil and natural gas for many decades to come.

"The demand growth for traditional fuels, transportation fuels in particular, is substantial in the United States and globally as well," he said. "So the demand for traditional hydrocarbons is going to grow, not shrink. Even if we move more and more into alternatives, we still are going to need to find more oil and gas, transport it and market it despite all the good things that might happen with alternatives and conservation."

But even a Texas oil man like Jim Baldauf recognizes that the country cannot continue to consume oil the way it does now for much longer.

That's why he drives a small hybrid car.

"Traditionally, a Texas oil man drives a Cadillac, right? But I think you will find that more and more of us are giving up the Cadillac to drive a more efficient vehicle," he said.

Baldauf is also co-founder of the Association for the Study of Peak Oil, USA. The theory behind peak oil is that world oil production is close to peaking, as domestic U.S. production did in 1970. Skeptics believe there is still much oil left to be discovered and developed around the world, but even they agree that getting that oil is going to be much more expensive. If the peak theory proves true, the intersection between rising worldwide demand and a decline in world production would likely drive prices much higher, giving drillers even more incentive to go after every last drop of oil they can find in old fields as well as new ones.