CO2‐EOR: A Win‐Win‐Win for Energy, the Economy, and the Environment
By Janet Gellici, National Coal Council
The U.S. has the opportunity to produce billions of barrels of domestic oil and generate new sources of revenue, while simultaneously reducing significant volumes of carbon dioxide (CO2).
CO2 for enhanced oil recovery (CO2‐EOR) represents the most immediate, highest value opportunity to utilize the greatest volume of anthropogenic CO2 – estimated at up to 77,500 MMmt of captured CO2.
CO2‐EOR provides significant economic benefits and new revenue to a variety of stakeholders – with generated revenues estimated at $5.7 billion. CO2‐EOR also has the potential to recover up to 284 billion barrels of oil, representing about 69% of the United States’ estimated domestic oil resources of 414 bb.
The National Coal Council, a federally chartered advisory group to the U.S. Secretary of Energy, recently completed a report for then Energy Secretary Ernest Moniz assessing market opportunities for CO2 from coal‐based power plants. This article highlights key findings and recommendations from the report, “CO2 Building Blocks: Assessing CO2 Utilization Options.”
GEOLOGIC AND NON‐GEOLOGIC MARKETS FOR CO2 – HURDLES & OPPORTUNITIES
Fossil fuels – including coal, natural gas and oil – will remain the dominant global energy source well into the future by virtue of their abundance, supply security and affordability. There is a growing consensus among industry, the environmental community and governments worldwide
that future CO2 emission reduction goals cannot be met by renewable energy sources alone and that carbon capture, utilization and storage (CCUS)technologies for all fossil fuels will have to be deployed to achieve climate objectives. The development of commercial markets for captured CO2 can help promote the deployment of CCUS.
In its CO2 Building Blocks report, the NCC assessed a variety of markets for CO2 and the potential of those markets to incentivize CCUS. Geologic and non‐geologic markets were evaluated. Geologic markets include technologies such as EOR, enhanced coal bed methane (ECBM), CO2 shale, and less developed options such as enhance water recovery (EWR) and geothermal and subsurface energy storage. Non‐geologic markets include chemical products and other value‐added products, such as inorganic carbonates and bicarbonates, plastics and polymers, fuels, and fertilizers, as well as food and beverages – dry ice, baking soda and carbonated drinks.
Utilizing CO2 in non‐geologic applications faces a host of hurdles, including:
- Current U.S. policies that arguably favor geologic uses.
- The immature status of nearly all non‐geologic CO2 utilization technologies.
- Logistical and infrastructure issues related to either the siting of CO2 utilization facilities close to utility or industrial CO2‐emitting plants or transporting CO2 from these plants to remote CO2 utilization facilities.
- Market limits and impediments, e.g., products derived from CO2 presumably would be competing against and endeavoring to displace comparable products made from other feedstocks.
- Technical barriers involved in the successful reduction of CO2 to carbon products, including thermodynamics and kinetics.
Among geologic utilization technologies, CO2 ‐EOR and ECBM are already commercialized while others, such as saline storage and CO2 shale, remain subject to ongoing research and have not yet emerged as commercially available technologies at scale.
Taking into consideration policy objectives and timelines, the volume of CO2 needed to be used/stored, the technology’s commercial status and technical limitations, it’s clear that CO2‐EOR remains the most immediate, highest value opportunity to utilize CO2 at scale and with the promise of some level of economic return. Given the technology’s potential to produce significant quantities of domestic oil, CO2‐EOR also represents significant potential in supporting U.S. objectives to achieve energy security and energy independence.
THE PROMISE OF CO2‐EOR2
CO2 ‐EOR has been underway in onshore, Lower 48 (states) oil reservoirs for more than 40 years. Based on the 2014 Oil and Gas Journal Survey, 136 significant CO2‐EOR projects produced 300,000 barrels per day of crude oil by injecting 3.5 Bcfd (67 MMmt per year) of newly sourced CO2. With growth in CO2‐EOR activity in the past two years (as of August 2016) and including co‐production of natural gas liquids, the current CO2‐EOR production estimate today is 400,000 B/D.
Advanced Resources International (ARI) estimates the original U.S. oil‐in‐place endowment at 624 billion barrels, located in several thousand already discovered domestic oil fields. Traditional primary recovery and water flooding have recovered about a third of this original oil‐in‐place, leaving behind a significant oil resource of 414 billion barrels. A significant portion of this 414 billion barrels of remaining U.S. oil endowment is technically favorable for application of CO2‐EOR, estimated by ARI at 284 billion barrels.
ORIGINAL AND REMAINING OIL
In addition to the remaining oil in‐place in the Main Pay Zone of discovered fields, significant additional volumes of oil in‐place exist in the Residual Oil Zones (ROZs) below existing oil fields and in ROZ “fairways.”
RESIDUAL OIL ZONE RESOURCES
The NCC report details the significant potential of CO2‐EOR for utilizing and storing CO2 in a diversity of geological settings.
- CO2 floods in the Main Pay Zone (MPZ) of discovered oil fields (onshore L‐48, Alaska and Offshore Gulf of Mexico) offer a technical potential for utilizing and storing 38,320 to 52,240 MMmt of CO2
(depending on CO2‐EOR technology) with significant associated production of crude oil ranging from 85 to 167 billion barrels.
- While the economically viable potential from the MPZ (at an oil price of $85 per barrel and with CO2 costs linked to oil prices) is more limited, the CO2 utilization and storage volumes are still significant at 10,740 to 23,580 MMmt (depending on CO2‐EOR technology) plus 28 to 81 billion barrels of economically viable oil recovery.
- CO2 floods in the ROZ resources assessed to date could provide an additional 25,300 MMmt of technically viable CO2 utilization and storage, and significant volumes of associated oil recovery on the order of 42 billion barrels. Advances in CO2‐EOR technology such as those embedded in the suite of “Next Generation” technologies would enable these ROZ resource to be efficiently recovered.
The growth of CO2‐EOR has always depended on the availability of secure, affordable sources of CO2 . While currently the majority of CO2 used by the EOR industry comes from natural sources, such sources are limited and increasingly expensive to develop. Experts anticipate that the supply of natural CO2 for EOR will peak and then plateau at 3.4 Bcfd (65 MMmt/yr) before slowing declining and will be consumed in the next 15 to 20 years. As such, significant additional CO2 supplies, captured from industrial and fossil fuel‐based power plant CO2 emissions, will be needed to accelerate EOR development and to enable CO2‐EOR to realize its full potential.
TECHNICALLY RECOVERABLE DOMESTIC OIL AND CO2 STORAGE CAPACITY, STATE OF ART AND “NEXT GENERATION” CO2‐EOR TECHNOLOGY
Integration of CO2‐EOR and CO2 storage would provide significant new revenues to a variety of stakeholders. With a potential for 81 billion barrels of economically viable oil recovery from mature oil fields and the ROZ (assuming use of “Next Generation” technology), the various CO2‐EOR stakeholders would gain valuable revenue and economic benefits.
Recipients of CO2‐EOR Revenues* Revenues
- CO2 Capture and Transporters – $1,210 billion
- State, Local and Federal Treasuries – $1,130 billion
- CO2‐EOR Investors (including Return on Capital) – $1,270 billion
- General Economy/Mineral Owners – $2,060 billion
Total – $5,670 billion
*Assuming an oil price of $70/B.
Clearly, CO2‐EOR represents the best opportunity to utilize CO2 at scale while providing an economic return for stakeholders and bolstering U.S. efforts to attain energy independence. In its CO2 Building Blocks report, the NCC recommends that the U.S. Department of Energy (DOE) support current CO2‐EOR technology by clarifying regulatory barriers, advancing the development of infrastructure such as pipeline networks, and offering financial incentives for CCUS technology deployment. NCC also encouraged DOE’s support for deployment of next generation CO2‐EOR technologies to realize further benefits associated with ROZ CO2‐EOR.
Despite the many barriers to deployment of other geologic and non‐geologic markets for CO2 use, NCC recommended that further investment in CO2 utilization technologies should be undertaken. On a case‐by‐case basis (at a specific coal power plant, for example), deployment of a CO2 utilization technology may hold promise for turning an uneconomic project into an economically viable one. Establishing a technology review process to assess the benefits and challenges associated with the various CO2 utilization technologies could be used to prioritize candidates for research development and deployment.
A steadfast commitment to the urgent deployment of CCUS technologies can advance U.S. environmental stewardship goals while simultaneously providing economic and energy security benefits. Win‐Win‐Win!