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DOE: New CO2 Enhanced Recovery Technology Could Boost US Oil Recovery 4x or More

4 March 2006

Doe_eor
One view of the potential CO2-EOR extension of reserves. Click to enlarge.

The US Department of Energy (DOE) released reports projecting that state-of-the-art enhanced oil recovery (EOR) techniques could significantly increase recoverable oil resources of the United States by a factor of four or more. That would, in effect, double the efficiency of US oil recovery from 33% to more than 60%.

According to the findings, 89 billion barrels or more could eventually be added to the current remaining US proven reserves of 21.4 billion barrels.

These promising new technologies could further help us reduce our reliance on foreign sources of oil. By using the proven technique of carbon sequestration, we get the double benefit of taking carbon dioxide out of air while getting more oil out of the earth.

—Energy Secretary Samuel W. Bodman

The 89 billion barrel jump in resources was one of a number of possible increases identified in a series of assessments done for DOE which also found that, in the longer term, multiple advances in technology and widespread sequestration of industrial carbon dioxide could eventually add as much as 430 billion new barrels to the technically recoverable resource.

If the 89 billion barrels in resources is converted to reserves, the US would be fifth in the world behind Iraq with 115 billion barrels, and an additional 430 billion barrels would make it first, ahead of Saudi Arabia with 261 billion barrels.

Next-generation enhanced recovery with carbon dioxide was judged to be a game-changer in oil production, one capable of doubling recovery efficiency. And geologic sequestration of industrial carbon dioxide in declining oil fields was endorsed last year as a potential method of reducing greenhouse base emissions by the Intergovernmental Panel on Climate Change.

The assessments looked at maximizing oil production and accelerating the productive use of carbon dioxide in all categories of petroleum resources, including as-yet undiscovered oil and the new resources in the residual oil zone.

The findings are consolidated in the February 2006 report Undeveloped Domestic Oil Resources: The Foundation for Increasing Oil Production and a Viable Domestic Oil Industry.

The 430 billion barrel potential was identified in increments of up to 110 billion barrels from applying today’s state-of-the-art enhanced recovery in discovered fields (90 billion in light oil, 20 billion in heavy oil); up to 179 billion barrels from undiscovered oil (119 billion from conventional technology, 60 billion from enhanced recovery); up to 111 billion barrels from reserve growth(71 billion from conventional technology, 40 billion from enhanced recovery); up to 20 billion from tapping the residual oil zone with enhanced recovery; and, another 10 billion from oil sands.

The summary report identified three keys to converting the large technical potential from enhanced oil recovery to actual economic reserves:

  1. Accelerated development of improved EOR technology;
  2. Risk mitigation policies and actions; and
  3. Large, affordable EOR-Ready supplies of CO2.

Pursuing the undeveloped domestic oil resource poses considerable economic risks and technical challenges for producers. The risks and challenges stem from a lack of information on the actual geologic condition of the remaining resource (e.g., the distribution and saturation of the residual oil in the reservoir’s pore space), uncertainties on how well oil recovery technology (often adapted from other settings) will perform in a new setting or basin, and the inherent volatility and uncertainty surrounding world oil prices.

To date, this combination of geologic, technical and economic risks have posed severe barriers to the full development of the remaining domestic oil resource.

Nonetheless, leaving this domestic oil resource in the ground, while steadily increasing our oil imports, would be bad public policy.

—from Undeveloped Domestic Oil Resources

Accordingly, the report suggests eight steps to overcome the barriers to developing the technology and the presumed increase in reserves:

  1. Mitigating the financial and investment barriers associated with enhanced oil recovery. This could, the report suggests, involve reductions in federal/state royalties and state severance taxes (until payout) to provide risk mitigation during the initial years of a commercial scale project. They could also involve modifying Section 43 of the federal tax code (that contains investment tax credits for application of EOR technology) to provide downside protection of investment during periods of low oil prices.

  2. Reducing the geological and technical barriers of enhanced oil recovery. Optimizing the performance of current CO2-EOR (and other EOR) practices and pursuing new, more efficient technology will help lower the geological and technical risks involved with enhanced oil recovery.

  3. Encouraging the production and productive use of CO2 from natural sources and industrial emissions. The report suggests exploring a range of approaches from natural sources of CO2 to the capture of high volume by-product CO2 from centralized refinery coke and residues gasification facilities and sale of high-purity CO2 from ethanol, hydrogen and other chemical production facilities. Production and efficient separation of byproduct CO2, particularly from next-generation, low-emission power plants, could provide large, long-term sources for EOR-Ready CO2, sufficient to meet the full CO2 requirements for recovery of stranded oil.

  4. Integrated energy systems to reduce the energy penalty associated with producing and capturing EOR-Ready CO2.

  5. Collaboration with Canada on oil sand and heavy oil technology.

  6. In-depth evaluation of the geologic settings and economic feasibility of undiscovered oil resources to help formulate additional supportive policies.

  7. Improving the information base on domestic oil fields to accelerate the pace and level of reserve growth in already discovered oil resources.

  8. Increased investments in technology development and transfer would lead to higher domestic oil recovery efficiencies.

The separate assessments and reports contributing to the total resource estimate are:

  • Basin Oriented Assessments, ten assessments of producing U.S. basins and the potential of state-of-the-art enhanced oil recovery;

  • Stranded Oil in the Residual Oil Zone (ROZ), five reports looking at new resources in the residual oil zone; and

  • Evaluation of the Potential for “Game-Changer” Improvements in Oil Recovery Efficiency for CO2 Enhanced Oil Recovery, a report on next-generation technology.

Achieving this could be expensive—hence the focus by the reports on risk mitigation for the producers. One of the contributing reports estimates an increase in capital investment of 4x; CO2 of 2x; and Operating and Maintenance (O&M) costs of 3x for a sample oil field, resulting in a total cost increase 3.6 times that of “traditional” practice.

Offsetting that in the report’s analysis is the potential for an ultimate improvement in the trade balance by $8 trillion, cumulatively, assuming one-half of the future technically recoverable resource becomes economically recoverable and oil prices average $40 per barrel.

The reports were prepared by Advanced Resources International and Melzer Consulting.

Resources:

March 4, 2006 in Oil | Permalink | Comments (18) | TrackBack (3)

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» Enhanced oil recovery from Econbrowser
The Department of Energy issued a series of optimistic reports on Friday about the potential for carbon-dioxide-based enhanced oil recovery methods (CO2-EOR) to lead to huge increases in U.S. crude oil production. [Read More]

» New Energy Currents: 2006-04-05 from Winds of Change.NET
The weather's finally looking up out here on the east coast, the Yankees are totally ridiculous this year, and New Energy Currents is back on its monthly grind, helping you keep up on the latest developments in energy technologies and their evolving ap... [Read More]

» New Energy Currents: 2006-04-05 from Winds of Change.NET
The weather's finally looking up out here on the east coast, the Yankees are totally ridiculous this year, and New Energy Currents is back on its monthly grind, helping you keep up on the latest developments in energy technologies and their evolving ap... [Read More]

Comments

If I can mix metaphors this seems like pork barrelling and a smokescreen combined. It seems DoE has big bucks ready to give away while making it look as though inroads are being made into GHGs. Suddenly CO2 becomes the preferred form of pressure assisted EOR, rather than say steam or nitrogen. If the CO2 source is diffuse or a long way from the oil reservoir that's no problem either. The numbers look impressive too; let's hope nobody checks on them for a few years.

Nice spin. Massive subsidies to the oil industry become "risk mitigation". Please. The oil companies are screwing us as it is with their underreported revenues and underpaid royalties.

If risk mitigation is desired, then the appropriate way would be to ensure a high market price for oil, which would require an appropriate level of taxation on imported oil. Regardless of the technology, we don't need to be consuming more oil. Sequestering CO2 so we can consume even more oil sounds like a way to ensure that we make no progress against greenhouse gases.

Regardless of what path we choose, there needs to be a mandated upper limit on CO2 emissions. As long as this is not the case, we will have a hodgepodge of counterproductive initiatives which are not necessarily focused on what should be the goal.

Any body know the ratio of CO2 injected for EOR to the CO2 produced from burning that oil?

You can be assured that if this technology is any good, that the "environmentalists' will figure out that it is the greatest threat to humanity since Crisco, and that they will get their allies in the Federal judiciary (a/k/a, the madmen in black robes) to put a stop to it. We wouldn't want to reduce the power that Cesar Chavez and Madman Ahmendijaz have on the world stage, now would we.

Preach on Robert, preach on.

great more pollution!

Robert, you are right on. Well stated.

Cesar Chavez - a mexican american labor leader - United Farm Workers (1927-1993). This guy must have lot of power for a dead man.

Exxon flunkies have infiltrated greencongress. Everyone head for cover.


Speaking of Exxon, they took out an ad in NY Times proclaiming that Peak oil is a myth. http://www.exxonmobil.com/Corporate/Files/Corporate/OpEd_peakoil.pdf
found at oildrum.com. Can you be more pathetic. I though Exxon was in business to squeeze as much out of their customers. It would be in their interest to fan the peak oil scare after all, they have done a marvelous job at refinery capacity to keep the gas prices high.

I agree with Robert - the hard-core, blind-to-everything-else "environmentalists" will probably protest this endlessly, until it fails.

I know it goes without saying, but the economic and political benefits of this would be HUUUUUUGE. Everything else being equal, what AMERICAN would not want to replace all of our middle east oil with a domestic (at least, North American) supply, promising a safer and more prosperous nation, as SOON as possible?

This has NOTHING to do with finding replacements for petroleum, enacting conservation policies or even ensuring environmental controls. All of things can coexist together. There will continue to be new investments in oil for at least the next 20 years, and that is optimistic. Why not have them be within our own continent?

Additionally, American and Candian environental laws are already far more strict than those in the middle east and Africa, so wouldn't it be better, ENVIRONMENTALLY, if new facilities were built here? Wouldn't it be better to have more control? Or do some have delusional beliefs that what happens halfway around the world will not impact our environment here?

Increasing USA's potential oil reserves from 21 billion barrels to 430 billion barrels is very good news for mastodon builders and drivers. GM, Ford and Dodge/Chrysler will produce their new four-ton V-12, 600 hp, 8 mpg, pick ups and 4 x 4. Who said that the Big three would not survive? The 3-ton cars may be back soon.

Since we have no controls whatsoever on carbon dioxide production, it is not terribly heartening that this oil would be produced in the U.S.

The technology itself is less concerning than the fact that we refuse to make any commitment whatsoever to reducing greenhouse gases. While I don't think the oil companies should be subsidized directly, I think it would make sense to keep oil prices at a high level to encourage innovation and conservation.

... what AMERICAN would not want to replace all of our middle east oil with a domestic (at least, North American) supply[?]
What worries me is that this "solution" to the crisis would cause people to put off the effort of conversion to other energy sources, causing the crash to be worse than it would be if we had to handle it sooner.

Look at the denialists.  You know they'd tell the public "all's well" with millions in PR money.  Until the public is convinced otherwise to the point where ExxonMobil wouldn't waste the effort, I fear that CO2 EOR might be worse than not using it.

Nevertheless, I'm for it.

E-P. Accepting your premise, it is critical that we immediately start taxing CO2 to the level at which it would be worthwihile to inject it purely for the purposes of ghg mitigation or for other purposes such as enhanced oil recovery.

At least for the foreseeable future, we will continue to consume large (hopefully less large) quantities of oil. But, as I said before, as long as we don't place a continually reducing cap on emissions, any new technology will just be used to increase our consumption, thus negating any advantages accrued from co2 injection.

Our current political leaders only care about supply. Talk of alternatives is solely for the purpose of continuing our lifestyle at all costs. Conservation is equated with suffering (and loss of votes), so we don't talk about that.

But here in the mountains, the Spring comes earlier and earlier each year, the ecology changes, and there is less snowpack for the coming Summer. I also hear the seals in Canada this year will have far less ice upon which to do their birthing. All seems to be crashing upon us faster than we previously imagined. The tipping point may be upon us, and therefore I fear, that all this talk about reducing carbon at the margin may be pointless talk.

Can someone explain how gas pressurization of an oil field allows oil to be extracted?

I've read about using water and it makes sense (pump water in, oil goes to the top and out you pump it with an associated water cut), but how does gas (whether CO2 or Nitrogen or whatever)work?

Sure wouldn't want to be around a field that vents and smothers all organisms in CO2...

Poor little environmentalists will definitely have higher blood pressure after reading this article. If by using advance oil technology increases domestic energy supplies and helps our country be more energy independent, I’m all for it! Our nation is built on cheap energy and it will take a very longtime (+20 years) to move to another energy source. No cheap energy equals to no food, no work, no society, but a whole lot of happy (many fewer) environmentalists. By the way, the earth has been warming up for well over 10,000 years! So stop already with the life on earth will end as we know it, if we don’t go back to pre-industrial lifestyle.

For background on CO2-EOR, see e.g.

http://www.sciencedaily.com/releases/2005/01/050110091718.htm
http://www.netl.doe.gov/publications/press/2006/06008-EOR_Sequestration_Initiative.html

Investors assess the value of oil companies not on the basis of economically proven reserves rather than technical oil recovery limits. This puts the numbers bandied about in the above article in perspective: advanced recovery technologies technology are *economically* predecated on a high oil price, which their very application undermines. This is why advanced tertiary extraction has so far remained the domaine of specialized small-scale operators.

Of course, a high oil price also means high prices for refinery prices. This promotes the application of energy-efficient technologies, which help to at least stabilize the GHG output rate. Plus, you could avoid primary extraction in still-pristine wilderness areas like the ANWR.

However, keeping the domestic price of oil high requires (a) that you make that a policy goal for the sake of energy security and, (b) that you ramp up domestic proven reserves slowly.

Unfortunately, (a) would be opposed by powerful consumer lobbies. As for (b), the irony is that a stable Iraq could ramp up supply much faster and more cheaply than the US could, instantly mothballing domestic tertiary recovery projects.

Ergo, I expect that CO2-EOR an its ilk will remain niche markets for years to come unless Congress rashly enacts protectionist legislation of some sort. That would generate a price differential between domestic and foreign oil, with a host of consequences not just for the environment but also for the balance of trade, exchange rates, outsourcing of heavy industry etc.

'By the way, the earth has been warming up for well over 10,000 years!'

That is true, but the warming has accelerated. What took 10,000 years to warm up now takes 20! and we shouldn't be concerned at all!!

Who do these americans think they is? This is too much to bear for a progressive philanthropist like me. They think maybe american oil better than my oil? Damn Yankees!

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