Getting steamed -- MegaWest Energy highlights thermal technology in weekend grand opening event

At its Marmation River Project near Deerfield, Mo., MegaWest Energy has embarked on the first phase of commercial production of heavy oil from Vernon County using s process now economically feasible in the face of the high prices currently commanded by oil -- even though the oil present in Vernon County commands a lower price than the preferred, light crude oil. During a demonstration and open house on May 3, MegaWest Energy Corporation Area Superintendent Jim Long (left) and CEO George T. Stapleton II stand in front of the heart of the steam-extraction effort to produce oil in western Vernon County. The boiler produces enough steam to heat a 10 acre area to 100 degrees to make pumping the thick oil possible. The boiler can produce steam that can be piped up to a mile effectively so when other fields are ready the boiler does not have to be moved. --photos by Steve Moyer/Daily Mail

MegaWest Energy Corporation has started pumping steam into its 10-acre field just east of the Missouri-Kansas state line in anticipation of pumping the area's thick oil out. The company has 40 producing wells in the field which it anticipates will produce an average of 300 barrels a day once the steam has raised the temperature of the field enough to thin the oil. The company has pumped some oil out of the ground but not in significant quantities yet.

"The oil has an API of 18 to 20 degrees," CEO George T. Stapleton, II said. "It's a lot like Karo syrup in December. Raising the temperature thins it until it's more like 30 weight oil. "

The oil costs more to produce than the light, sweet crude that is the benchmark of the oil business. It also brings in less per barrel than the lighter oil. Thus the only time it is profitable to produce is when oil prices are high.

"It's a higher cost oil to produce and brings in less per barrel," Stapleton said. "It runs about 85 cents on the dollar compared to light, sweet crude."

The heart of the MegaWest operation is a boiler that produces 300 pounds per square inch of steam. The steam is pumped into injection wells in a hexagonal pattern interlaced within a hexagonal pattern of oil pumping wells.

"The steam not only heats the ground the way the wells are spaced there are at least three injection wells pushing the oil toward the producing wells," Stapleton said. "If the steam pressure exceeds 300 psi at the boiler it will trip a valve that will vent the steam to the air, that helps to prevent any damage down the line."

MegaWest has approximately 10,000 acres under lease and estimates that each acre will produce 10,000 barrels over the life of the field.

"The field straddles the state line, it extends into Kansas and other counties in Missouri but is primarily in Vernon County," Stapleton said. "It's estimated that the field has a total of 1.8 billion barrels. Of the 10,000 acres we have under lease we expect to produce about 10,000 barrels per acre with the technology we're using now."

Stapleton said the technology may change in the future and increase the amount of oil recovered.

"We're using proven technology now to get the field producing," Stapleton said. "The technology has been used successfully in Canada and California and we know it will work. I've seen steam flood in Indonesia. Steam flood works best on shallow, dense fields like we have here. Newer technology could increase our yield. We're evaluating other technology that could have an impact on yields and we'll look to optimize our approach as we proceed."

The field is the first of up to a dozen fields MegaWest hopes to construct in the area. The corporation spent $3 million on the plant, which required 21,000 man hours to construct, to support the operation and will employ six to eight full-time employees.

"This is the first of 10 to 12 facilities we expect to build in this area in the next three to four years," Stapleton said. "We'll have 60 to 80 full-time employees on the payroll then. It's a fair amount of investment in the local area."

Stapleton said the contractors they have worked with were hard-working and helped the company get the facility up and running in a timely manner.

"The local craftsmen here are very skilled," Stapleton said. "It's a testament to how hard the guys here work and their dedication to the project."

Stapleton said the company was using local labor to man the facility.

"We're using local men to man the facility," Stapleton said. "They're being trained by the Canadians who have been doing this type of operation. It's surprising how quickly they're picking it up."

The operation is drawing attention from academia as well. Stapleton said the University of Missouri-Rolla has students interested in coming to the area.

"There are several University of Missouri-Rolla classes looking at coming here," Stapleton said. "We're looking to see how we can work with UMR, they were instrumental in us rediscovering the field here."

Meanwhile, MegaWest's operation has put Vernon County on the international radar -- on April 24, a report from Reuters news service highlighted the Vernon County operation. The report sums up the impact of the operation like this, "In a non-descript pasture bordered by a pecan grove and a fish pond, Stapleton's company has hit black gold -- and in doing so is demonstrating how record prices of more than $100 a barrel are fueling a modern-day American wildcat oil era."

Other news organizations took notice as well, such as the Wichita Eagle and UPI, where reports said, "oil and gas drilling in the United States has hit a 22-year high. The year 2007 marked the most active year in oil and gas since 1990 … Oil and gas exploration is continuing as MegaWest Energy Corp. has started steam injection and production operations at its Deerfield, Mo., project."

Stapleton said he is proud of what the company has accomplished and of its future.

"I'm real proud of what we're doing out here," Stapleton said. "We're well on the way to accomplishing great things."