Significantly reducing greenhouse gas emissions is an all-hands-on-deck kind of thing. More wind power? More solar? Electric vehicles? Yes, yes, and yes. Another great way to slash GHGs is to use man-made or “anthropogenic” carbon dioxide for enhanced oil recovery. EOR is an extraordinarily efficient way to permanently store CO2 deep underground. And today, the economics for EOR are being turned on their head — in a good way. For decades, the acquisition of CO2 has been a significant cost for EOR operators, requiring volumes to be produced from natural geological formations and then to be pumped to the oil fields where the CO2 is used. But things are changing. Now companies are planning to spend big bucks to capture and dispose of their CO2, meaning they may be paying someone to get rid of it. And if they pay, that flips CO2 from an operator cost to a revenue stream. The implications are profound, with operators historically motivated to use CO2 as efficiently as possible set to morph their operations to use as much CO2 as can be safely sequestered. In today’s blog, we continue our series on CO2-based EOR by looking at the coming transition in CO2/EOR economics.
This is Part 6 of our deep-dive blog series into CO2, which accounts for over 70% of all GHGs and is therefore the #1 target in global efforts to reduce emissions. Our goal is not to debate the politics around CO2 or the climate impact of CO2 emissions, but instead to develop a solid understanding of the science involved, to separate the reality from the hype, and to quantify what investments are really being made to reduce CO2 emissions, focusing primarily on CO2 sequestration, especially via EOR.
As we said in Part 1, 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, where it 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. It is then separated and recycled back into the field — a process that goes on until all the original CO2 used is trapped beneath the surface. We’ll get back to recycled CO2 in a minute.
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