Oil Week Magazine - Terrex / Kim DaviesOil Week Magazine Feb 2011
Terrex takes EOR to heart
Terrex Energy, a new startup last summer, is built around a business strategy of pursuing
enhanced oil recovery (EOR) in conventional light oil reservoirs. It´s top executive, Kim
Davies, makes it clear this isn´t a research company. It plans to use only proven technology,
which for Terrex means chemical floods: using alkaline surfactant polymer (ASP) to help
sweep the oil from the reservoir.
"ASP is the most robust method out there and it´s the easiest," Davies says. It requires
shorter timelines to set up, is less capital-intensive than thermal EOR or carbon dioxidemiscible
floods. Cenovus and Apache use CO2 EOR in Weyburn, Saskatchewan, to good effect
but they are among only a few EOR producers in Canada with access to steady supplies of
reasonably priced CO2. (Apache and others in the United States do CO2 EOR in areas
proximate to naturally occurring geological deposits of CO2.)
Preparing an asset for ASP can take anywhere from 18-24 months. In the interim, Terrex´s
plan is to apply improved oil recovery techniques - infill drilling, re-completions, optimizations,
better water management - to maximize conventional production prior to the implementation
of the ASP flood.
Its first acquisition is an oilfield near Strathmore, Alberta, an asset that had 20 million barrels
of original oil in place. To date, Terrex has produced about five million barrels and it expects to
get another two million or three million barrels (10 or 15 per cent of the original oil in place).
It has finished most of its technical evaluation for the ASP and is now finalizing the
composition of the chemical cocktail. Injection is expected in 2011.
"Most of the EOR in Canada is focused on heavy oil or the oilsands," Davies says. "We´re
looking at medium to light oil. There´s a real niche there."
Terrex sees good economics in EOR. It´s betting that depleted conventional oil assets will cost
less than the light oil resource plays everyone is currently chasing. It also saves on the
existing infrastructure and on finding and development costs. So Terrex is targeting a US$30
to US$40 per barrel West Texas Intermediate break-even point and expects an internal rate of
return of about 60 per cent.
This compares favourably with the currently hot resource plays, Davies says. Based on a $25-
million capital expenditure and US$80 oil, excluding land costs, the average IRRs in the Viking
are 57 per cent, 76 per cent in the Bakken, anywhere from 34-84 per cent in the Cardium
depending on the analyst. (Thermal recovery is in the range of 20 per cent.)
"Our overall plan is to acquire 500 million barrels of original oil in place, which at 10 per cent
recovery is about 50 million barrels," Davies says. "What I´m really talking about is another
kind of oil resource play."