The oil and gas industry in the United States today has a much different character than the industry of the 1950s, 60s, and 70s. No longer does "Big Oil" dominate the makeup of America's oil and gas sector. For the most part, the major oil companies have focused their attention on more lucrative prospects outside of the United States.

Independent oil and gas producers now drill 90 percent of the nation's wells and produce 85 percent of the natural gas and nearly 60 percent of the oil that flows from wells in the lower 48 states. Most of these companies, however, are working on small financial margins and have few resources to risk on developing technological solutions to the problems they encounter in today's oil or gas fields.

Therefore, the Office of Fossil Energy has made oil and natural gas field projects, technical assistance, and technology transfer, targeted specifically to small independent producers, an important focus. Innovations emerging from the Energy Department oil and natural gas research programs do little good unless the nation's petroleum producers are made aware of them and deploy them in actual exploration and production operations.

A key element of the U.S. Department of Energy's oil and natural gas research program is to enable America's oil and gas producers to take innovative exploration and production concepts out of the laboratory and into oil or gas fields that are experiencing production problems.

In the late 1970s to the mid-1980s, the Bartlesville Project Office at DOE's National Institute for Petroleum and Energy Research in Bartlesville, OK, operated 26 field demonstration projects that concentrated on three main areas: chemical flooding, carbon dioxide and thermal/heavy oil recovery. The goal was to take processes and technologies that had been developed and tested in the laboratory to the field and demonstrate the viability of these technologies under actual reservoir conditions.

The basic lesson learned during these early demonstrations was that oil and natural gas reservoirs were much more complex than previously thought. This meant that geological characterization of a reservoir was critical to the effective deployment of any reservoir technology. This early insight thus provided a guideline for the design and implementation of DOE's next generation of field demonstrations which have proven much more successful.

Since the 1980s, when unpredictable, up-and-down cycles in world oil prices began curtailing most privately-funded field experiments, the Energy Department has sponsored numerous oil field technical assistance initiatives under real conditions and economic restraints in an effort to keep America's producers equipped with improving technologies and increase U.S. oil resource recovery.

A 1997 National Research Council (NRC) review, Maintaining Oil Production from Marginal Fields: A Review of the Department of Energy's Reservoir Class Program, highlighted the importance of reservoir characterization and technology transfer, and concluded that DOE was applying appropriate conventional and advanced technologies that could significantly contribute to continued production if the technologies proved to be successful in economically recovering oil and were broadly applicable.

Additionally, every major field project that receives Federal funding from the Department?s oil and natural gas research program must include a technology transfer element. Typically, the private operator is required to share the techniques and project results with other producers through workshops, technical papers, or site visits.

A 2001 NRC review, Energy Research at DOE - Was it Worth It?, found DOE has an important role in funding high-risk projects that individual companies cannot justify, utilizing existing expertise at DOE and national laboratories to increase domestic oil and gas production, and supporting smaller companies and independent producers that are usually too small to be able to support their own R&D programs. As part of the review, the NRC determined that the DOE Reservoir Class Program provided significant economic, environmental, and energy benefits and that it is "generally regarded in industry and the research community as one of DOE's most successful programs." 

Technology Development with Independents

In 1995, the Department's Office of Fossil Energy began providing grants to small independent oil producers to test untried or unfamiliar technologies in the field. In 1999, the program formally designed the Technology Development with Independents program.

MORE INFO 05.22.03 Techline: DOE Announces Winning Independent Producer Projects

The program provides relatively small federal grants (typically $75,000 to $100,000) to companies with 50 employees or fewer to try new approaches that could solve specific production problems. The goals are to: 

• Extend the economic production of domestic fields by slowing the rate of well abandonments and preserving industry infrastructure.
• Increase ultimate recovery in known fields using advanced technologies for formation evaluation, oil recovery and production technologies. 
• Use field demonstrations to broaden information exchange and technology application among stakeholders by expanding participation in DOE projects.

By 2003, a series of competitions had resulted in over 60 projects by small independent operators in 19 different states. Largely because of this program, many marginal U.S. oil fields that were on the verge of being abandoned are still in production today. Independent operators have contributed more than 70 percent of the investment needed for these projects. Sharing the risks and expenses has resulted in innovative methods and technologies which have boosted oil production and prevented the premature shutdown of some of the nation's most endangered oil fields.

MORE INFO Rocky Mountain Oilfield Testing Center (RMOTC) website 09.28.06 Techline: RMOTC Receives Federal Laboratory Consortium Award

Another opportunity for independents to test technology development is with the Rocky Mountain Oilfield Testing Center (RMOTC), which provides a test site for petroleum techniques and equipment both for the government and for private sector producers, service companies and equipment manufacturers. RMOTC resides within the Naval Petroleum Reserve No. 3 (NPR-3), the Teapot Dome Oil Field.  The field test site is a 10,000 acre operating oil field offering a full complement of associated facilities and equipment on-site.  There are approximately 1,200 well bores and approximately 600 producing wells, in nine producing reservoirs ranging in depth from 500 ft. to 5000 ft.  Existing producing wells, non-producing wells, or sites for drilling new wells are all available to field test partners.  Areas of testing opportunities include drilling, exploration, production, and environmental remediation.

Native American Program

The Office of Fossil Energy's Native American Initiative Program is designed to help Tribes develop and manage their energy resources in an environmentally sound manner by participating in joint exploration and production efforts with the oil industry. Native American lands contain large reserves of oil and gas- estimated at 890 million barrels of oil and 5.6 trillion cubic feet of natural gas.

MORE INFO Native American Initiative Fact Sheet [561KB PDF]

The goal is to enable Native Americans to develop and manage their mineral resources by providing them access to the latest technological innovations. The effort is expected to return economic dividends to the tribes at the same time it helps to strengthen our country's energy security.

Through discussions with tribal decision-makers and the Bureau of Indian Affairs, the DOE program identifies the unique resources and experiences of individual tribes and responds to their needs. Research projects that address these needs by developing and demonstrating technologies are conducted in partnership with the Tribes. The program encourages dialogue between tribes, industry, and researchers through face to face meetings and technology transfer workshops.

The Reservoir Class Oil Field Demonstration Program

Realizing that domestic production was declining rapidly and that huge volumes of oil were being abandoned in domestic reservoirs because of uneconomic production techniques, DOE initiated the Reservoir Class Oil Field Demonstration Program in 1992.

To determine which of the more than 96,000 oil reservoirs in the United States should receive priority attention, DOE first grouped 2,500 of the largest domestic reservoirs into "geologically similar reservoir classes" representing 65 percent of the oil-in-place in the lower-48 States. The reservoir classes were then prioritized by:

• the amount of producible oil remaining in them, and
• the likelihood of premature abandonment.

Once priorities were set, DOE began running competitions, asking private operators, universities, State agencies, and others to recommend technologies and candidate projects that would increase production from the most threatened of these geologic classes. Projects addressed either near-term (within five years) program goals of preserving access to reservoirs with high potential for increased productivity which are rapidly approaching their economic limit or mid-term (within 10 years) program goals of developing and testing the best advanced technologies through an integrated multidisciplinary approach.

Three competitions were conducted for the following classes:

• Class I Fluvial-Dominated Deltaic Reservoirs - These reservoirs were formed in ancient river deltas and originally contained about 70 billion barrels of crude oil. Class I reservoirs now contain over 5 billion barrels of potentially recoverable oil; half of this oil is at risk of abandonment by 2010. In April 1992, 14 projects were selected (10 near-term and four mid-term). Three projects were cancelled shortly after they began; the remaining 11 projects have been completed.

• Class II Shallow Shelf Carbonate Reservoirs - Formed in shallow ocean shelves, these reservoirs originally contained more than 68 billion barrels of crude oil. Most of the remaining 48 billion barrels are at risk of being abandoned. Advanced technologies have the potential to recover an additional 5 billion barrels. The nine projects selected in 1993 were completed between December 1997 and September 2002.

• Class III Slope and Basin Clastic Reservoirs - Created from sediment deposited in deep ocean slope and basin areas, these reservoirs are estimated to have originally contained nearly 60 billion barrels of light and heavy crude oil. Most of the remaining 44 billion barrels are in danger of being abandoned unless more sophisticated techniques are widely deployed. Advanced technologies have the potential to recover an additional 5 billion barrels. The nine projects awarded in fiscal year 1995 have been completed.

MORE INFO Summaries of Class II Projects The Class Act Newsletter

Projects selected in the initial Reservoir Class Demonstration Program were expected to generate about 500 million barrels of oil by 2002. In terms of the economics of the times, the market value of this oil would be $10 billion - an impressive return for a total federal investment of about $116 million.

Several Class I projects and one Class III project have individually produced tax revenue and royalities that exceed the Federal Government's investment in the entire program. Successes from completed Class projects include innovative waterfloods, CO2 and steam flood projects, and new developments in the use of seismic attributes for 3-D and 4-D seismic interpretation.

Detailed reservoir characterizations conducted in the initial phase of the projects has led to improved and integrated management strategies for infill drilling, horizontal drilling, and FMI wireline and acoustic logging technologies. Seismic analysis conducted as part of these projects has discovered new reserves and oil recovery has increased by up to 10-fold in projects in Utah, Colorado, California, and Texas. For many reservoirs in the program, the productive life has been extended by as much as 10 to 20 years, and many cost-saving technologies have been applied to promote continued economic development of mature domestic oil reservoirs.

The Reservoir Class "Revisit" Program

With the original Reservoir Class Field Demonstration Program winding down and the threat of premature oil field abandonments continuing to intensify, the Department in February 1999 announced its intent to reopen competitions for additional projects in the three high-priority reservoir classes identified in the original program. In October 1999, ten new projects were selected with the potential to produce as much as 40 million barrels of additional crude oil by 2007.

The Petroleum Technology Transfer Council

MORE INFO PTTC Web Site [opens new window] AAPG Assumes PTTC Management  [80KB PDF]

DOE enabled states and industry to create the Petroleum Technology Transfer Council (PTTC) in 1993. With federal seed money from the Department's Office of Fossil Energy, states and independent oil and gas producers launched the PTTC specifically to improve technology transfer and stimulate the application of innovative technology applications in actual field operations.

The PTTC conducts most of its technology transfer activities through 10 Regional Lead Organizations, each typically affiliated with a state university and representing an oil and gas producing area that may have similar geologic features and technology needs. Technologies come from many sources -- vendors and service companies, government laboratories, universities, producers themselves, and, notably, the DOE's Fossil Energy R&D program. The PTTC provides grass-roots assistance and since its inception has conducted nearly 1,400 regional workshops.

The Natural Gas and Oil Technology Partnership

MORE INFO Natural Gas and Oil Technology Partnership Web Site [opens new window]

Begun in 1988, the Natural Gas and Oil Technology Partnership brings together the expertise of the Energy Department's national laboratories in collaborative projects with the nation's oil and gas producers and service companies. A major focus of the Partnership in its early stages was to apply the national defense capabilities of the Sandia and Los Alamos National Laboratories to the peaceful exploration and production of oil and natural gas. In later years, the Partnership expanded to include Lawrence Livermore and Lawrence Berkeley National Laboratories in 1994, and Argonne, Brookhaven, Idaho, Pacific Northwest, and Oak Ridge National Laboratories in 1995.

Any natural gas and oil producer, refiner, or service company is eligible to participate in the Partnership, provided they team with a national laboratory. Universities and other research institutions may join project teams. The industry-driven program establishes active industry interfaces through review panels and forums that define industry needs, provide annual project reviews, and determine the priority of new proposals and ongoing projects.

The Partnership has focused its collaborative efforts on these specific topics:

• Drilling, Completion, and Stimulation Technology projects develop and demonstrate innovative drilling, perforation, and fracturing processes; subsurface instrumentation; and advanced computational software. 
• Oil and Gas Recovery Technology centers on assisting independent producers by providing a broad range of hardware and software technologies to improve production from existing wells and fields. 
• Diagnostic and Imaging Technology projects strive to improve exploration and reservoir characterization through advances in borehole geophysics and seismic processing and imaging. 
• Computational Technology provided the opportunity for both basic and applied collaborative R&D to enhance and apply computational technologies for finding, developing, and producing natural gas and oil. This activity area has been combined with the Diagnostic and Imaging; Oil and Gas Recovery; and Drilling, Completion, and Stimulation technology areas.
• Upstream Environmental Technology seeks to develop technologies and practices that reduce environmental risk and decrease the cost of regulatory compliance. Two specific upstream environmental technology areas are the focus: produced water reduction and treatment, and stationary source emission control.
• Downstream Environmental Technology addresses the needs of the U.S. refining industry and emphasizes developing advanced processing technologies that provide more efficient pollution prevention and environmental compliance capabilities. 
• Natural Gas Technology includes two sub-topic areas: Gas Storage and Drilling, Completion, and Stimulation. The Gas Storage sub-topic emphasizes enhanced efficiency and reliability of natural gas storage systems. Projects within the Drilling, Completion, and Stimulation sub-topic develop new innovative technologies to reduce cost and improve drilling, completion, and production success in harsh reservoir environments.