Carbon-dioxide (CO2) injection is a successful enhanced-oil-recovery (EOR) technology that has been deployed extensively in the Permian Basin of West Texas, enabled by CO2 mostly produced and transported from naturally occurring CO2 reservoirs in Colorado and New Mexico.
Further expansion of CO2 EOR has been limited by the availability of affordable CO2 rather than the existence of suitable target reservoirs for redevelopment with CO2 EOR. The US Department of Energy estimates that 67 billion STB of economically recoverable next-generation CO2-EOR oil exist in US conventional reservoirs, with significant potential identified in other oil provinces around the world.
This situation may be about to change. On 9 February, Congress passed and the president signed into law a budget agreement that included language to expand a 2009 tax credit for CO2 capture and storage known as 45Q. The key provisions are that, for stored CO2, the tax credit rises to $50 per tonne in 2027, while, for EOR, the equivalent value is $35. The amounts will be adjusted for inflation after 2026. The tax credit is per tonne of CO2 captured as long as it can be established that the CO2 was stored. The tax credit is transferable, hence nontax-paying entities or entities that have no tax liability can benefit from the program. The credit goes to the facility that captures the CO2 and is available for the first 12 years of operation. There is no cap on the arrangement for the tax-credit projects coming online after 2018 or for which construction has started before 2024.
As a result, the US now has a carbon-pricing mechanism that could well be enough to unlock a wave of innovative CO2-capture projects and lead to a significant expansion in CO2 EOR, ultimately leading to new infrastructure, storage sites, and technology improvements that give birth to a CO2-capture industry.
This Month's Technical Papers
Recommended Additional Reading
SPE 185526 Surveillance and Initial Results of an Existing Polymer Flood: A Case History From the Rayoso Formation by L.A. Martino, YPF, et al.
SPE 188363 A Field Case Study of an Interwell Gas Tracer Test for Gas-EOR Monitoring by Modiu Sanni, Saudi Aramco, et al.
SPE 185734 Case Histories of Solvent Use in Thermal Recovery by Bita Bayestehparvin, University of Calgary, et al.
Stephen Goodyear, SPE, Manager, Gas Flood, Shell
01 June 2018
New OGA Wells Strategy Focuses on Improving Economics of UKCS Oil and Gas
The strategy supports the Maximise Economic Recovery from UK Oil & Gas Strategy and Vision 2035, whose goal is to achieve £140 billion additional gross revenue from UKCS production by that time.
US Energy Department R&D Funding To Include Conventional, Shale EOR
The projects are designed to reduce technical risks in enhanced oil recovery and expand application of EOR methods in conventional and unconventional reservoirs.
In recent years, some effort has been made to use EOR techniques, particularly CO2 injection, to extract additional oil and gas from unconventional resources. This has the potential to change the dynamics (again) of oil production from these tight and difficult reservoirs.
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08 August 2019
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