The Air That I Breathe, Part 6 - For Producers Using CO2 for EOR, What Once Was Cost Is Now Revenue

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.

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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.