Release Date: December 4 , 2006

WASHINGTON, DC - A technology developed with U.S. Department of Energy funding has revived oil production in two abandoned oilfields on Osage Indian tribal lands in northeastern Oklahoma, and demonstrated a technology that could add billions of barrels of additional domestic oil production in declining fields.

Production has jumped from zero to more than 100 barrels of oil per day in the two Osage County, Okla., fields, one of which is more than 100 years old. The technology was successfully pilot-tested in the century-old field, and using the knowledge gained, the technology was applied to a neighboring field with comparable success. This suggests that such approaches could revitalize thousands of other seemingly depleted oilfields across America's Midcontinent region.

The pilot test was funded under DOE's Native American Initiative, which is implemented by the Office of Fossil Energy's National Energy Technology Laboratory. The initiative seeks to stimulate economic development and increase oil and natural gas production on American Indian lands while protecting the environment. Through tribal partnerships with industry and academia, the development of innovative technology results in increased revenues and educational benefits for tribal members. In this case, the Osage Tribe was a partner in the project and stands to earn royalties on incremental oil production.

Grand Resources Inc., a small, independent oil producer based in Tulsa, Okla., proposed an innovative approach to the recovery of oil in the Bartlesville sandstone geologic formation in the 100-year-old Wolco field in the Osage Nation: waterflooding using horizontal wells. Waterflooding using vertical wells is the most common form of "secondary" oil recovery; it involves injecting water into an oil reservoir where production is declining in order to help repressurize the reservoir and help "sweep" the residual oil to producing wells.

The Bartlesville sandstone is shallow, underpressured, and naturally heavily fractured. That makes it a poor candidate for a conventional waterflood, because the vertically injected water is too easily channeled away through the natural fractures before it can flush out residual oil impregnated in the sandstone.

However, the Bartlesville formation offers a tantalizing target for improved oil recovery efforts: More than 1.6 billion barrels of oil has been produced from the Bartlesville sandstone in northeastern Oklahoma, yet the recovery efficiency averages only about 20 percent of the original-oil-in-place.

Grand Resources' innovation was to drill three horizontal wells in parallel - an injector well surrounded by two producing wells - after conducting extensive reservoir characterization studies of Wolco field.

In horizontal drilling, a vertical borehole is drilled first, then "kicked off" at a roughly 90-degree angle through an underground formation. Horizontal drilling has become common in the oil and gas industry in the past 20 years, gaining popularity because horizontal wells can penetrate more of a pay zone than a vertical well can. Although they cost more, horizontal wells can produce more oil and gas by orders of magnitude, thereby accelerating the return on investment. For the most part, horizontal drilling is limited to potential producing wells and deeper formations.

Grand Resources' chief innovation was to design a horizontal waterflood program that could be economic for a shallow, underpressured, highly fractured reservoir. The company also developed special techniques to economically drill and monitor the shallow horizontal wells without damaging the producing formation.

Following its success with the Wolco pilot, Grand Resources expanded its horizontal waterflood in that field and implemented a similar project at neighboring Avant oilfield, with comparable results. The two fields together are producing on average 103 barrels per day of oil. By the end of its third year in 2005, the pilot project had yielded more than 6,000 barrels of oil - about as much as a vertical waterflood might have produced over a 10-year period; the test wells are expected to ultimately produce almost 29,000 barrels.

An economic evaluation indicated that the Wolco project, expanded to demonstration scale, would generate $2.9 million in total revenue over 6 years versus $1.4 million in total revenue over 30 years for a vertical waterflood.

The Grand Resources' project's success has translated into growth for the small independent as well. The company's staff has grown from 8 employees when the DOE grant was awarded, to 45 today.

America has more than 218 billion barrels of by-passed conventional oil lying at shallow depths in tens of thousands of declining or depleted reservoirs. If replicating Grand Resources' success could tap even a tenth of that by-passed oil, it would roughly double the Nation's proved crude oil reserves.