The average oil well is only able to produce 35% of the oil that was originally in place. That means oil companies are leaving billions of barrels of oil worth hundreds of billions of dollars just sitting in those reservoirs. The good news is that technological advances are helping companies improve those recoveries, which is making each well much more valuable than ever before.
Oil giant Chevron Corporation (NYSE:CVX) is just one of the many companies using technology to drive improvements in its oil recovery, though its commitment to technology runs deeper than most. Because the company focuses on extracting hard-to-reach oil, technology is absolutely critical to its business, especially in deepwater locations like the Gulf of Mexico. Initial recovery rates there can sometimes be less than 10%. However, by using technology Chevron can more than double the amount of oil that is ultimately recovered, which increases the value of each find.
The following slide from a recent investor presentation shows a sampling of just some of the technologies Chevron uses to extract more oil from deep-sea reservoirs.
Subsea systems like sea-floor pumps are a critical next step for companies that want to get more oil out of deep-sea wells. Technology companies like OneSubsea, which is a joint venture between Cameron International Corporation (NYSE:CAM) and Schlumberger Limited. (NYSE:SLB) as well as FMC Technologies, Inc. (NYSE:FTI), are the leaders in the subsea space. These companies make the high-pressure, high-temperature systems that are key for the wells drilled in a mile or more of water that Chevron is drilling in locations such as the Gulf of Mexico.
One of FMC's Enhanced Vertical Deepwater Subsea Trees was used at the Perdido field project, which counts Chevron among its partners. The FMC tree holds the world record for the deepest subsea tree system, sitting beneath 9,600 feet, almost two miles, of water. Technologies like these withstand crushing water pressure so that more oil can be produced from these incredibly deep wells.
Cameron has also worked with Chevron to provide high-pressure, high-temperature systems. In fact, the company provided its latest technology to support the Jack/St. Malo development that should begin producing oil next year. However, while subsea systems are critical, they are just one example of how Chevron looks to technology to increase its oil production.