Oil companies using steam-driven enhanced oil recovery now have a cheaper and greener option.

Instead of using natural gas to generate the steam that is injected into reservoirs to force oil to the surface, GlassPoint Solar, a Fremont, California-based company has developed a new technology that utilizes solar power.

Using a combination of lightweight mirrors which are housed inside a glass house, GlassPoint’s technology utilizes sunlight to produce the steam, a method which is produces five times more steam per acre that a traditional solar tower facility, Rod MacGregor, GlassPoint’s CEO told Breaking Energy.

Using steam that is derived from solar technology can generate up to 80% of the total annual enhanced oil recovery project needs in sunny regions and lowers the amount of natural gas used by a matching percentage.

GlassPoint’s first glasshouse was constructed in February and is now being used by Berry Petroleum to extract heavier oil from itsmore than 100-year-old field in McKittrick, California.

GlassPoint says it can help oil companies cut costs because its solar-powered steam is cheaper than natural gas. Although natural gas is relatively cheap these days, selling for about $4 per thousand cubic feet (mcf), it adds up quickly for companies producing millions of barrels of oil annually.

“We are the first and only [company] that can produce heat at a lower cost than heat produced by burning natural gas,” MacGregor said. “The amount of gas used worldwide for EOR (enhanced oil recovery) is immense, [while] most heavy oil producing regions are also blessed with great sunshine. Steam for oil recovery is our whole business and we do it at a lower price than current methods.”

Churning out more oil cheaply is attractive to Berry, whose strategy since 1909 is to acquire heavier oil properties.

“Today Berry Petroleum wants to acquire small, heavy oil properties that have been left behind by large companies because they are simply too small to impact their businesses. While Berry applies sophisticated technologies like 3D seismic and horizontal drilling in its heavy oil operations, we cannot fund new technology, so that’s why partnering with GlassPoint makes sense,” Berry’s President and CEO Robert Heinemann told Breaking Energy.

GlassPoint’s technology allows oil companies to boost their profit margin by generating more proved reserves. By producing 20% of their steaming needs from solar, operators can increase their ultimate recovery fraction by 12%, depending on the formation, MacGregor added.

“In this demonstration test, Berry provided the oil field and the infrastructure and GlassPoint believed enough in their technology that they built the plant to prove the concept and determine the economics of the project,” said Heinemann. “We are interested in this solar steam generation project because any technology innovation that can lower our cost to generate steam and lower operating costs can potentially make the small heavy oil reservoirs remaining in California more economic.”

Solar EOR can definitely “improve” the costs since steam “represents up to 60% of the cash production cost for heavy oil projects, said Pavel Molchanov, a Raymond James energy research analyst.

While Glasspoint’s early-stage technology is just now being commercialized, solar EOR allows companies to hedge against long-term natural gas price increases, he said.

Solar-generated steam is a “creative example of ‘green’ technology coming to the aid of a traditionally carbon-intensive industry,” he said.

While MacGregor declined to detail the cost of the glasshouse, he said that the company’s customers purchase the solar equipment while GlassPoint funds the construction. Last October GlassPoint received an injection of $3.5 million from Chrysalix Energy Venture Capital, a Vancouver-based cleantech venture capital firm. Chrysalix’s limited partners include Shell, Total and Kuwait Petroleum.

In the next few weeks, GlassPoint plans to announce another installation for an oil company in the Middle East, he said. Another project is slated to be announced later this year with more to follow in 2012, MacGregor said.

GlassPoint is “growing very quickly” by generating revenue, although MacGregor declined to disclose specific figures.