what’s new for roz,...2018/12/02 · 4 county study 1 2,390,000 61 104 72 32 8 county study 2...

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What’s New for ROZ, CO2-EOR and CO2 Storage

Prepared for:

Carbon Management Workshop

Part of:

2018 CO2 Conference Week

Prepared By:

Vello Kuuskraa, President

Advanced Resources International, Inc.

December 3, 2018

Midland, TX

What’s New for ROZ,

CO2-EOR and CO2 Storage

| JAF2018_088.PPT | November 30, 2018 | www.adv-res.com

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Topics for Discussion

1 The ROZ “Prize” Becomes Larger

2 CO2-EOR as a “Negative Emissions” Technology

3 The Missing Link - - Pipelines Not Evolution

4 Improving the Business Case for CCUS


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Modified from Ward, 1986

1. The ROZ “Prize” Becomes Larger

Advanced Resources recently completed its assessment of the San

Andres Fm ROZ “fairway” resource in the Permian Basin of West Texas and

SE New Mexico.

The resource assessment

entailed analysis of 384 logs,

use of core data from 10

locations, and construction of

73 published (plus 12 working

level) regional cross-sections.

The overall ROZ “fairway”,

covering over 9 million acres,

was partitioned into 120

distinct assessment units.

Estimates were made for oil

in-place, technically

recoverable resources, and

economically viable potential.

Andrews

Crane

Ector

Martin

Midland

Ward

Winkler

Upton

Dawson

Gaines

Terry

Yoakum

Cochran

Hockley

Lubbock

Chaves

Eddy

Lea

Roosevelt

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Gaines County NW-SE Cross-Section A-A’

Regional Cross-Sections to Map Formation Continuity

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Log Analysis for

Computing Oil In-PlaceGamma

RayResistivity

ROZ “1”

Porosity Oil Saturation

ROZ 1

Gross Pay = 336’

Net Pay = 259’

Porosity = 0.126

Oil Saturation = 0.30

OIP (B/AF) = 229

OIP (B/Acre) = 59,338

ROZ

“Pay”

Porosity

below cut-off;

exclude from

net pay & OIP

Questionable

porosity values;

exclude from net

pay & OIP

Apparent shale,

exceeds GR index

cut-off; exclude from

net pay & OIP

Resistivity

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AreaAssessment

UnitsTotal

Higher

Quality

Lower

Quality

(Acres) (#) (BBbls) (BBbls) (BBbls)

West Texas 5,962,400 99 194 136 58

▪ 4 County Study 1 2,390,000 61 104 72 32

▪ 8 County Study 2 2,462,400 26 71 52 19

▪ 3 County Study 3 1,110,000 12 19 12 7

New Mexico 3,127,000 21 44 40 4

Total 9,089,400 120 238 176 62

JAF2018_048.XLS

Oil In-Place

San Andres ROZ “Fairway” Oil In-Place


Three major technical reports, prepared by Advanced Resources Intl with

sponsorship from the U.S. DOE/National Energy Technology Laboratory, tabulate the

San Andres ROZ “fairway” resource at 238 billion barrels of OIP, with 194 billion

barrels in West Texas and 44 billion barrels in SE New Mexico.

Nearly three-quarters of the ROZ resource is “higher quality,” porosity >8% in West

Texas (>6.5% in New Mexico) and oil saturation >25%.

1. “Defining an Overlooked Domestic Oil Resource: A Four-County Appraisal of the San Andres Residual Oil Zone (ROZ) “Fairway” of the Permian Basin” prepared by Advanced Resources International for U.S. DOE/NETL, 2016.

2. “San Andres ROZ “Fairway” Resources of the Permian Basin: An Eight-County Resource Assessment”, prepared by Advanced Resources International for U.S. DOE/NETL, 2016.

3. “Permian Basin San Andres ROZ Resources Assessment: West Texas and New Mexico” prepared by Advanced Resources International for U.S. DOE/NETL, 2018.

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San Andres ROZ “Fairway” Recoverable Resources


The study used an updated version of CO2-PROPHET and a revised CO2-EOR

cost/economic model to calculate technically and economically recoverable oil and

the volumes of net CO2 injection for the San Andres ROZ “fairway” resource.

The CO2-oil ratio for the economically viable portion of the ROZ resource is 0.47

metric tons of CO2 per barrel of oil (9 Mcf/B).

1. “Defining an Overlooked Domestic Oil Resource: A Four-County Appraisal of the San Andres Residual Oil Zone (ROZ) “Fairway” of the Permian Basin” prepared by Advanced Resources International for U.S. DOE/NETL, 2016.

2. “San Andres ROZ “Fairway” Resources of the Permian Basin: An Eight-County Resource Assessment”, prepared by Advanced Resources International for U.S. DOE/NETL, 2016.

3. “Permian Basin San Andres ROZ Resources Assessment: West Texas and New Mexico” prepared by Advanced Resources International for U.S. DOE/NETL, 2018.

(BBbls Oil) (MMmt CO2) (BBbls Oil) (Mmt CO2)Mmt CO2/

Bbl Ratio

West Texas 55.8 35,700 38.7 17,770

▪ 4 County Study 1 28.1 20,000 20.4 9,870

▪ 8 County Study 2 21.9 12,100 15.5 6,700

▪ 3 County Study 3 5.8 3,600 2.8 1,200

New Mexico 13.3 7,600 5.0 2,800

Total 69.1 43,300 43.7 20,570 0.47

*Using $75/B (WTI) oil price, a CO2 cost of $28.35/mt, and 10% (after tax) ROR.JAF2018_048.XLS

Economically Viable*Technically Recoverable

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Emerging ROZ Basins and Resources


In addition to the San Andres ROZ “fairway”, ROZ resources

exist in numerous other basins and formations:

Grayburg Fm, Permian Basin

Glorieta Fm, Permian Basin

Cypress Sandstone, Illinois Basin

Advanced Resources is currently completing the assessment of the

ROZ resource in the Grayburg Fm of the Permian Basin. Other entities --

EERC/University of North Dakota, EORI/University of Wyoming, and the

Prairie Ranch Institute/Illinois State Geological Survey – are evaluating the

ROZ resources in their regions.

Other countries – Australia, Canada, Norway, among others – are also

assessing their ROZ resources.

Tensleep Fm, Powder River Basin

Tensleep Fm, Big Horn Basin

Mission Canyon Fm, Williston Basin

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2. CO2-EOR as a

“Negative Emissions” Technology


Considerable attention is being given to the topic of

“negative CO2 emissions,” including technologies such as air-

capture of CO2 and BECCS (bio-energy with carbon capture and

storage) as Carbon Management Strategies.

Less recognized is that CO2 enhanced oil recovery applied to the

ROZ resource also delivers “negative CO2 emissions.”

The FUTURE ACT supports and provides tax credits for “negative

CO2 emissions,” as will be discussed later today and tomorrow.

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Establishing the Carbon Balance


The “carbon balance” of applying

CO2-EOR to the ROZ resource:

A barrel of oil contains 0.43 metric tons (mt)

of CO2, when combusted.

Approximately 15% of the barrel is

consumed for petrochemicals and other

non-combustion uses, leaving 0.37 mt of

CO2 per barrel when combusted.

A barrel of economically viable oil from the

San Andres “fairway” ROZ requires 0.47 mt

of CO2 to be injected and stored.

A barrel of ROZ oil displaces a barrels of oil

that would otherwise be imported (produced

with conventional methods). This is similar

to a wind turbine that displaces electricity

that would otherwise be produced by using

fossil fuels.

0.06 mt/B Negative CO2 Emissions

CO2 Storage0.47 mt CO2 /B

CO2 Content0.43 mt CO2 /B

0.37 mt CO2/BStored

0.37 mt CO2/BCombusted

Producing a Barrel of San

Andres “Fairway” ROZ Oil

0.10 mt CO2/B

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Establishing the Carbon Balance


Using CO2-EOR to produce the ROZ resource in the San

Andres ROZ “fairway” would create 0.10 mt of “negative CO2

emissions” for each barrel of oil recovered.

No matter where one draws the boundary using “life-cycle”

analyses, the answer will be the same.

Recovering the 44 billion barrels of economically viable oil

from the San Andres ROZ “fairway” would create 4,400 million

metric tons of “negative CO2 emissions.”

Pursuing ROZ resources in other basins and, where feasible,

with other CO2 flooding designs would substantially increase the

volume of “negative CO2 emissions.”

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CO2Injection

CO2 Source

Oil to Market

Production Well

CO2Recycled

Current Water Oil Contact

Original Water

Oil Contact

Stage #1

Stage #2

Stage #3TZ/ROZ

Unswept Area

Oil Bank

Swept Area

“Next Generation” CO2-EOR and Storage Technology

Saline Reservoir

Application of

“gravity stable” CO2

EOR provides

opportunities for

more than doubling

storage of CO2 in oil

reservoirs.

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3. The Missing Link: CO2 Transportation

Lack of CO2 transportation between sources and oil fields is

the critical “missing link” for storage of CO2 with EOR.

A recent study – “Making Carbon a Commodity”* – proposed

establishing a comprehensive U.S. CO2 pipeline system linking CO2

captured from power plants with oil fields for enhanced oil recovery.

The 240 km Alberta Carbon Trunk Line (ACTL) is expected to be in-

service at the end of 2019.

Advanced Resources recently prepared a conceptual design for a

Deepwater Gulf of Mexico CO2 pipeline system.

*Performed in-part by Advanced Resources International with sponsorship by the Carbon Utilization Research Council

and ClearPath (2018).

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Expanding CO2 EOR beyond

West Texas/New Mexico entailed

the construction of new pipeline

systems:

Gulf Coast Region. A 750 mile CO2

pipeline system (including the recent

325 mile Green Pipeline) links natural

CO2 (Jackson Dome) and industrial

CO2 (e.g., Air Products Hydrogen)

with Gulf Coast oil fields.

Rocky Mountain Region. The 800

mile CO2 pipeline system (including

the new 232 mile Greencore Pipeline)

links industrial CO2 (e.g., Lost Cabin

gas processing plant) with Colorado,

Wyoming and Montana oil fields. A

110 mile extension into North Dakota

is under construction.

Existing and Expanding

CO2 Pipeline Systems

Source: Denbury Resources, 2018

Gulf Coast Region

Rocky Mountain Region

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Small-Scale CO2 Gathering Lines

Regional CO2 Transportation Pipelines

Large CO2 Transportation Pipelines

Source: Making Carbon a Commodity: The Potential of Carbon Capture RD&D (analysis by Advanced Resources

International, 2018). Sponsored by the Carbon Utilization Research Council and ClearPath Foundation (2018).

In Scenario #1, a series

of large, long-distance

onshore pipelines, ranging

from 200 to 1,000 miles

plus smaller regional

pipelines, would transport

950 million metric tons of

CO2 in Year 2050.

This would enable 8,200

million metric tons of CO2

to be captured and stored

by Year 2050.

Comprehensive U.S. CO2 Pipeline System

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Alberta Carbon Trunk Line

Source: Enhance Energy, 2018

The ACTL will transport 1.5

million mt of CO2 /year captured

from the Redwater Fertilizer

plant and NW Redwater’s

Sturgeon Refinery for use and

storage with EOR.

At full capacity, the ACTL will

provide transportation capacity

for storing nearly 15 million

metric tons of CO2 per year.

ACTL Pipeline Project

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Eastern and East

Central GOM63 Larger Oil Fields/7 Large

Deepwater CO2 Hubs

Offshore GOM Deepwater CO2 Pipeline System

Location of 63 Large GOM Deepwater Oil Fields

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Appomattox Oil Field and CO2 Hub

The Appomattox

deepwater semi-

submersible production

platform will be located

in 7,200 feet of water, 80

miles south of Mobile,

Alabama. It will contain

six drill centers, 15

producing sub-sea wells

and five water injection

wells.

The production

platform is scheduled to

be placed on-stream in

2020.

Source: OGJ On-Line, 07/01/2015

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Offshore GOM Deepwater CO2 Pipeline System

The Eastern GOM Deepwater CO2 Pipeline is a 255-mile System

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Pipeline

Requirements

Capital

Costs*

(MMcfd) (MMmt/yr) (inch-miles) ($MM)

Eastern 880 17.0 4,862 $1,310

East Central #1 700 13.5 3,048 $820

East Central #2 1,360 26.3 7,166 $1,980

Total 2,940 56.8 15,076 $4,110

JAF2017_029.XLS

Pipeline

System

CO2 Requirements

GOM Deepwater CO2 Pipeline

Investment Costs


The preliminary cost estimate for installing the three CO2 pipeline

systems in the deep waters of the Gulf of Mexico is $4.1 billion.

*We assume capital costs of $300,000 per inch-mile for deepwater pipelines.

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4. Improving the Business Case for CCUS


The foundation for an improved Business Case for CCUS rests

on three pillars:

Alternative Industrial Model. CCUS is conducted as a distinct business

center, not as an environmental control activity.

Appropriate Incentives. Two modifications to the Sec. 45Q tax credit

would boost its impact.

Closing the Cost/Revenue Gap. A variety of other actions would help

close the cost/revenue gap.

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Alternative Industrial Model


CO2 capture is conducted as a separate corporate entity or a

distinct subsidiary of a power company.

The entity/subsidiary (located “across the fence”) receives the CO2-

rich flue gas from the power plant and purchases electricity and heat from

the power plant for separating and compressing CO2.

The entity/subsidiary sells CO2 to the EOR industry (or to itself, if fully

integrated) for use and storage. It receives the Sec. 45Q tax credit.

The power company has a new customer for its electricity and heat

and no longer has to grapple with the complex energy penalty or loss of

generating capacity due to installation of CO2 capture.

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Appropriate Incentives


Sec. 45Q tax credit is a first key step toward overcoming the

barrier of “private costs and public benefits.”

Two modifications would greatly expand its impact.

Extending the time period for “breaking ground” to Year 2030 from Year

2024 to enable lower cost CO2 capture technologies to become

commercially available.

Increasing the number of years of eligibility for the tax credit to 20 from 12.

On a NPV (15) basis, 20 years provides essentially all (96%) of the

potential credit value.

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Cost of NGCC With CO2 Capture


Past R&D investments

for NGCC with capture

have reduced the “energy

penalty” to a 12.4% loss

of generating capacity.

Further gains may be

realized with advanced

solvents.

CURC and EPRI

studies state that the cost

of a new NGCC unit with

CO2 capture would be

30% lower by 2030.

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

2020 2025 2030 2035 2040O

&M

, $/k

W-y

r ($

20

17

)

Ca

pit

al, $

/kW

($

20

17

)

Year

Capital Fixed O&M w CC Variable O&M

Source: CURC/ClearPath, 2018.

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Closing the Cost/Revenue Gap


A variety of means would help close the gap between the cost of

CO2 capture and the Sec. 45Q tax credit for CO2 capture and storage:

Sale of CO2 to the EOR market

Capture of CO2 from lower cost industrial sources (the low hanging fruit)

Reduction in capture costs from R&D and new technologies

A comprehensive CO2 pipeline system, toll-free for anthropogenic CO2

JVs with highly economic CO2-EOR projects

Improvements in CO2-EOR performance from R&D

Front-end capital support for early CO2 capture projects

Loan guarantees to lower project financing costs

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Closing Comments


With passage of the 45Q tax credit and advances in technology

that reduce the costs of CO2 capture, we have entered a new, more

dynamic era for Carbon Management and CO2 Enhanced Oil

Recovery:

Greatly expanded CO2 demand and storage opportunities

Recognition of CO2-EOR as a “negative CO2 emission” technology

Definition of the essential CO2 pipeline system

Alternative pathways for establishing a viable “business case” for CCUS.

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Advanced

Resources

Internationalwww.adv-res.com


Office Locations

Washington, DC

4501 Fairfax Drive, Suite 910

Arlington, VA 22203

Phone: (703) 528-8420

Knoxville, TN

1210 Kenesaw Ave.

Suite 1210A

Knoxville, TN 37919-7736

what’s new for roz,...2018/12/02 · 4 county study 1 2,390,000 61 104 72 32 8 county study 2...

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