CO2 Based EOR Projects – Potential, Difficulties and Opportunities Presentation by Hugh Sharman, Director IN-CO2 ApS, Denmark Carbon Capture and Storage, CO2 for Enhanced Oil Recovery and Gas Flaring Reduction 8th – 9th June, 2004 OPEC Secretariat, Vienna www.inco2.com IN-CO2 ApS, Denmark 1 OPEC - Sailing into the Storm We would not have this picture had the tanker not sailed through 2 OPEC and Kyoto To a recent search engine question ”OPEC and Kyoto”, AltaVista found 15,621 results Google found 36,000 Yahoo found 207,000 All those I read were negative about OPEC 3 Demand growth is relentless 4 Watch China China, Production & Consumption, M illion t/y 350 300 Now watch India! 250 200 150 100 50 1994 1995 1996 1997 1998 Production 1999 2000 2001 2002 2003 Consumption 5 Recent exploration performance has been poor – 200 billion bbls added billbbl bbl bill 100 100 Leif Magne Meling 10 10 Production Production Exploration Exploration Extrapolation Extrapolation(bbl/NFW) (bbl/NFW) 11 1900 1900 1925 1925 1950 1950 1975 1975 2000 2000 2025 2025 With 100 bill bbl for frontier basins gives a total of 300 bill bbl Demand growth ...so demand must mostly met from good reservoir management Exploration success 120 Million BOPD 100 80 New field developments 60 40 Reserve growth; IOR and EOR 20 0 1980 1990 2000 History Production improvement New field development Evaluation of history, IHS data base 2010 2020 2030 Leif Magne Meling Natural decline IOR Exploration Natural decline “as is” Production efficiency 7 ....and global CO2 emissions seem to cause much bother While there is an international consensus that climate is being altered by excessive emissions of human caused CO2… …oil producers are squeezed by pressures to reduce oil prices and receive an unreasonable share of the blame for “global warming” 8 CO2 is on already on OPEC’s Horizon “I believe there is enough technology to sequester CO2 and to take CO2 out of the atmosphere.” 5th April, 2004 9 Let’s turn these ”problems” into “opportunities” The Peak Oil & Climate Change Debates: - Increasing consumption of fossil fuels - Increasing emissions of GHGs CO2 is an effective and widely accepted gas for EOR the technologies exist and the economics for stripping CO2 from industrial and power plants are there already There are big advantages for a CO2 infrastructure Inter-statal agreements & other conditions for finance bring peace And EOR can pay a crucial role in setting oil price 10 Which gas for tertiary oil recovery? Gas floods, usually with HC gases, start after the water flood returns unacceptably high water cut HC-gas floods are still being planned but... ...gas supplies are under pressure and... ...HC-gas, landed USA, Japan or Europe is now more valuable than crude oil... so HC gas is no longer the automatic gas of choice ...and is any way needed for producing countries’ industry feedstock.. ...resulting in CO2, an excellent gas for tertiary production Producers should benefit from international emissions trading for permanently sequestering CO2. CO2 will be the ideal gas of choice for future tertiary production. 11 CO2 is already in wide-spread use Industrial sources have always been important LaBarge Utah a ni or lif Ca McElmo Dome Natural North Dakota Wyoming 73 CO2-miscible floods, 2004 USA & Canada (OGJ) Colorado Sheep Montain Oklahoma Arizona St. John Dome CO2-Sources Coal Gasification New Mexico Bravo Dome Ammonia Plant Mississippi Jackson Dome Permian Basin Texas Louisiana Gas Plants Industrial Pipelines 12 US EOR, Which Method? US EOR PRODUCTION 800,000 700,000 Production from gas is increasing 600,000 b/d 500,000 400,000 300,000 Steam assisted EOR is in decline 200,000 100,000 1982 1984 1986 1988 1990 1992 Thermal 1994 Chemical 1996 1998 2000 2002 2004 Gas 13 Which Gas? CO2 is increasingly the gas of choice 350,000 Relative Gas Use in USA EOR, 2004 300,000 250,000 Nitrogen 5% HC Gas 31% b/d 200,000 150,000 CO2 miscible 64% 100,000 50,000 1996 1998 HC Gas 2000 CO2 miscible 2002 2004 Nitrogen 14 CO2 used Globally for EOR will .... 1. …increase oilfield recovery by 6 – 15% of OOIP 2. …and global recoverable reserves 3. …while delaying the pending oil and gas production peaks, 4. …extending the oil and gas production plateau, 5. ….sequester CO2, safely and reliably 6. Large scale CO2 use aligns the interests of producers and consumers of crude oil and gas … 7. …and reduces concerns regarding global warming 15 CO2 Sources There are some, outside USA, who say... CO2 is ”too expensive” …or “not available” …or “too complicated” Not true! Examples follow 16 CO2-Source Facilities Onshore and Offshore Gas Separation Unocal have installed a reliable, membrane based, CO2 separation system to meet contractual gas production requirements. At Pailin Field, Thailand Oil and gas related CO2 is an obvious choice for EOR 17 Elsam Kinder Morgan CENS Project Capturing CO2 from coal power plants • CO2-Emission reduced by 90 % • SO2-Emission capture is 99,9 % • NOx-Emissions reduced by 5 % • Cost of capture < $25 /tCO2 18 Qatar Fertilizer Company QAFCO - 4 project: the project includes an ammonia plant and a urea plant with daily capacities of 2000 and 3200 tons of ammonia and urea respectively. QAFCO's annual production capacity will be 2 million tons of ammonia and 2,8 million tons of urea. 2 – 4 million tonnes pure CO2 per year 19 Proven CO22 Recovery on Gas Turbine Exhaust; Bellingham Plant, USA - Aerial View 6 CO2 is produced in the Middle East Natural Gas Consumption & Corresponding CO2 Production in Middle East 700.0 600.0 million t 500.0 Most CO2 from natural gas use can be captured and used for EOR 400.0 Enough for > 2 billion barrels per year 300.0 200.0 100.0 0.0 1991 1992 1993 1994 1995 1996 Natural Gas 1997 CO2 1998 1999 2000 2001 2002 21 But why Build an Infrastucture? 7 0 0 0 6 0 0 0 4 0 0 0 3 0 0 0 2 0 0 0 1 0 0 0 jan.30 jan.26 jan.22 jan.18 jan.10 jan.14 C O 2E O R H o riz o n ta ls In fill v e rtic a ls B a s e W a te rflo o d jan.06 jan.02 jan.98 jan.94 jan.90 jan.86 jan.82 jan.78 jan.74 jan.70 jan.66 jan.62 jan.58 jan.54 0 B O P D 2 5 0 ,0 0 0 1 5 0 ,0 0 0 1 0 0 ,0 0 0 5 0 ,0 0 0 Today Centerline Projects 2 0 0 ,0 0 0 W a te rflo o d C O 2 F lo o d I J-10 J-06 J-02 J-98 J-94 J-90 J-86 J-82 J-78 J-74 J-70 J-66 J-62 J-58 Depletion J-54 Primary J-50 0 Discovery (m3/day) 5 0 0 0 { Examples show how CO2 use and oil production at... ...Weyburn, Canada ...SACROC, Texas ..rises, plateaus then falls ..as use in one field falls, ...it increases at new floods ...in new fields 8 0 0 0 C O 2 F lo o d II 22 Such infrastructures already exist vo Bra Mtn Sheep rish n-I o t An Lubbock Slau ghte r e NEW MEXICO Permian Region West Texas Snyder N W Ca ny on Re ef Ca rri e rs Midland Odessa W. Te xas TEXAS ir Ada Means l Basin Centra Hobbs CO2 Company te Es Wellman Llano Co rte zP ipe lin ch an ek m Co Cre e LEGEND CO2 Pipelines E S McCamey At a large scale Pe Sou tro rce CO2 Projects Created by: SADavis August, 2001 23 File: CO2 Permian v1.ppt Example A ”Gulf” Infrastructure for CO2? Why not? enormous amounts of abandoned oil lie in a significant number of abandoned and/or mature reservoirs, conveniently clustered for a super-CO2 infrastructure Oil & Gas Journal 24 PROPOSED PROJECT IN NORTH SEA • 30 – 40 million t/y buried CO2 •CO2 from power stations and factories around N. Sea basin • 100 million bbl/y incremental oil •Field life extended for 10 – 30 years Statfjord Brent Ninian Claymore Gullfaks Beryl Brae Piper Forties Brage Grane Sleipner Ekofisk SPONSORS 25 Gullfaks has been studied in detail 26 So has Ekofisk CO2 Other, similar North Sea structures, like Forties & Brent, will respond just as well The technology exists to do this at lower cost – even offshore! Sub-sea pipelines inject CO2 directly into the wells Floating storage & production vessels reduce the capital cost of smaller floods Norsk Oliedirektorat 28 All this costs serious money! The CENS model shows investment costs of roughly $1.7 billion for CO2 pipeline $2.2 billion for CO2 capture plants $5.0 billion for EOR investment in oilfields About $ 10 billion 29 So why has it not happened - yet? Brent Crude, $/bbl They don’t trust this 40.00 35.00 30.00 25.00 20.00 15.00 10.00 This is what upstream companies remember! 5.00 01 00 99 98 02 20 20 20 19 19 96 95 94 97 19 19 19 19 93 19 91 90 89 92 19 19 19 19 88 19 86 85 84 87 19 19 19 19 83 19 81 80 79 82 19 19 19 19 78 19 77 19 19 76 0.00 30 Financing Tertiary Recovery requires Mostly - stable oil prices, no more nasty surprises Transparent knowledge of reservoir conditions in target oil fields Treaties of cooperation between oil producing countries Contracts between oil producers and CO2 suppliers Contracts between oil producing countries and Annex 1 countries 31 Oil Producers can benefit from Clean Development Mechanisms & Joint Implementation with Annex 1 Countries Sequestered CO2 will contribute towards major CO2 emission reductions in the years following 2005 Annex 1 Countries 32 Developing a CO2 Infrastructure Producers in the oil basin must recognise & pool their common interests, 1. ...preferably choose a common infrastructure developer... 2. ...whose interests are aligned with all producers... 3. ...and finds a total solution that produces the least cost incremental oil 33 Preferred Infrastructure Developer Should understand all phases and aspects of oil production, ...how to source low cost CO2, …mutually benefit the producers from the upcoming, international trade in CO2 reductions …while aligning its interests with all producers, …possibly sharing revenues from incremental oil 34 Why do it? billbbl bbl bill 100 100 Developing a World-class infrastructure for CO2 will take decades And cost many $billions 10 10but if started now, the oil plateau can be extended by decades... Production …and early developmentsProduction at suitable sites Exploration could give early returns Exploration Extrapolation Extrapolation(bbl/NFW) …such early developments can be (bbl/NFW) the “hubs” 11of the long term infrastructure 1900 1900 1925 1925 1950 1950 1975 1975 2000 2000 FINDING ZEROCOST 2025 2025 35