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.
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