Insights and Commentaries

SCCS launch report from Joint Industry Project on CO2-EOR

15th June 2015

Topic(s): Carbon capture, Economics, Engineering and project delivery, use and storage (CCUS)

The Carbon Dioxide Enhanced Oil Recovery (CO2-EOR) Joint Industry Project (JIP) led by Scottish Carbon Capture & Storage (SCCS) has published results from a collaborative programme of work to develop an understanding of CO2-EOR, with the aim of creating a commercial use for CO₂ captured from power plants and industry. This Insight by Peter Brownsort, SCCS Scientific Research Officer outlines the project’s analysis on the importance of CO2-EOR to the United Kingdom's (UK) economy and decarbonisation targets and gives a summary of its key findings. It is based on a press release issued by SCCS on 16 June 2015.

Enhancing North Sea oil recovery can store more CO₂ much faster

Linking the development of enhanced oil recovery in the North Sea to low-carbon electricity can bring significant benefits to the wider UK economy while accelerating carbon storage and providing the most cost-effective pathway to UK decarbonisation targets; this is the main finding of a new report published by SCCS.

The report, launched in London, Brussels and Aberdeen last week summarises the results of a three-year JIP led by SCCS partners with funding provided by the Scottish Government, Scottish Enterprise, 2Co Energy Limited, Nexen Petroleum UK Ltd and Shell. The project focused on addressing issues of major importance to project developers looking to link CO2-EOR in the North Sea with carbon capture and storage (CCS) projects.

The project partners with Angus MacNeil MP, Chair of the Energy and Climate Change Committee, at the report launch in London on 16 June 2015. From left to right: Richard Crossick (Shell), David Mirkin (2Co Energy), Stuart Haszeldine (SCCS), Angus MacNeil MP, Stephen Goodyear (Shell), Frank Knight (Nexen), Julien Hailstone (Nexen) and Kath Mansfield (Nexen). Photo: Matt Ball

CO2-EOR technology, which has been used in North America for decades, involves injecting CO₂ into partially depleted oilfields deep beneath the land or seabed to force out additional volumes of oil, with the majority of the injected CO₂ remaining permanently stored deep underground. Although to date there has been no supply of CO₂ to support implementation of industrial scale CO2-EOR in the North Sea, the large-scale development of CCS could change this.

The report, CO₂ storage and Enhanced Oil Recovery in the North Sea: Securing a low-carbon future for the UK, outlines key findings of the project, introduces its results in the context of the current UK situation and includes brief summaries covering the results of seventeen work packages. More details of the project, with technical reports for some work packages, are available on the project webpage.

Synergy between CO2-EOR and CCS

The project has shown that a synergy between CO2-EOR and CCS could be the driver for developing both technologies in the UK Continental Shelf. Part of the CO₂ that would otherwise go directly to dedicated storage in CCS projects could be used to drive CO2-EOR, bringing significant benefits to the wider UK economy – including extending the producing life of the North Sea, reducing imports of oil, maintaining employment, developing new capability to drive exports, and additional direct and indirect taxation revenues. The report suggests that this approach could also provide the most cost-effective way to accelerate an energy transition between 2018 and 2030 to meet UK Committee on Climate Change decarbonisation pathways.

In launching the report Professor Stuart Haszeldine, SCCS Director at the University of Edinburgh, said:

“North Sea oil and gas are facing an existential cost challenge, and at the same time the UK is struggling to fund its electricity decarbonisation clean-up. The beauty of this new analysis is that it shows how to help develop big projects in the power industry, while also supporting a transition of the abilities and profits from offshore hydrocarbons into new, sustainable jobs.”

Desirable UK objectives

The project analysis suggests that this CO2-EOR route achieves two desirable UK objectives:

1. A business demand is created, which drives the sequential construction of CO₂ capture projects – reducing the costs associated with CO₂ supply and enabling cheaper low-carbon electricity. CCS by this route, with secure CO₂ storage already proven, would develop more rapidly and protect the onshore UK economy and industry from increasing carbon prices.
2. Through accelerated CCS deployment more CO₂ is abated, more quickly, than by any other route, and this includes emissions from the additional oil produced. Public subsidy towards the cost of a low-carbon transition would be greatly reduced, and CO2-EOR may even be profitable across the whole economy. Investment in CO2-EOR has a national return of up to 7.2x, which is much larger than rival energy opportunities.

However, the report points to a lack of clear supportive legislation and fiscal regimes for CO2-EOR in the UK. New supportive regimes are needed for CO2-EOR projects, similar to existing brown field or development allowances, and these must make investing in CO2-EOR in the UK competitive with the alternative global investment opportunities.

Key findings

• CCS is one of several routes to low-carbon electricity and directly reduces emissions from fossil fuel use. In the transition to a UK low-carbon future, fossil fuels with carbon capture will become essential in the generation and industry mix. CCS has the benefit of providing power on demand, independent of the external conditions which impact wind, tidal and solar.
• CO₂ captured in CCS projects can be publicly subsidised and sent to permanent geological storage deep beneath the North Sea. Alternatively, additional oil production using CO2-EOR, can provide the commercial finance, equipment infrastructure, and project management experience needed to develop lower cost CO₂ capture and secure storage, which has lasting benefit to UK low-carbon electricity.
• CO2-EOR is a proven technology to increase oil recovery, and simultaneously stores CO₂ permanently in the subsurface. Two technically similar projects have been commercially successful in the North Sea offshore since 1998 and 2002, by injecting miscible methane gas. This gives high confidence that CO2-EOR is achievable in North Sea oilfields. Detailed computational simulations of CO₂ injection to oil reservoirs has confirmed viability of injection and oil production. Measurements from existing CO2-EOR operations demonstrate secure CO₂ storage into the far future.
• A carbon accounting balance of carbon produced and carbon stored shows that CO2-EOR continues to enable “green” low-carbon electricity produced by CCS. In addition, CO2-EOR stores significantly more CO₂ before 2050 than the present publicly funded pathways of CCS. CO2-EOR enables production of a limited amount of additional oil with less carbon cost than any other method.
• CO2-EOR can be economic if the CO₂ is provided to EOR projects at a near zero transfer price, and if fiscal structures are introduced that are similar to existing brownfield and cluster allowances. This can encourage further development of existing fields, by ensuring that CO2-EOR projects surpass international “hurdle rates” of profitability to successfully compete for funding by oil and gas companies.
• Financial leverage into the whole-UK economy is conventionally measured as GDP or by an Economic Multiplier (EM), which measures the ratio of economic return to Government input. Calculation of illustrative returns show, for UK Government input into CCS linked to CO2-EOR, this ratio = 7.2 EM; compared against simple CCS fitted on coal = 2.6 EM; compared to offshore wind = 3.3EM. Thus every £1 invested in CO2-EOR could generate a return of up to £7.2, which is 2.2 to 3.2x larger than rival clean energies.
• This CO2-EOR pathway compares well to some independent propositions for future CCS pathways in the UK. The Energy Technologies Institute (ETI) envisages an optimal 60Mt CO₂/yr injection by 2030. The Committee on Climate Change “core decarbonisation scenario” of the 4th carbon budget envisages 52Mt/yr CO₂ capture by 2030. These can both be met by a UK CO2-EOR market, which develops commercial CCS projects every year from 2019-2030.
• CO2-EOR strengthens the case for Government to invest in CCS, and reduces the level of investment required by providing part of the offshore transport storage capacity and storage certainty as an intrinsic part of EOR.

Scottish Carbon Capture & Storage is an independent academic and applied research partnership of British Geological Survey, Heriot-Watt University, University of Aberdeen, the University of Edinburgh and the University of Strathclyde. www.sccs.org.uk

Please note that the project findings are those of the authors and do not necessarily reflect those of the project sponsors.

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