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Vello Kuuskraa is President of Advanced Resources International, an oil and gas technology consultancy. He has over 30 years of experience in the oil and gas industry and is a recognized expert on the technologies of unconventional oil and gas resources, enhanced oil recovery (EOR) and CO2 sequestration. Sarah Watson caught up with Vello Kuuskraa at the 11th International Conference on Greenhouse Gas Control Technologies in Kyoto Japan and spoke to him about EOR and the role he feels EOR has to play in carbon capture utilization and storage (CCUS).
GHG: What is the role of CO2 EOR as a market driver for CO2 capture and storage?
Vello Kuuskraa: CO2-EOR can provide a series of market drivers for CCUS. It can remove the costs of CO2 storage from the power company and transfer the long-term liability for CO2 to the oil company. Most importantly, CO2-EOR can provide revenues from the sale of CO2, which can help to bridge the gap between the cost of CO2 capture and other revenues, incentives, and support provided to carbon capture and storage (CCS). Our view is that a realistic future value for CO2 is about $40/ton, paid for by the oil field operator at the field-site. Some operators could pay more, some could pay less. From that, one would need to subtract the cost of transportation which might run to $8-12 per metric ton, depending on the size of the pipeline and the location of the power plant and the oil field site, to calculate the revenue value of CO2 at the plant gate. As such, CO2-EOR would bring valuable dollars to the table for CO2 capture. For the USA, we see the potential of CO2-EOR providing over a trillion dollars of revenue for captured CO2 in the next 40 years.
GHG: How can EOR help to reduce carbon emissions?
Vello Kuuskraa: There are concerns by some that CO2-EOR will just bring more carbon out of the ground and therefore add to the problem. That's called ‘additionality’. However, CO2-EOR stores nearly as much CO2 as the carbon content of the oil, making it a low to neutral carbon energy option. The low/neutral carbon barrel of oil from CO2-EOR can substitute for a full carbon content barrel of oil from imports and push the use of that high-carbon oil into the next century. Therefore, from a practical point of view, CO2-EOR provides substitution of low-carbon oil for high-carbon oil, very much like wind power provides low-carbon substitution for gas or coal-fired power. As such, CO2-EOR provides ‘substitution’ as opposed to ‘additionality’ and should qualify as a carbon abatement option.
GHG: Tell me about the scale of EOR. Potentially how much CO2 can actually be utilized?
Vello Kuuskraa: We have done detailed work on this topic for the USA and recent work for the International Energy Agency (IEA) on worldwide CO2-EOR potential. In the USA, we see an economic demand for CO2 for EOR of about 33 billion metric tons. Natural sources in the USA can only supply about 10% of that demand, approximately 3 billion metric tons. So, what we have is an unmet demand for CO2 by the EOR industry of 30 billion metric tons that can only be met from anthropogenic sources. For perspective, that's equal to the CO2 that would be captured from about 140 GW of coal-fired electric power over a period of 35 years. That's equal to about half of the coal plant electricity capacity in the USA. Given the size of the CO2 demand, CO2-EOR is no longer just a niche opportunity, but now a major option for reducing CO2 emissions.
To understand the worldwide potential for CO2-EOR and CO2 demand, we looked at large oil fields that were within 500 miles of large CO2 emitting facilities: coal-fired power plants, refineries, gas processing plants, and so on. What we found was that the large oil fields within this 500 mile distance from large CO2 emitting facilities offered a market demand of 370 billion metric tons. This is what one would call ‘matched’ CO2 demand.
We learned at the GHGT-11 conference that the IEA looks to CCS to capture and store 120 billion metric tons of CO2, between now and 2050. We believe that CO2 EOR can meet a great portion of that requirement. In James Dooley's presentation at GHGT-11, he told us that there is a worldwide need to capture and store 700 billion metric tons of CO2 between now and the end of the century. CO2-EOR can provide half of that capability. So CO2-EOR is both a near-term bridge, and also an important part of the longer-term solution.
When I talk about the demand for CO2 from EOR, I am talking about market-driven demand, at an oil price of $85 per barrel, a CO2 price (at the oil field site) of $40 per metric ton, and CO2-EOR projects that can achieve at least a 20% before-tax return on capital. So, what I am discussing is economic demand, not just a technical demand, for CO2.
GHG: Does the CO2 stay securely stored?
Vello Kuuskraa: Yes. There are concerns expressed by some that because the CO2 comes out with the oil, that in the end it provides little benefit in terms of storage. Given the way EOR is actually practiced, CO2 is a very valuable commodity and is re-injected to recover more oil. At the end of the project, essentially all of the CO2 that you have purchased is stored in the ground.
GHG: Tell me a little more about the Weyburn Project. How important was the EOR element in getting this project up and running?
Vello Kuuskraa: The Weyburn oil field needed CO2 for enhanced oil recovery and the operator was willing to pay a reasonable price for CO2 from a coal gasification plant in North Dakota. The Weyburn project demonstrated that you can operate a long-term, integrated CCS project at scale. As we heard yesterday, 24 million metric tons have already been stored at Weyburn and the project is still going on! Given the CO2/oil ratios at Weyburn, the project is storing nearly as much CO2 as the CO2 content of the produced oil. It's just a wonderful poster-child for CO2-EOR as part of CCUS.
GHG: What else needs to happen to enable CCS to be deployed at the required scale?
Vello Kuuskraa: As you know, the cost of CO2 capture is high and the storage of CO2 in saline formations adds to that cost. What needs to first happen is for the cost of CO2 capture to be reduced through advances in technology. Second, CCUS needs to be recognized as a carbon management option, similar to renewables and other low-carbon options, such that it gets ‘level-playing-field’ treatment. Finally, there is a need to recognize that CO2-EOR is a long-term carbon storage solution that can also bring revenue to the table.
GHG: What impact has the worldwide explosion of shale gas resources and production had on CCS?
Vello Kuuskraa: In the USA, the shale gas revolution deferred the construction of coal-fired power plants as essentially all new build power plants are now gas fired. However, to meet future carbon management targets, we will need CCUS for both coal and gas power plants.
GHG: What are your thoughts on the future of CCS? Will EOR always play a role?
Vello Kuuskraa: I think CO2-EOR can and will play a very critical role in the near term. We've already passed the point where it's only a niche opportunity; it's now being considered as a major bridge. As we begin to invest in R&D and improve the CO2-EOR processing, achieving what I call ‘next-generation CO2-EOR technologies’, the market demand for CO2 will expand greatly. Also, by making the CO2-EOR process more efficient, an operator can afford to pay more for CO2. Ultimately, I think that CO2-EOR will not only be a bridge, it will become a part of the long-term carbon management solution. However, we will need saline storage options as well. In certain parts of the USA and the world saline formations may be the only CO2 storage option, so we need to pursue both options in my view.