“Our responsibility is to keep improving … we must continue to innovate and collaborate, and we must continually earn a license to operate each and every day.”
This statement by Staale Gjervik, senior vice president of Permian integrated development for Exxon Mobil subsidiary XTO Energy, at AAPG’s recent Global Super Basin Conference: “The Permian – A Decade of Lessons Learned,” underscores the importance of sustainable development for today’s petroleum industry. Featured luncheon speaker, Liz Schwarze, vice president of global exploration for Chevron Upstream, addressed the challenges faced by the petroleum industry, citing Chevron’s commitment to flaring reduction, methane management and carbon capture and storage in the Permian Basin.
AAPG’s Global Super Basin Conference addressed not only challenges but also the business opportunities for exploration and horizontal re-development of tight oil and high water cut formations. Industry leaders presented geoscience and engineering technical content, drilling and completion technology, and innovations for water handling. Thank you to the organizers AAPG President-elect Mike Party and past President Charles Sternbach, the speakers and sponsors for an outstanding two-day conference. Understanding the resource in global super basins, developing new plays with new technology and maximizing recovery of reserves are an integral part of sustainable petroleum development.
A Viable Industry
January’s President’s Column in the EXPLORER covered creative and collaborative space in exploration to “recycle” or revitalize petroleum basins for an economic industry. February’s column discussed development and enhanced oil recovery to maximize recovery of reserves for an optimized industry. This month’s column, in turn, addresses the third, and an increasingly important aspect of sustainable petroleum development: carbon capture, use and storage for a viable industry.
BP recently released its 2019 Energy Outlook stating that, “The demand for energy is set to increase significantly driven by increases in prosperity in the developing world.” Under BP’s 2019 “Evolving transition” scenario, natural gas will grow much faster than oil and coal, but all will continue to contribute to energy solutions. Carbon emissions will continue to rise, along with societal pressure for the petroleum industry to be responsible for the product that is produced and is eventually combusted. The dual energy challenge can be summed up as “more energy with less carbon.” Natural gas – and to a lesser extent, coal-power generation – with emissions counterbalanced with Carbon Capture Utilization and Storage (CCUS) is one of the solutions.
CCUS - More Energy with Less Carbon
The petroleum industry has been active in CO2 storage and use projects since 1972. With both upstream and downstream components to the business, the industry has experience in all five parts of the process: 1) carbon capture, 2) transportation, 3) injection, 4) use or storage and 5) surface monitoring.
Carbon dioxide capture happens at the emissions source such as coal or natural gas power plants or at high-CO2 emitting industrial plants like steel, cement and chemicals manufacturing. Carbon capture can be post-combustion, pre-combustion or oxy-fuel combustion, depending on the type of power generation facility. All three processes require energy to separate and compress CO2 for transport, and all three can remove between 80-90 percent of the carbon dioxide.
Carbon dioxide can be transported onshore in a compressed state via carbon manganese steel or stainless-steel pipeline, or offshore in tankers as low pressure, refrigerated liquids to the geologic site designated for use or storage. There are more than 4,000 miles of CO2 pipelines worldwide, 1,500 miles are in the United States, most of which transport naturally occurring CO2 from the subsurface to fields for enhanced oil recovery.
Existing CO2 pipelines form a global framework for future CCUS projects. Our role as geoscientists is to understand both the subsurface site and surface properties for CO2 storage or use. What is needed are multidisciplinary geology-geophysics-engineering-land assessments of the global potential of depleted petroleum reservoirs, deep saline formations, deep unmineable coal seams and other geologic formations like basalts and salt caverns.
As petroleum geoscientists we understand how the lithology, porosity, permeability and fluids will interact with the injected CO2. We work with engineers to safely drill and complete wells. We can build reservoir models to predict how the reservoir will fill and how geochemical trapping mechanisms can help prevent the injected CO2 from leaking from the reservoir and remain sealed under increasing pressure. Finally, we can set up baseline and project monitoring of surface operations for induced seismicity and gas leaks.
What’s the Deal with CCUS?
CCUS is prompting a new global acquisition market for investment companies interested in economic low-risk production and digitalization of oil field operations with a sustainable development component.
The Global CCS Institute identified 37 large-scale carbon capture and storage facilities in its 2017 Global Status of CCS report, according to which, 21 projects are operating or are in construction and are reported to capture more than 30 million tons of CO2 annually. For reference, coal, oil and natural gas annually contribute between 30 and 40 gigatons of CO2 into the atmosphere to produce power. There is an opportunity for many more CCUS projects globally to address CO2 emissions!
The Oil and Gas Climate Initiative, a CEO-led enterprise to take practical action on climate change, entered into a strategic partnership with BP, ENI, Equinor, Occidental Petroleum, Shell and Total on the Clean Gas Project in Teesside, northeast England. The CO2 will be captured, transported by pipeline for storage in a subsurface formation in the Southern North Sea. It will be the world’s first large-scale commercial facility for capturing carbon emissions from gas-fired power generation.
OGCI Climate Investments has a more than $1 billion fund through which to invest in technologies and business models that lower the carbon footprint of the energy and industrial sectors. It currently has four investments in CCUS and is exploring several early stage CCUS projects for future investment.
In the United States, the Q45 tax subsidy included in the 2018 U.S. Budget Bill will affect funding for CCUS projects for the next decade. The bill aims to stimulate investment in carbon capture by expanding incentives for permanent CO2 underground storage from $22 per ton CO2 in 2018 to $50 per ton CO2 in 2026. The numbers are halved for CO2 use, as it has the benefit of increased production.
This eight-year subsidy provides the economic incentive for companies to identify the best projects for storage, enhanced oil recovery and residual oil zone projects. Currently, 136 CO2-EOR projects in the United States produce roughly 300,000 barrels of oil per day. The IEA estimates the tax credit could lead to capital investment on the order of $1 billion over six years, add 10-30 million tons more of CO2 capture capacity and increase production from mature fields by 50,000-100,000 barrels of oil per day. Research by the Advanced Resources International suggests greater production potential for CO2-ROZ projects with an added benefit of net negative CO2 emissions.
The U.S. Secretary of Energy Rick Perry has requested the National Petroleum Council address the environmental benefits of CCUS technologies, as well as R&D, technology, infrastructure and economic barriers to deploy CCUS at scale, and actions to guide public policy and stimulate private-sector investment to advance the deployment of CCUS. AAPG Member Cindy Yielding, senior vice president of BP America is a chair of the NPC Coordinating Subcommittee. AAPG will be supporting the WPC and global research for CCUS projects through the Sustainable Development Ad Hoc Committee and Division of Environmental Geosciences.
What Sustains You This Month?
February is one of my favorite months as a petroleum geoscientist because AAPG is a partner in the North American Prospect Expo and participant in the NAPE Charities Luncheon. I try to attend every year and try not to cry when they play the videos of the charities to receive generous checks. I haven’t succeeded with the latter goal yet. This year NAPE Charities featured an interview with President George W. Bush and former First Lady Laura Bush. I consider them former neighbors. When I lived in Midland, Texas, my house shared an alley with the childhood home of President Bush. I mentioned that to the Bushes when it came time for the photo opportunity, he opened his arms for the former First Lady and me and called us his “Midland Girls.” Priceless.
Let us know which charitable program supported by the AAPG Foundation for education, awards and fellowships, lectureships, publications or digital resources sustain you. Then consider making a donation or writing a thank you note to the Foundation for that program. #GrantsInAidSustainsMe #AAPGSustainsMe
Onward!