Economics and financing of a full-scale chemical flood

Economics of tertiary enhanced recovery of petroleum are reviewed. It is noted that the national tertiary enhanced recovery (chemical) target is 15 billion barrels of crude. The independent oil producer is responsible for approximately 38% of the oil production and by inference 38% of the reserves in the U.S. The front end costs for tertiary enhanced recovery (chemical) projects exceeds the independents' available capital resources by a factor of 2 at a minimum. Tertiary enhanced recovery (chemical) crude must be viewed not as advanced water-flood production, but in the same category as other exotic energy replacement resources such as synfuels, solar and geothermal. Following this reorientation of viewpoint, the government should provide equivalent financial incentives for the independent oil producer. Suggested minimum incentives in this paper are: (1) $17 support price; (2) 90% federal guaranteed loan, 50% net profits interest payback.