The Air That I Breathe, Part 5 - Shifting from Natural CO2 to Captured CO2 for Enhanced Oil Recovery

The handful of enhance-oil-recovery producers in the Permian Basin secure virtually all of the carbon dioxide they use from natural CO₂ reservoirs located thousands of feet below the surface. In essence, they are taking CO₂ out of the ground and putting it back in during the EOR process — producing more crude oil and demonstrating that the CO₂ is safely and securely stored underground. Now the challenge is to transform this proven process in a way that reduces greenhouse gas emissions. To do that, EOR producers would need to use man-made or “anthropogenic” CO₂ that is captured from industrial and other sources. Well, that’s exactly what’s already happening to a significant degree in EOR operations along the Gulf Coast and in the Rockies, with plans by a leading producer in both regions to use “A-CO₂” for the vast majority of its CO₂ needs within a few years. In today’s blog, we continue our series on CO₂-based EOR with a look at how Denbury Inc. is shifting from naturally sourced CO₂ to the man-made stuff.

When we wrote our first blog on enhanced oil recovery way back in 2014, our focus was on how using CO₂ for EOR can breathe new life into older wells whose production had slowed to a trickle — not on the fact that the CO₂ used is forever socked away thousands of feet below the surface. Times have changed. Nowadays, many investors and lenders will only make capital available to energy companies if they have a strong environmental slant; federal and state policies are making climate change a front-and-center issue; and an increasing number of oil and gas producers, midstreamers, and refiners are moving to improve their ESG cred. All of this has morphed CO₂-based EOR from a cool way to wring more crude out of half-spent oil fields to a leading way to reduce CO₂ emissions.

As we said in Part 1 of this blog series, CO₂ sequestration is the permanent storage of CO₂ deep below ground in rock formations, oil and gas reservoirs, coal seams, etc. If the CO₂ is captured and stored, and that’s all, the process is called CCS (Carbon Capture and Storage). If the CO₂ is used for some other process before it’s stored, it is called CCUS (Carbon Capture, Use, and Storage). As it turns out, EOR is a very economic form of CCUS. In EOR, CO₂ is pumped into the production zone of an otherwise depleted oil field, then mixes with and frees the oil that has been left behind. Some of the CO₂ used in this closed loop process stays underground, permanently trapped in the reservoir. The rest of the CO₂ comes out of the ground mixed with the oil, then is separated and recycled back into the field — a process that goes on until all the original CO₂ used is trapped beneath the surface.