Summary: During a review of the Department of Energy's (DOE) enhanced oil recovery field test program, GAO noted a contract proposal under consideration by DOE. There are questions on the merits of the proposal and the qualifications of the proposer, the Frank D. Smith Corporation. The president of the Smith Corporation, Frank D. Smith, is also the president of the Guyan Oil Corporation, a recipient of DOE funds for performance of an enhanced oil recovery project, which is delayed at present because of exhausted funds. A major problem of developing domestic crude oil is the inefficiency of recovering it from the rock reservoirs where it is found. A projected 299 billion barrels of the estimated 446 billion total discovered are still not recoverable using current techniques. At present, recovery rates range from 5 to 70 percent among various fields, but recovery efficiency is improving at approximately .3 percent annually. The Government conducts a cost-sharing program for enhanced oil recovery projects, including the demonstration of practical applications.
DOE is presently considering awarding to the Smith Corporation a contract for an oil recovery project, which GAO feels is faced with significant questions on its merits, its usefulness to DOE's program, and the Smith Corporation's technical and financial capability to perform. Similar reservations surround the renewal of the contract held by the Guyan Oil Corporation, because of the project's suspended status, doubts about the company's ability to obtain the additional funds required for completion, the weakness of the proposal to enlarge the test area, the results of similar concurrent projects in the same area, and the low priority of this research.
