We Can Be a Key Player in the Solution to Global Warming

Eve S. Sprunt, 2006 SPE President • president@spe.org

Whether or not you are convinced that climate change from rising levels of atmospheric CO2 is a serious problem, you must admit that it has become a real business issue. Like any change, concerns about global warming present both opportunities and threats for the petroleum industry. Let’s focus on the opportunities.

Although many people dream of a society that is powered by renewable energy, most recognize that dream is still many years away. The question then is, how can fossil fuels, which are regarded as the major cause of increasing atmospheric CO2, be used in a climate-friendly way?

CO2 capture and storage has been identified as a promising alternative. The CO2 would be captured from large, stationary point sources such as electric power plants, combined heat and power plants, and district heating, and through industrial processes such as oil refining, natural gas processing, iron and steel smelting, and cement processing. Capturing CO2 from vehicles is not practical with current technology. Many of the emissions captured would be from coal, but reduction of global CO2 emissions would diminish concern about emissions from use of petroleum as a transportation fuel.

Once CO2 has been captured, there are several alternatives, including storing it in the ocean, converting it to another stable form through chemical processes, and storing it underground. Oceanic storage poses a host of environmental issues. Transforming CO2 into other materials is being evaluated for technical feasibility. Underground storage, also known as geologic sequestration, is considered by many groups, including the International Energy Agency (IEA), to be the most promising option.

When it comes to storing gas underground, the petroleum industry is the home of much of the expertise. We know how to locate appropriate rock formations, determine the storage capacity of the rock, assess the ease with which gas can be injected and immobilized with time, and determine the maximum gas pressure that can be sustained without risk of fracturing or exceeding the sealing capacity of the cap rock. Injection into hydrocarbon-bearing formations, even depleted ones, includes the additional benefit of enhanced recovery. Theoretical modeling is now underway to see if repressurization with CO2 can also produce additional methane from depleted natural gas reservoirs. Thus, while the oil industry has been viewed as a major contributor to global warming, it can also be a key player in the solution.

Three different underground storage alternatives have been identified: storage in deep, saline water-bearing formations; storage in depleted oil and gas reservoirs; and storage in unmineable coal seams. Let’s look at the status of each of these.

Statoil has played a major role in demonstrating the validity of geological sequestration by capturing and storing CO2 from the Sleipner West natural gas field, which is located in the Norwegian sector of the North Sea. Gas from the Sleipner West field has 9% CO2, which is above the 2.5% European export limit. CO2 is separated offshore and injected into an aquifer 800 m below the sea floor and 2500 m above the reservoir. Since 1996, Statoil has injected about 1 million tons of CO2 per year. Other commercial-scale projects entailing injection of CO2 stripped from natural gas include BP’s In Salah project in central Algeria (2004), Statoil’s Snohvit LNG project in the Barents Sea (2006), and Chevron’s Gorgon LNG project at Barrow Island off Northwest Australia (2010).

Another key demonstration has been conducted by the IEA at EnCana’s Weyburn field. Since 2000, CO2 from Great Plains Synfuels’ North Dakota, U.S.A., coal gasification plant has been transported via a 330-km purpose-built pipeline and then injected and stored in the 50-year-old Weyburn oilfield in southeast Saskatchewan, Canada. In 2004, following extensive studies, the IEA concluded that CO2 injected in the Weyburn field will essentially all remain securely stored underground for at least 5,000 years. Over the life of the EOR project, the Weyburn field is expected to store 14 million tons of CO2, which is equivalent to 1 year’s CO2 emissions from 3.2 million cars. CO2 injection is expected to extend the life of the oilfield by about 25 years and produce 130 million bbl of incremental oil.

The third alternative, storage in unmineable coal seams, is being evaluated. The concept is that coal, depending on rank, type, and depth, can absorb two to three times or more CO2 than methane. The current method of recovering coalbed methane is to depressurize the coal bed, usually by pumping water out of the reservoir. In a sequestration project, CO2 would be injected instead of reducing pressure. The displaced methane diffuses into the cleat system and is produced. Replacement of methane with CO2 swells the coal, so there is concern that the permeability of the coal will decrease. The U.S.Dept. of Energy has sponsored several projects, including one at Burlington Resources’ Allison Unit in the San Juan Basin of New Mexico, U.S.A., in which CO2 was injected for 5 years. Although coal permeability was reduced, methane was produced in a proportion of about 1 volume of methane for every 3 volumes of CO2 injected, with greater ultimate methane recovery than originally estimated. SPE held an Applied Technology Work-shop (ATW) on “Enhanced Coalbed Methane Recovery and CO2 Sequestration” in October 2004 and the scribe’s report, which summarizes the Allison Unit and other studies, is available athttp://www.spe.org/web/rd/co2seq.html.

As SPE President I have been working to expand SPE’s technical coverage of geological sequestration of CO2, to educate our members on the potential business opportunities, and to reach out to the people in the environmental community who are not already SPE members. An ATW on “CO2 Sequestration" was held in November 2005 and a Forum Series meeting on “CO2 Capture and Storage—A Dual Benefit for the Oil and Gas Industry,” will be held in June 2006. I’m also encouraging inclusion of this topic in plenary and panel discussions in many of our larger meetings.

Our response to climate change plays an important part in the public’s perception of the petroleum industry. Geological sequestration of CO2 offers us a wonderful opportunity to be part of the solution. Since enhanced hydrocarbon recovery as a result of CO2 sequestration could generate revenues that may offset part or all of the CO2 capture and transportation costs, we have a potential win-win situation.

Risk and reward go hand-in-hand. CO2 restrictions will be unevenly applied depending on national incentives and policies, and CO2 capture technologies are still very expensive. The price companies will pay for CO2 sequestration is therefore uncertain. Now is a good time to look at the economics of different coupled CO2 sources and reservoir injection sites. I encourage you to open your mind to new business opportunities.