GlassPoint Solar’s Miraah EOR project in Oman is set to be the largest of its kind in the world. InnovOil caught up with the company to discuss its plans for the future.
By all accounts, GlassPoint Solar is an unusual renewable energy developer. The company sits with one foot firmly in the solar energy sector and another in the tricky business of enhanced oil recovery (EOR). “I’m quite certain that we’re the only solar company in the world that employs petroleum engineers and does reservoir simulation,” vice president of business development John O’Donnell quipped in conversation with InnovOil earlier this month.
GlassPoint’s proposition has been well covered in recent years. The California-based company uses concentrated solar power (CSP) to generate steam for thermal EOR. Thin curved mirrors, protected under glasshouses, track the sun throughout the day and use its rays to boil water. The resulting steam is then injected into the reservoir to raise the permeability and lower the viscosity of heavy crude.
Despite ample sunshine, much of the Middle East has lagged in terms of solar power development, mainly thanks to the availability of enormous hydrocarbon resources. While many have concentrated on harnessing solar photovoltaics (PV) for electricity production, GlassPoint’s industry-focused application of CSP has allowed it to make a beachhead – in both the oil and renewable industries – where others have failed.
As a case in point, it is telling that the company’s latest project – Miraah, a 1,021-MW thermal facility currently under construction at the Amal oilfield – will be the region’s largest solar plant of any kind and one of the world’s largest solar facilities.
Full steam ahead
Announced in July, the new US$600 million Miraah development follows the success of a 7-MW pilot scheme, also at Amal, and began producing steam in 2013. While very little changes in the deployment of the technology, its footprint is obviously of an entirely different scale.
“It’s a little more than 100 times larger than the pilot,” O’Donnell enthused. When complete, it will deliver an average of 6,000 tonnes a day – about 38,000 barrels per day – of steam, throughout the year. Structurally, steam will be delivered from 36 massive greenhouses, built and commissioned in blocks of four.
Meaning “mirror” in Arabic, Miraah cements years of co-operation between GlassPoint and Petroleum Development Oman (PDO), the Sultanate’s government-backed joint venture with Royal Dutch Shell. Indeed, according to O’Donnell: “When [PDO managing director Raoul Restucci] announced Miraah, he said that in Arabic it means ‘mirror,’ and in Latin it means ‘wonderful.’”
The willingness of PDO and Shell to look at alternative technologies has been a major factor in getting the project off the ground, not least solar EOR. “We’ve seen international partners bringing technology of many different kinds and Oman has really been a leader in harnessing it,” O’Donnell said.
Oman’s quest for invention is driven by necessity. Despite large heavy crude reserves, it lacks the domestic gas supplies necessary to drive large power and EOR projects. Having previously exported gas to Qatar and the UAE via the Dolphin pipeline, Oman saw production fall until pipeline flow was reversed, with supplies now being sourced from Qatar’s world-class gas deposits. Gas is now imported, with more than 20% of the country’s gas used at the oilfield. It is for this reason that O’Donnell argued: “Solar energy can deliver steam at a significantly lower price point than LNG and also contribute to energy independence and energy security.”
According to PDO estimates, Miraah will allow the country to save around 157 million cubic metres of natural gas per year.
Neither is there a shortage of demand for more thermal projects. He notes that another operator, Occidental Petroleum (Oxy), “came in very aggressively at the Mukhaizna field and took a field at around 8,000 barrels per day and now it’s closer to 150,000 bpd, using a giant steam project.” Such results are impressive, but require massive amounts of capital investment and fuel.
Economies of scale
Part of the reason solar EOR is deployable at Amal is its remoteness. Located 500 km from the capital Muscat – and “about a 200-mile [320-km] drive from anywhere” – investing in and constructing infrastructure, generation facilities and the fuel supply lines to support them is costly. But the higher CAPEX of a solar project is returned relatively quickly over its lifetime, and acts as a partial hedge against the vicissitudes of the gas spot market.
Additionally, the concept is now firmly proven for other potential clients. “The pilot was designed so as to prove everything at scale, so that when [GlassPoint] undertook larger projects, they would be copies of that,” O’Donnell explained. This involved working with equipment and manufacturing suppliers, as well as those in construction and fabrication, so producing a highly efficient supply chain.
GlassPoint calculates its price competitiveness based on a “fuel breakeven cost.” A 2014 SPE paper illustrated the price of solar steam against gas-fired once-through steam generators and co-generation steam projects. It suggests that at a gas price of US$6 per million British thermal units, solar generates steam at US$17 per tonne – around US$3 less per tonne than the co-generation facility and US$10 less than once-through steam generators.
O’Donnell said that even with lower gas prices, GlassPoint was competitive, with the company and its clients now looking at a breakeven price of around US$3 per million Btu. “We dramatically cut the cost of making steam from sunshine, so that we’re below the fuel price,” O’Donnell says. “With that economic drive, even at a time of low oil prices, I think it indicates how significant solar technology is, because in today’s environment, no-one is sanctioning nice-to-have projects – they’re sanctioning must-do projects.”
Hurry up and Kuwait
With the first tranche of Miraah expected on line by 2017, GlassPoint already has its eyes on new markets. Nearby Kuwait is another promising lead. “Kuwait has announced plans to go much further than Oman, with many times larger steam projects. Earlier this year it sanctioned the first days of commercial development at the first of a series of thermal recovery projects.” With an office established in the country in 2014, GlassPoint is ideally positioned to move in.
Beyond Kuwait, the sky is very much the limit. With heavy crude accounting for an estimated 2.3 million bpd of production in 2013, there is no shortage of targets. Venezuela, western China, North Africa and much of the Middle East are in need of thermal EOR for heavy oil projects.
Yet GlassPoint’s medium-term ambitions are closer to home. “We see the California market opening up very significantly,” O’Donnell said. In the light of new restrictions on emissions, he suggested: “Solar steam can deliver compliance with carbon regulations at much lower cost than other projects and contribute substantially to refinery profitability as well as steam producer profitability.”
The result is that GlassPoint is increasingly being brought in as an early-stage consultant on thermal EOR projects, in order help operators model and understand the process of setting up facilities. The potential is enormous, O’Donnell said. “We’re working with customers, who aren’t just looking to get 5% of their steam from sunshine; they [want] 50% or 80% from sunshine.”
“The oil industry is really the next major market for the solar industry,” O’Donnell concludes. “We see a very substantial market opportunity.”