U.s. oil production potential from accelerated deployment of carbon capture and storage

56 Pages·2010·1.11 MB·English

U.S. OIL PRODUCTION POTENTIAL FROM
ACCELERATED DEPLOYMENT OF CARBON
CAPTURE AND STORAGE
White Paper

Advanced Resources International, Inc.
Arlington, VA USA

March 10, 2010
This report was prepared for the Natural Resources Defense Council.
White Paper: U.S. Oil Production Potential from Accelerated Deployment
of Carbon Capture and Storage
TABLE OF CONTENTS

EXECUTIVE SUMMARY...............................................................................................................................................1
BACKGROUND AND OBJECTIVE................................................................................................................................5
CURRENT CO -EOR ACTIVITY....................................................................................................................................6
2
POTENTIAL DOMESTIC OIL RESOURCES FROM CO -EOR.....................................................................................8
2
DISTRIBUTION OF ECONOMIC CO -EOR PROSPECTS.........................................................................................13
2
LIMITS TO AND PLANNED EXPANSION OF CO -EOR IN THE U.S.........................................................................15
2
POTENTIAL FOR CCS AND CO -EOR BY INDUSTRIAL EMISSIONS SOURCES...................................................19
2
FORECASTS OF POWER SECTOR CCS DEPLOYMENT FROM IMPLEMENTATION OF ACES...........................21
NATIONAL FORECASTS OF OIL PRODUCTION FROM CO -EOR RESULTING FROM PROJECTED CCS
2
DEPLOYMENT UNDER ACES....................................................................................................................................25
REGIONAL DISTRIBUTION IMPACTS OF CCS DEPLOYMENT OF CO -EOR POTENTIAL....................................31
2
CONNECTING CO SUPPLY WITH EOR DEMAND...................................................................................................37
2
ECONOMIC BENEFITS OF INCREASED DOMESTIC OIL PRODUCTION...............................................................41
ENVIRONMENTAL BENEFITS OF INCREASED DOMESTIC OIL PRODUCTION WITH CO -EOR.........................47
2

Advanced Resources International, Inc. 1
March 2010
White Paper: U.S. Oil Production Potential from Accelerated Deployment
of Carbon Capture and Storage
LIST OF FIGURES
Figure ES-1. Possible Way That U.S. CO Capture/Transport/And Storage Could Evolve..........................3
2
Figure 1. Major CO -EOR Activity in the U.S..............................................................................................7
2
Figure 2. Distribution of Oil Production Potential by Field Size...................................................................13
Figure 3. CO Supply and Demand in the Permian Basin...........................................................................16
2
Figure 4. U.S Gulf Coast Potential Anthropogenic Sources of CO ............................................................17
2
Figure 5. Denbury Resources’ Strategic Vision for Moving Midwest CO Supplies to the U.S. Gulf Coast
2
CO -EOR Market.........................................................................................................................................18
2
Figure 6. Carbon Dioxide Captured from Electricity Generation Technologies with CCS in 2020 and 2030
....................................................................................................................................................................23
Figure 7. Comparison of Potential Oil Production from CO2-EOR due to CCS Deployment to 2008 U.S. Oil
Production and Imports................................................................................................................................27
Figure 8. Growth of CO2-EOR Production in the U.S. (1986-2008)............................................................29
Figure 9. NEMS Electricity Market Model Supply Regions.........................................................................32
Figure 10. NEMS Electricity Market Regions and Major Oil Basins with CO2-EOR Potential.....................35
Figure 11. Possible Way That U.S. CO Capture/Transport/And Storage Could Evolve............................37
2
Figure 12. Schematic Illustration of Coupling CO -EOR with Other Strategies to Maximize Cost-Effective
2
CO Storage................................................................................................................................................48
2

Advanced Resources International, Inc. 2
March 2010
White Paper: U.S. Oil Production Potential from Accelerated Deployment
of Carbon Capture and Storage
LIST OF TABLES
Table 1. Volumes of CO Supplying EOR Projects in 2008...........................................................................7
2
Table 2. Economically Recoverable Domestic Oil Resources from CO -EOR*...........................................11
2
Table 3. Economically Feasible Market for CO for “Next Generation” CO -EOR*......................................12
2 2
Table 4. Cumulative Probability Distribution for Onshore Economic CO -EOR Prospects..........................14
2
Table 5. Comparison of Forecasts of CCS Deployment and Associated Benefits due to ACES.................24
Table 6. NEMS Forecasted Deployment of Power Generation Capacity with CCS.....................................31
Table 7. Estimates of Captured CO Associated with Power Generation Capacity with CCS.....................34
2
Table 8. Estimates of Maximum Oil Production Potential from CO -EOR Utilizing Captured CO Associated
2 2
with Power Generation Capacity with CCS..................................................................................................34
Table 9. Tabulation of Possible Movement of CO from CCS Deployment from Electricity Market Supply
2
Regions to Oil Regions................................................................................................................................38
Table 10. Tabulation of Possible Movement of CO from CCS Deployment to Oil Regions from Electricity
2
Market Supply Regions................................................................................................................................39
Table 11. Estimated Distribution of Economic Value of Incremental Oil Production from CO -EOR by 2030
2
....................................................................................................................................................................43
Table 12. Estimated Distribution of Economic Value of Incremental Oil Production from CO -EOR by 2030
2
....................................................................................................................................................................44
Table 13. Estimated Economic Impacts of Oil Production from CO -EOR Utilizing Captured CO
2 2
Associated with Power Generation Capacity with CCS...............................................................................45
Table 14. Estimated Economic Impacts of Oil Production from CO -EOR Utilizing Captured CO
2 2
Associated with Power Generation Capacity with CCS...............................................................................46

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White Paper: U.S. Oil Production Potential from Accelerated Deployment
of Carbon Capture and Storage
EXECUTIVE SUMMARY
Key features of climate legislation being considered by the U.S. Congress, such as the American
Clean Energy and Security Act (ACES) (H.R. 2454), are designed to stimulate and support rapid
deployment of carbon capture and storage (CCS) in power generation and other industrial facilities that
emit significant volumes of carbon dioxide (CO ). In addition to reducing emissions, the captured CO
2 2
could be productively used to produce more domestic oil through the application of CO -enhanced oil
2
recovery (CO -EOR) technology. Increasing domestic oil production will result in lower crude oil
2
imports, enhanced domestic energy security, and significant economic and environmental benefits.
Specifically, the implementation of ACES could result in:
 By 2020, application of CCS technology in 13 to 14 gigawatts (GW) of coal power
generation capacity, capturing 78 to 85 million metric tons (tonnes) of CO per year
2
(about 4 billion cubic feet per day (Bcfd)).
 By 2030, 69 to 109 GW of new coal and natural gas-fired power generation capacity
equipped with CCS technology, reducing annual CO emissions by 410 to 530 million
2
tonnes in 2030.
 The productive use of this captured CO for EOR could increase domestic oil production
2
by 3.0 to 3.6 million barrels per day by 2030, assuming all of the captured CO is
2
preferentially used for EOR.1 Cumulatively, from 12% to 19% of the economically
recoverable CO -EOR potential in the Lower-48 would be produced by 2030.2 The
2
reduction of oil imports that could result from this increased domestic production would
represent 33-40% of net crude oil imports in 2009 and 43-52% of net crude oil imports
projected in 2030.3
 The cumulative reduction in oil imports that could result between now and year 2030
would improve the trade balance by nearly $700 billion, resulting in increased state and
Federal revenues of $190 to $210 billion.

1 This is not necessarily what is expected to take place as a result of the ACES.
2 U.S. Department of Energy, National Energy Technology Laboratory, Storing CO with Enhanced Oil
2
Recovery, February 2008 (see Reference 4)
3 Energy Information Administration, Annual Energy Outlook, April 2009.

Advanced Resources International, Inc. 1
March 2010
White Paper: U.S. Oil Production Potential from Accelerated Deployment
of Carbon Capture and Storage
National Energy Market Model (NEMS) runs by the Natural Resources Defense Council (NRDC) and
the Energy Information Administration (EIA) of the impacts of implementing ACES provide the
foundation for the projected deployment of CCS-equipped power plants assumed in our study. In
addition, NRDC modeled CCS deployment and CO -EOR production at the aggregate national level in
2
MARKAL (acronym for MARKet ALlocation). The widespread deployment of CCS-equipped power
plants and large supplies of captured CO emissions would result in significantly lower CO costs than
2 2
assessed in previous reports on CO -EOR potential and enable the widespread and rapid expansion of
2
CO -EOR production.3,4
2
Productively using CO to enhance oil recovery is neither a new nor an exotic technology. Today, 105
2
CO -EOR projects provide over 250,000 barrels per day of incremental oil production in the U.S. Since
2
1986, about 1.5 billion barrels of domestic oil have been using CO -EOR, with another 1 billion barrels
2
currently booked as proven reserves. However, the single largest deterrent to expanding production
from CO -EOR today is the lack of large volumes of reliable and affordable CO . Most of the CO used
2 2 2
for EOR today comes from natural CO reservoirs, which are limited in capacity. Thus, an attractive
2
market exists for CO emissions captured from industrial sources and power plants for expanding
2
domestic oil production through the application of CO -EOR.
2
In the near-term, lower cost, high-purity CO captured from the host of smaller industrial (non-power)
2
sources would “kick start” the field pilots, demonstrate CO -EOR in new oil fields, and accelerate early
2
CO -EOR market growth in underdeveloped oil basins. Captured CO from power plants would
2 2
provide the subsequent large volumes of CO needed to scale up CO -EOR in these basins.
2 2
The captured CO need not be adjacent to or near oil fields amenable to CO -EOR for this option to be
2 2
economically viable. The vast majority of power plants projected to be equipped with CCS would be
within 700 miles of oil basins with significant CO -EOR potential. This distance is comparable to
2
existing and planned CO pipelines, of which more than 3,500 miles exist today in the U.S. In fact, in
2
this white paper, as shown in Figure ES-1, which illustrates just one of the many possible ways a CO
2
capture, transport and storage industry could evolve by 2030 in response to these regional imbalances
and efficiently allow for captured volumes of CO from CCS to be utilized to take advantage of CO -
2 2
EOR opportunities. As shown, the transport network necessary to serve a CCS-oriented marketplace
would be much less complicated than the current network utilized for natural gas.

Advanced Resources International, Inc. 2
March 2010
White Paper: U.S. Oil Production Potential from Accelerated Deployment
of Carbon Capture and Storage
Figure ES-1. Possible Way That U.S. CO Capture/Transport/And Storage Could Evolve
2
5 7
11
6
3
4
13 10 1
12
9
2
8
Potential Inter-Regional Pipeline Corridors
NEMS Electricity Market Model Supply Regions
Major Oil Basins with CO2-EOR Potential in the Lower 48
JAF02059.CDR
4
The bulk of U.S. oil fields are amenable to CO -EOR. Application of today’s “best practices” CO -
2 2
EOR technology to these oil fields could enable 85 billion barrels to become technically recoverable
(over 72 billion barrels in the Lower 48). At an oil price of $70 per barrel and delivered CO costs of
2
$15 per metric ton, 48 billion barrels would be economically recoverable (over 38 billion barrels in
the Lower 48), providing a large volume market for captured CO .
2

4 “Best practices” in this assessment, assumes “State-of-the-Art” technology characteristics used in
previous DOE/NETL studies. These represent the practices used by the most sophisticated operators
today. (See discussion in the text of this report, as well as Reference 4)

Advanced Resources International, Inc. 3
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White Paper: U.S. Oil Production Potential from Accelerated Deployment
of Carbon Capture and Storage
5
Importantly, the use of “next generation” CO -EOR technology would make 119 billion barrels
2
technically recoverable (106 billion barrels in the Lower 48), with 66 billion barrels economic at $70
per barrel oil and $15 per metric ton CO (57 billion barrels in the Lower 48).
2
The nation’s oil reservoirs amenable to CO -EOR are more than adequate to make use of the
2
projected supplies of captured CO emissions to support increased domestic oil production of 3.0 to
2
3.6 million barrels per day, and to provide a high volume market for captured CO emissions well past
2
the year 2030. Higher production rates could be achieved with additional CO2 supplies from industrial
(non power) sources, which will also be incentivized under proposed emission limits and CCS
incentives.
Technically and Economically Recoverable Domestic Oil Resources from CO2-EOR*
Incremental Technically Incremental Economically
Recoverable Oil* Recoverable Oil** (Billion
(Billion Barrels) Barrels)
“Best “Next “Best “Next
Region Practices” Generation” Practices” Generation”
Lower 48 72.4 106.3 38.5 56.5
TOTAL 84.8 118.7 48.0 66.0
*Incremental technically recoverable oil resources after subtracting 2.3 billion barrels already being developed with CO2-EOR.
**Assumes an oil price of $70 per barrel (constant, real) and a CO2 cost of $15 per metric ton ($0.79/Mcf), delivered at pressure to the field.

5 “Next Generation” in this assessment, assumes technology characteristics used in previous DOE/NETL
studies. Specifically, it assumes: ((1) Increasing the volume of CO injected into the oil reservoir; (2)
2
optimizing well design and placement, including adding infill wells, to achieve increased contact between
the injected CO and the oil reservoir; (3) improving the mobility ratio between the injected CO /water and
2 2
the residual oil; and, (4) extending the miscibility range, thus helping more reservoirs achieve higher oil
recovery efficiency.(See discussion in the text of this report, as well as Reference 3).

Advanced Resources International, Inc. 4
March 2010
White Paper: U.S. Oil Production Potential from Accelerated Deployment
of Carbon Capture and Storage
BACKGROUND AND OBJECTIVE
Implementation of the American Clean Energy and Security Act (ACES), or H.R. 2454, which was
passed by the U.S. House of Representatives in 2009 (the “Waxman-Markey” bill), or similar
legislation, would result in rapid deployment of carbon capture and storage (CCS) by new power
generation and industrial facilities through the bill’s extensive incentives for the technology.6 As of the
publication of this report, additional incentives are being considered by the U.S. Senate to further
encourage CCS from both power generation facilities (including gas-fired facilities) and other industrial
sources.
It has been alleged that requiring CCS for new power generation capacity would impose severe
economic hardships on consumers and the nation’s economy. In fact, this report demonstrates that
CCS can provide both significant environmental and economic benefits; especially if value-added
opportunities for productively using captured carbon dioxide (CO ) are encouraged and pursued. In
2
addition, large-scale CCS deployment could lead to significant increases in energy security. The
captured CO , if stored in depleted oil fields with CO enhanced oil recovery (CO -EOR) technologies,
2 2 2
could result in significant increases in domestic oil production, with commensurate reductions in oil
imports. Specifically, combining CO storage with CO -EOR can help produce more oil from mature,
2 2
already-developed oil fields in the U.S., while sequestering large quantities of CO , rather than emitting
2
this greenhouse gas (GHG) to the atmosphere.
As such, CO -EOR can provide a “bridge” to a low-carbon energy future involving widespread market
2
penetration of CCS technology. Revenues from CO sales to the oil industry can offset some of the
2
costs of CO capture from both natural gas- and coal-fired power plants, as well as other industrial
2
facilities producing large volumes of CO . In addition, CO -EOR can facilitate the construction of CO
2 2 2
pipelines and other infrastructure for transporting and storing CO into other types of subsurface
2
formations as well. Finally, the support provided by CO -EOR for early implementation of CCS will
2
help drive down the costs of capture, the largest cost hurdle for CCS, through “learning by doing.”
While previous reports by the U.S. Department of Energy (DOE), National Energy Technology
Laboratory (NETL) have reported estimates of the overall national oil supply potential from CO -EOR,
2
estimates of potential future oil production as a function of forecast deployment of CCS have not been

6 Section 115 of the legislation contains an incentive program for CCS deployment subsidies that are
estimated to amount to $150-200 billion, incentivizing up to 72 gigawatts equivalent of power generation
and industrial capacity.

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March 2010