merchandise trade deficit. 3 Further decreases in domestic production will exacerbate the trade deficit problem and increase foreign dependence for a resource that provides about 40 percent 4 of the total U.S. energy supply.

The Reservoir Class Field Demonstration Program, hereafter referred to as the Reservoir Class Program, was initiated in 1992 as part of a broad DOE effort to counter the continuing drop in domestic oil production 5 and to slow the abandonment, because of unfavorable economics, of wells in “mature” fields that typically still contain 60 to 70 percent of the original oil in place (OOIP). 6 Of this remaining oil, approximately 32 percent (113 Bbbl; 21 percent of OOIP) is mobile 7 but bypassed during primary recovery and waterflooding and about 68 percent (238 Bbbl; 45 percent OOIP) is immobile, requiring advanced recovery methods to produce. 8 The specific goal of the program is to encourage oil companies to employ techniques that will increase oil recovery from wells in these “mature” fields.

As major companies reduced their efforts in domestic onshore operations and shifted their emphasis to frontier areas (Alaska and offshore) and international operations, DOE recognized that production of oil from mature fields in the lower 48 states and the continental shelf of the United States would shift to smaller companies and independent producers. Such companies generally lack the internal technical expertise and capital resources to undertake technically or economically risky projects, leading to

3  

For 1994, the U.S. merchandise trade deficit totaled $168.4 billion. Imports of petroleum and petroleum products accounted for $51.5 billion of this total (U.S. Department of Commerce, Survey of Current Business, January 1995).

4  

In 1993, the latest year for which complete data are available, U.S. energy consumption totaled 83.89 Quadrillion BTU (Quads), of which 33.84 Quads were supplied by petroleum— crude oil, lease condensate, and natural gas plant liquids (Energy Information Administration, Monthly Energy Review, January 1995).

5  

U.S. domestic field production of crude oil declined from 8.60 million barrels per day (bpd) in 1980 to 6.63 million bpd in 1994 (Energy Information Administration, Monthly Energy Review, January 1995).

6  

In 1994, for example, there were approximately 442,500 stripper wells (wells that produce less than 10 barrels of oil per day) in the United States, which accounted for about 14 percent of domestic production of crude oil. In the same year, about 18,000 (4.0 percent) stripper wells were abandoned (Interstate Oil and Gas Compact Commission, Marginal Oil: Fuel for Economic Growth, 1995), presumably due to unfavorable economics.

7  

Mobile oil is that oil which can be moved to the well under the force of gravity, the natural pressure of the reservoir, or with the aid of conventional pressure maintenance or displacement technologies (e.g., water or natural gas flooding). Immobile oil is that oil held in the rock pores by capillary or viscous forces and is usually produced using gas, chemical, or thermal methods.

8  

An Assessment of the Oil Resource Base of the United States, Oil Resources Panel: A Commentary by William L. Fisher, Noel Tyler, Carol L. Ruthven, Thomas E. Burchfield, and James F. Pautz. U.S. Department of Energy Report DOE/BC-93/1/SP, 1992.



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