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    CO2-Enhanced Oil Recovery For Decarbonization

Summary

In a future in which the energy system faces dual challenges – addressing carbon concerns and transitioning away from hydrocarbons altogether – reducing the carbon impact of fuels will become a key tool in meeting climate and energy goals.

by: Colin Ward, OXFORD INSTITUTE FOR ENERGY STUDIES (OIES)

Posted in:

Complimentary, Global Gas Perspectives, Energy Transition, Carbon

CO2-Enhanced Oil Recovery For Decarbonization

As an example, jet fuel is very difficult to substitute due to the low energy density of batteries and the high cost of alternatives like hydrogen, making an upstream solution the only option until technology and costs evolve. Thus, making the best of the existing energy supply chain through decarbonization is a realistic and cost-effective option for the mid-term and warrants investigation.

Initial efforts to decarbonize oil include shifting portfolios to less intrinsically emissive sources, but further reductions quickly become more difficult. Improved production efficiency – such as reduced flaring and venting, economies of scale, and better operations – can also lead to significant carbon savings; but for large producers, these upgrades have already been implemented as general cost-saving measures. Downstream decarbonization opportunities, where carbon is physically removed from fuels to produce blue hydrogen and other energy carriers, will require time to become truly scalable. As carbon removal from the supply chain and other industries matures, it also creates a new problem concerning CO2 sequestration. One option that both reduces the carbon intensity of oil and provides CO2 storage is enhanced oil recovery using CO2 (CO2-EOR). The King Abdullah Petroleum Studies and Research Center (KAPSARC) has examined this promising option in depth and held a workshop in January 2019 with the International Energy Agency to discuss the technology and the opportunities it offers.

Operation and opportunities

Naturally recoverable oil in a reservoir is typically about 20 percent of the resource available, but injecting CO2 can reduce the viscosity of the crude and stimulate additional production of up to 13 per cent. Not all reservoirs are suitable for this method, but many do meet its minimum pressure and temperature requirements. Assuming complete separation and reinjection of the CO2 produced with the crude, the net carbon extracted from the reservoir is lower on a per-barrel basis, avoiding the need for new resources and the emissions associated with developing them.

In normal CO2-EOR operations, the amount of CO2 injected into the reservoir to enhance production is kept to a minimum. CO2 is a cost, and supply is often limited, so there is little incentive for higher injection rates. However, as more CO2 becomes available from anthropogenic sources through carbon capture, opportunities to increase these injection levels become viable. Conventional operations use 300 kg of CO2 per barrel produced, but it is possible to inject 600 kg per barrel if the intention is to maximize both the stored CO2 and the oil recovered. 1 The impact of injecting 600 kg of CO2 per barrel means the carbon produced can technically become negative in some fields. This is the case for several of the OPEC producers, including Saudi Arabia and Kuwait, as their crude is relatively easy to produce on a large scale with minimal energy investment.

CO2-EOR is a common and commercially viable process. It has been used for decades in the North American energy industry, but it can be leveraged into much wider use worldwide. A recent paper published by KAPSARC examined possibilities of using CO2-EOR to reduce the carbon impact of oil production. The study focused on non-North American resources, because the technique is already well developed in that region but typically relies on geologic CO2 sources that negate the climate benefits. The results of the study indicate an immediate technical opportunity to store over 40 Gt (gigatonnes) of CO2 with existing source-sink pairs, and 6 Gt could be stored economically at an oil price as low as $50. Under less strict criteria, where projects are not limited by local supply of CO2, the full storage potential jumps to over 200 Gt, in line with estimates produced by others.

The global distribution of reservoirs suitable for CO2-EOR is robust, with the best locations for development in Russia and China (due to stationary sources near reservoirs) and the highest total storage potential for future development located around the Arabian Gulf.

Encouraging growth

The CO2 supply is a major constraint on the expansion of CO2-EOR, and this is primarily due to the limited nature of the available capture and transportation infrastructure. Without using geologic sources there are few high-concentration supplies of CO2 available. Hydrogen, ammonia, ethanol, natural gas, and urea plants produce waste streams of CO2 that can be used with minimal processing, but not in the volumes needed to drive mass adoption. Lower-concentration sources like power plants require significant scrubbing but may become key resources in future.

Concerning transportation, building dedicated pipelines for a single source-sink pair often does not make sense economically as the distance and volumes involved are insufficient to justify the costs. For most countries looking to handle captured CO2, a network approach will be needed to connect several sources and sinks for collection and redistribution. The responsibility for constructing the network remains a question, where it is undetermined if a legal responsibility placed on the emitter, the demand from the oil producer, or an economic incentive for a pipeline operator will drive development. Ultimately, a network of this scale may be treated as a public good or utility and require government backing if private entities are unwilling to invest.

Beyond solving the CO2 supply constraint, additional factors could increase adoption of CO2-EOR worldwide. Locally, the tax regime of an oil-producing country can have an influence, by qualifying CO2 storage as an exempt revenue stream if royalties on oil production are the primary source of government revenue. Direct impacts include the oil price, with revenues from additional production reducing the break-even value for CO2 to justify an EOR project. A CO2 price can also drive adoption, under the assumption that emitters are willing to pay more for storage. Lastly, tax credits can be helpful in creating conditions for EOR growth by indirectly incentivizing storage, much like section 45Q in the United States tax code.

Carbon accounting options

The accounting standards for CO2 emissions and storage may make the idea that crude produced via CO2-EOR is a reducedcarbon option contentious, due to the CO2 emitter typically claiming credit for any mitigations. The sequesterer of carbon is often treated as a service provider to the emitter, and not as a full partner in emissions reduction. In this case, the only reward for CO2-EOR is in the form of payments for the CO2 stored and additional oil revenues. There are, however, some options that could be more effective in creating favourable conditions with the risk of double-counting the carbon impacts.

First, a novel system to give credit for storage has been proposed that would turn the current thinking about carbon mitigation upside down. Negative-emission technologies will be needed to meet our climate goals, and current reduction schemes make it difficult to extend below zero. By giving credit for verified units of stored CO2, it is possible to encourage the development of carbon capture, utilization, and storage technology and drive down future costs. CO2-EOR is an excellent candidate for launching this type of scheme.

Second, in economies that rely on significant hydrocarbon exports for revenue, the value of ‘green oil’ is a competitive advantage, securing market share and meeting the demands of end markets with established carbon legislation. The ability to extend the lifetime of their primary revenue stream, along with the coincidence of frequent state ownership in emissive industries, indicates that the credit for mitigation could be allocated to the oil producers for export along with their products

Lastly, if an exporter shifts towards producing blue hydrogen or some other decarbonized energy carrier in the future, then the benefits of CO2-EOR are compounded. In addition to extending the long-term viability of oil revenues, the challenge of sourcing and transporting CO2 solves itself, as collocating hydrogen production with crude production makes EOR a self-sustaining system.

Conclusion

While the technology of CO2-EOR is well established, it has not seen much use outside of North America. Specific conditions concerning the geology, availability of CO2, economics, and local policy have kept interest in this approach minimal compared to interest in easier and cheaper options. As these factors, and other concerns such as sustainability of supply and carbon impacts, evolve, CO2-EOR is likely to become a first-line option when transitioning our energy system. Large-scale producers with low costs (such as the United Arab Emirates and Saudi Arabia) are the most likely first adopters, as their margins allow for investment, but other locations with high CO2 taxes (Norway, Europe), or the need for secure supplies (China) will also play a part in wider growth.

Originally published by Oxford Institute for Energy Studies.

The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.