The 1 GW solar-thermal project will turn water into steam for injection into an oilfield in Oman. The process is known as enhanced oil recovery (EOR) and involves heating the ground to improve the flow of heavy crude to the surface.
The Fremont, Calif.-based company is working with Petroleum Development Oman, a joint venture with Royal Dutch Shell Plc, Total SA and the government of Oman. The project is a landmark deal in terms of size but also because it the first time that solar energy is used to produce oil at a commercial scale. Glasspoint previously did smaller pilot projects involving solar and oil.
“The global oil industry uses about 9 million barrels of the fossil fuel per day to power the production process, the equivalent of Western Europe’s daily consumption,” Rod MacGregor, chief executive officer of GlassPoint, said in an interview in London.
Many countries have already pumped their lightest, easiest to access oil and now are using EOR to reach the heavier varieties. Companies can spend as much as 60 percent of their operating costs on fuel for EOR, using five barrels to steam to make one barrel of oil, according to MacGregor.
GlassPoint’s steam-making facility will largely be run on the sun’s energy by day and natural gas at night. Solar-powered steam is 10 percent cheaper than natural gas in California. In Oman, it’s about 28 percent cheaper compared to the export price for liquefied natural gas.
“But you also have to factor in the opportunity cost; Oman could be selling that gas,” MacGregor said.
A standard medium-sized oilfield would require 1 GW to 3 GW of solar thermal power to make the right amount of steam. Some of the larger ones would need up to 30 GW, he said.
GlassPoint is also considering development of solar energy for other applications in the oil industry that use thermal heat, such as desalination and desulfurization, which remove salt and sulfur from water. It may eventually develop sun-powered plants for other industrial uses, but “not for decades.”
©2015 Bloomberg News
Lead image: Oil rig in the sunset. Credit: Shutterstock.