Carbon Capture Could Boost U.S. Oil Output, Slash Imports—Study

BY CHRIS HOLLY

In a new and potentially powerful argument for legislative action against climate change, new research released Wednesday concludes that using captured carbon dioxide for enhanced oil recovery could slash U.S oil imports in half by 2030 while permanently securing billions of tons of the main greenhouse gas.

The study, unveiled Wednesday by Advanced Resources International (ARI), a research and consulting firm specializing in unconventional gas, enhanced oil recovery (EOR) and carbon sequestration, concludes that federal controls on carbon emissions from utilities and other industrial sources could lead to large volumes of carbon dioxide (CO2) sufficient to fully develop oil recovery potential in existing U.S. oil fields.

The report finds that carbon capture stimulated by federal clean energy and climate legislation could boost U.S. oil production by between 3 to 3.6 million barrels per day, cutting imports of crude oil up to 40 percent compared to today’s levels and up to 52 percent by 2030, depending on how much of the captured CO2 is used for EOR.

This CO2-enhanced domestic oil production would help the United Sates retain more than $700 billion in the U.S. economy, employ tens of thousands of workers and increase state and federal revenues by $190 billion to $210 billion, according to the study. In addition, the report concludes that the U.S. can sequester in oil reservoirs as much as 530 million metric tons of CO2 by 2030.

Currently about 20 U.S. companies are using CO2 to recover oil in depleted wells, including Occidental Petroleum, Kinder Morgan, Denbury Resources, Merit Energy and Chevron. Occidental is the national leader in oil production from CO2-EOR, while Denbury uses more CO2 for oil production than any other U.S. company.

Denbury Resources President Tracy Evans said the main reason more companies aren’t using CO2 for EOR is that there simply isn’t enough CO2 available. Denbury, for example, relies on a natural CO2 reservoir near Jackson, Miss., where the company uses the gas to squeeze 25,000 barrels per day (bpd) from Mississippi oil wells. Nationwide, about 250,000 bpd are produced using CO2-EOR, a fraction of the U.S. total production of 5 million bpd.

“There is no doubt that a large market exists for CO2 emissions captured from industrial sources and power plants for expanding domestic oil production,” Evans told reporters Wednesday. “The single largest deterrent to expanding production from CO2-EOR today is the lack of large volumes of reliable and affordable CO2.”

The report analyzed legislation (H.R.2454) approved by the House last year and found that enactment of the bill would lead to the deployment of up to 14 gigawatts (GW) of coal-fired generation with carbon capture and sequestration (CCS) technology, an amount that would result in the capture of 75 to 85 million metric tons of CO2 per year by 2020.

By 2030, the bill would lead to 69 to 109 GW of CCS-equipped coal and gas generation, reducing emissions by 410 million to 530 million metric tons per year by 2030.

If all that CO2 is devoted to EOR, from 12 percent to 19 percent of the economically recoverable CO2-EOR potential in the lower 48 states would be produced by 2030, cutting net crude oil imports by 33 percent to 40 percent in 2009 and 43 percent to 52 percent by 2030, ARI said.

“This is an important piece of the puzzle for reducing our dependence on foreign oil and cutting carbon emissions,” said ARI Vice President Mike Godac. “With the right policies and investment in demonstrating EOR technologies, captured CO2 could be productively used to produce more domestic oil from existing fields. These are benefits that should appeal to a broad range of politicians and business leaders—not to mention the general public that wants greater energy security and more energy independence.”

In the near term, lower-cost, high-purity CO2 captured from the host of smaller, non-power industrial sources would kick start the field pilots, demonstrate CO2-EOR in new oil fields and accelerate early CO2-EOR market growth in underdeveloped oil basins. Captured CO2 from power plants would provide the subsequent volumes of CO2 needed to scale up EOR in these basins.

The report stressed that the captured CO2 need not be adjacent to or near oil fields amenable to CO2-EOR for this option to be economically viable. The vast majority of power plants projected to be equipped with CCS would be within 700 miles of oil basins with significant CO2-EOR potential. This distance is comparable to that of existing and planned CO2 pipelines, of which more than 3,500 miles exists today in the United States.

The report concludes that the states that would benefit the most from CO2-EOR are Arkansas, California, Indiana, Illinois, Kansas, Louisiana, Montana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming.

Oil reservoirs in these states and others that are amenable to CO2-EOR are more than adequate to make use of the projected supplies of captured CO2 emissions to support increased domestic oil production of 3 to 3.6 million bpd, and to provide a high volume market for captured CO2 well past 2030, the report concluded. Higher production rates could be achieved with additional CO2 supplies from non-power industrial sources.