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EOR Method Creates Market For Carbon Emissions

Oil storage facilities are virtually overflowing, commodity prices continue to languish in the doldrums with occasional upward blips, and angst permeates the industry.

Many take what comfort they can from the fact that the world runs on oil, and past extreme price gyrations have aptly demonstrated that high prices tend to peak and ultimately crater at some point, only to rise again.

Today, the industry at large is waiting to see history repeat itself.

A positive aspect to price downturns is that they provide the gift of time to develop new, more efficient technologies to enhance anticipated upswings through economies of scale, for example.

To this end, improvements in the realm of already existing technologies, such as enhanced oil recovery (EOR) applications, are underway given the anticipation for higher demand and prices in the future.

EOR technology and its potential to increase production garnered significant attention in the late 1970s. It continued to attract interest and enthusiasm until the Big Crash in commodity prices in the early 1980s sent the industry into a tailspin.

The more expensive ‘exotic’ oil recovery applications quickly faded from the headlines – that is, until prices improved.

Much of the future oil supply in the United States is expected to come from existing wells, where producing conventional reservoirs frequently retain about two-thirds of the crude therein, leaving about 400 billion barrels stranded in place, according to the U.S Department of Energy’s National Energy Technology Laboratory. Some portion of this will be a ready-made target for EOR applications.

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Oil storage facilities are virtually overflowing, commodity prices continue to languish in the doldrums with occasional upward blips, and angst permeates the industry.

Many take what comfort they can from the fact that the world runs on oil, and past extreme price gyrations have aptly demonstrated that high prices tend to peak and ultimately crater at some point, only to rise again.

Today, the industry at large is waiting to see history repeat itself.

A positive aspect to price downturns is that they provide the gift of time to develop new, more efficient technologies to enhance anticipated upswings through economies of scale, for example.

To this end, improvements in the realm of already existing technologies, such as enhanced oil recovery (EOR) applications, are underway given the anticipation for higher demand and prices in the future.

EOR technology and its potential to increase production garnered significant attention in the late 1970s. It continued to attract interest and enthusiasm until the Big Crash in commodity prices in the early 1980s sent the industry into a tailspin.

The more expensive ‘exotic’ oil recovery applications quickly faded from the headlines – that is, until prices improved.

Much of the future oil supply in the United States is expected to come from existing wells, where producing conventional reservoirs frequently retain about two-thirds of the crude therein, leaving about 400 billion barrels stranded in place, according to the U.S Department of Energy’s National Energy Technology Laboratory. Some portion of this will be a ready-made target for EOR applications.

CO2, Among Other Methods

EOR programs using thermal, chemical, CO2 and other methods have proven to be commercial on land in the United States and elsewhere.

Offshore EOR is a bit of a laggard given its more challenging logistics and economics.

Even so, various technologies are being studied, improved and evaluated for use there, including biological, surfactants and secondary polymers, among others.

CO2 injection appears to be the leader of the pack.

A relatively straightforward description of this EOR process belies its complexity.

The CO2 is injected into the reservoir under high pressure and the vaporization of the hydrocarbons alters the system composition at the invading gas front to the extent that the two otherwise immiscible fluids become miscible.

Simply put, the CO2 decreases the viscosity of the oil it reaches and allows it to flow more readily to the wellbore. A portion of the injected CO2 remains sequestered in the pores of the reservoir rock.

But, you say, carbon is a dangerous waste product – a threatening greenhouse gas at the epicenter of climate change.

That’s only part of the story.

There’s an upside here, if you listen to 35-year energy industry veteran Charles McConnell, executive director at Rice University’s Energy and Environment Initiative and former assistant secretary at the DOE. McConnell is a designated co-chair for the “Advances in EOR in Offshore Environment” session at the upcoming Offshore Technology Conference in Houston.

Upon joining DOE, McConnell swept away a bit of the bad vibe associated with this gas. Rather than focusing on carbon capture and sequestration (CCS), he shifted the emphasis by adding utilization to the mix to make it “CCUS.” In short, he recognized the need to focus on this carbon gas as a path to energy security and profit generation rather than just as an environmental menace.

It’s actually a kind of Catch-22 in that what might be viewed as “too much” by some might not be enough for others – for now.

CO2 Supply Sources

U.S. onshore naturally occurring CO2 supplies are limited and are all, for the most part, already spoken for. So, McConnell zeroed-in on anthropogenic CO2, which can be captured at fossil fuel power plants.

Stripping out the CO2 requires energy, so the process can be pricey. But its use as an application for EOR – in addition to increasing oil production – provides a market for CO2 emissions.

These anthropogenic sources abound in various parts of the world, often along coastlines.

Look at the hydrocarbon-rich U.S. Gulf of Mexico, for example. The abutting U.S. coastal region is near chock-a-block with power plants, refineries, chemical plants and the like, particularly in south Louisiana and south Texas.

NETL contractor Bill Pike has noted that with application of current moderate performance CO2 EOR technology in the offshore GOM, economically viable oil recovery and CO2 demand are modest.

Substituting higher performing “next generation” technologies, the projection is for a tenfold increase in recovery – think 15 billion barrels of incremental oil. This entails 3,910 million metric tons (mt) of CO2 demand.

This more efficient CO2 performance, along with higher recovery per well, means that many additional offshore oil fields may become economically viable.

Besides the performance level of these technologies, Pike commented on two additional governing factors for CO2 potential in this offshore region:

  • Price of CO2 with delivery cost to field factored in: a NETL study used $50/mt (CO2 purchase price = $30/mt + $20 for CO2 transportation).
  • World oil price: the agency studied the CO2 EOR and CO2 storage potential using an oil price of $90/bbl and a future oil price of $135/bbl.

Besides increasing Outer Continental Shelf oil production and providing a significant market for CO2 emissions, there are other benefits to be gained from CO2 use in the offshore environment.

Storage potential ranks high among these.

As opposed to land storage, there is diminished risk to subsurface sources for drinking water. Additionally, existing corridors and oil and gas infrastructure can be utilized by offshore CO2 pipelines, thereby reducing upfront capital costs.

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