This Biotech Company is Helping Oil Companies Boost Production
The average oil (NYSE:USO) well is abandoned long before all the oil has been pumped. The natural pressure subsides as oil is pumped, and by the time a third of a well’s oil has been pumped, it can seem completely dry, and it is often too costly to continue pump the remaining crude. But scientists are trying to change that.
Glori Technology is using a system to stimulate the growth of bacteria in an oil (NYSE:USO) well. The bacteria grow on droplets of oil, making the oil slicker and thus allowing it to flow more easily. About half of the 5 million barrels of oil pumped in the U.S. each day is from older, low-pressure wells.
Glori is only one of many companies working on a solution to pressure problems in older wells. Others are trying to inject water, carbon dioxide, and natural gas in order to maintain pressure. Glori’s technology works with those injecting water into wells. It takes a sample of bacteria already living in the well, develops nutrients to encourage growth in the water, then injects those nutrients into the well after cleaning the water and developing a circulation pattern that will also help stimulate growth. The process is expected to make old wells about 30% more productive.
This is by no means a new technology. It was first developed by the Indian National Oil Company in the early 1990s, but in 2005, a private equity firm founded Glori and advanced the technology by purchasing an Argentinian biotech outfit and and Norway’s Statoil. The advancing technology has garnered a lot of attention for Glori in the last year, with the company receiving a large investment from a venture capital fund controlled by GE (NYSE:GE), NRG (NYSE:NRG), and ConocoPhillips (NYSE:COP).
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But Glori still faces some obstacles. Firstly, oil companies (NYSE:XOP) are reluctant to invest money in new technology, as the process of exploration and production (NYSE:OIH) is already so expensive. Secondly, many of the big oil companies such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and BP (NYSE:BP) are already developing a similar technology in-house. Glori will need to get one big-name user in order to legitimize their product within the industry. Currently the company is in talks with six different oil companies, and is expected to announce its first commercial partnership soon.