Sequestration Issue Helps Rekindle Interest in CO2 Injection
by F. Jay Schempf
|Friday, January 30, 2004
Higher oil prices and the war against global warming help create commercial, pilot gas floods, giving new hope to the industry in states like Wyoming and Kansas.
The threat of global warming is helping to generate sparks of hope for several U.S. states in reviving the substantial oil and gas industry activity they once enjoyed.
The glimmer stems from a rather unlikely combination of sustained high crude oil prices, the application of enhanced oil recovery (EOR) technology, and the sequestration of carbon dioxide (CO2)--that most highly ballyhooed of greenhouse gases.
Probably the best examples of states that are anticipating a renewal of their oil and gas fortunes by dint of these developments are Wyoming and Kansas though they aren't alone, by any stretch of the imagination. However, both are once-prolific oil states whose petroleum activity dwindled after companies retrieved the easy-to-get production during the first half of the 20th century, and then focused elsewhere. While the industry continues to operate modestly in both states, oil production trend lines are still headed downward, even today.
For decades, the seesaw nature of world crude oil prices made the viability of applying EOR in depleting U.S. oilfields a risky proposition. Most EOR technology, particularly of the CO2 injection kind, was too expensive, given that comparatively low oil prices dominated the market for most of the last quarter-century.
There was a CO2 injection boomlet in the 1980s, during a period when prices hovered around the $30-per-barrel mark and stayed there for a while. This was particularly evident in the Permian Basin area of West Texas/southeastern New Mexico. And while most of the gas flood projects built there and in a few other places around the country are still active, cyclical oil price downturns held further expansion to a minimum.
During the past year or two, however, a return to similarly higher prices, coupled with an amazingly vigorous nationwide interest in sequestering CO2 in deep geological formations, is turning gas injection for EOR once again into a high-profile cause celebre.
An example is Anadarko Petroleum's program to move CO2 via a 16-inch pipeline from ExxonMobil's LaBarge gas processing plant in southeastern Wyoming some 125 miles to its Salt Creek and Monell fields north of Casper. That project, with an estimated cost of $27 million, is well underway. The pipeline, which will transport an initial 125 million cubic feet of CO2 to the two fields, is capable of moving up to 250 million cubic feet of the gas, and Anadarko plans to sell the overage to other producers in the area. According to Anadarko officials, the pipeline was completed in early January. Under a three-phase development, Anadarko plans ultimately to inject about 7,200 tons per day into the Salt Creek field alone, boosting production there alone from about 5,300 barrels per day to 35,000 barrels per day.
In addition to commercial projects like Anadarko's, the federal government is playing a big role in the revival of CO2 injection, be it for EOR or simply to "park" waste gas somewhere underground, hopefully forever. During the past two years, the U.S. Department of Energy has plumped down a bundle of taxpayer dollars for joint CO2 sequestration pilot projects with both industry and the academic community. The ventures, with partners sharing the cost, cover mostly geologic sequestration. But funding is also being given around the country for similar ventures aimed at parking CO2 in other media, such as in deep coal seams and in the deep ocean environment.
As for geologic sequestration, the DOE has initiated a number of joint venture projects in several regions of the country.
One of the largest of these projects is at its Rocky Mountain Oilfield Testing Center in Wyoming near Casper, which operates the venerable, long-depleted Teapot Dome oilfield (aka Naval Petroleum Reserve No. 3). There, CO2 injection is slated to begin in 2006. Working closely with Anadarko, the apparent CO2 supplier, and a number of universities, the DOE plans to make Teapot Dome one of the world's largest test sites for CO2 sequestration.
And while it probably will use Anadarko-provided CO2 for the project, the DOE has its main focus set on sequestering so-called anthropogenic CO2, the majority of which is produced by the nation's power plants, oil refineries, petrochemical plants, and other manufacturing facilities.
According to the DOE, the annual sequestration potential from the Wyoming project could be at least 2.8 million tons of CO2 (about 700,000 tons of carbon). Incidentally, they expect a concurrent rise in related oil production of about 30,000 barrels per day, which is almost six times the current production level from the field. But while the EOR benefits may be significant, the DOE's main goal is to seal CO2 in depleted reservoirs that obviously held oil and gas for millions of years.
Once injection begins sometime in 2006, the DOE plans to continue it for seven to 10 years. Among potential benefits, including the enhanced production and the ability to store large amounts of byproduct carbon that otherwise would be vented into the atmosphere, the DOE hopes the project will:
The State of Wyoming, recognizing the renewed vigor in both commercial and federal government pursuit of CO2 injection, has itself decided to commit funds to further the interest in EOR in the state. Recently, officials with the EOR Institute at Wyoming University proposed that the state legislature set aside $2.4 million a year to beef up the 20-year-old institute to enhance long-term EOR research. The proposed research would focus on CO2 injection, but also would keep abreast of other technologies, since CO2 injection is not appropriate for all Wyoming fields.
The proposal, to be introduced in the legislature this year, also would authorize the institute to hire experts in reservoir modeling, fluid flow simulation, economics assessment, and chemical separation technology assessment.
And then, there's the potential for EOR in Kansas.
In early December, following years of planning, the DOE and the University of Kansas launched a pilot CO2 injection project at the Hall-Gurney oilfield near Russell in Bob Dole country. The field, discovered in 1931, has produced more than 150 million barrels of oil, with output having dropped almost in half during the past 10 years. It produced 500,000 barrels in 2001.
The $4.4 million project was conceived in 2000 and is financed by a government, academia, and industry group that includes funding--in money or in contributed research, testing, and equipment--from the DOE as well as from several energy companies, including Kinder-Morgan CO2 Co., Houston; Murfin Drilling Co., Wichita; and the State of Kansas, among others. University researchers will oversee the project.
Currently, the group is injecting CO2, trucked to the location from a nearby ethanol plant, into one well in the field. Three producing wells will receive the oil driven by the injection process. The group plans to inject about one truckload of gas per day for about six months, followed by a four-year period of water-alternating-gas (WAG) injection. Modest results will help prove the successfully stimulating effect of the CO2's presence: They hope to increase production by 20,000 barrels during the four-year period.
Because the nation's Mid-Continent area--including Kansas, Oklahoma, Arkansas, and Nebraska--still holds billions of barrels of oil in place, the significance of a successful test at the Hall-Gurney field is that the process could work elsewhere in that region, said state officials. And while industrial plants could provide large volumes of waste CO2 for the region, Kinder Morgan CO2 Co., which owns and operates the nation's largest developed CO2 fields, could extend its pipeline network from the Permian Basin area to points in the Mid-Continent area if CO2 floods were to multiply there.
The Wyoming and Kansas projects are not alone, either. A number of DOE-funded pilots are ongoing in both West Virginia and New Mexico, and more are in the planning stages in Texas, California, Ohio, and several other states.
But it has taken the policy-driven desire to cut industry-generated CO2 levels in the U.S. to get the ball rolling.