(187d) Economic and Environmental Implications of the Transition from CO2-Enhanced Oil Recovery to Saline Aquifer Sequestration

Title: Economic and Environmental Implications of the
Transition from CO₂-Enhanced Oil Recovery to Saline Aquifer
Sequestration.

Authors: Matt Jamieson, Greg Cooney – National Energy
Technology Laboratory

Geologic storage can dramatically reduce the GHG emissions
from fossil fuel power generation. There are two well understood methods of
doing this – storage in saline aquifers and storage in depleted oil fields via CO₂-enhanced
oil recovery (CO₂-EOR). One strategy being investigated is using CO₂-EOR
to incentivize the deployment of capture systems on fossil fuel power plants,
which is reflected in the recently passed 45Q tax credit that provides a credit
of $30 per megagram (Mg) of CO₂ used. Using CO₂-EOR as a
catalyst for capture is viewed as economically beneficial for CO₂-EOR
producers because CO₂ is currently supply-side constrained and
represents a significant operating cost for them. From the power plant
perspective, it would be beneficial to sell CO₂ to pay for the cost
of CO₂ capture equipment rather than paying for capture equipment
and also having to pay a saline aquifer site operator for the storage of CO₂.
However, because of the dynamics of CO₂-EOR and limited capacity
storage capacity, the use of anthropogenic CO₂ for EOR has a limited
lifespan. To date, there has been little research looking at the transition
between CO₂ as a feedstock to CO₂ as a waste. One study
evaluated the required magnitudes of CO₂ taxes and oil prices to
support the deployment of a gigatonne per year of CO₂ capture under
a variety of scenarios, but in that study the power plants are treated
exogenously with no decision framework for whether the plants can actually
operate under the stated taxes.¹ Additionally, the study used a
selection of curves from other studies to define EOR production.

This study will examine the economic and environmental
implications of large-scale anthropogenic CO₂‑EOR deployment
and transition to saline aquifer storage. First, the dynamics of CO₂-EOR
must be considered. For each operating pattern, there is a lag between initial
injection of CO₂ and production of crude as the CO₂ mixes
with the oil and brine. Oil production then quickly ramps up and follows a
decline as the operator continues with an injection schedule to optimize the
production of crude. The same pattern is repeated over time as the field is
developed to inject and produce from more patterns. A notional reservoir-level
result is shown in Figure 1. The reservoir production in Figure 1 was developed
assuming that a maximum rate of injection is sustained over the life of the
project. Next, the source of CO₂ must be considered – this study
will assume a 550 MW-net supercritical pulverized coal (SCPC) power plant with
90 percent CO₂ capture, which is capable of providing about 3.5
million Mg of CO₂ per year. According to Figure 1, this plant won’t
be capable of sending all of its CO₂ to the reservoir until year 4,
and then its capacity is quickly exceeded to around 190% in year 10, only to
quickly be under capacity again by year 15. If the EOR operator wants to
maintain the injection rate to the facility, more favorable to the economics of
the oil field, then the equivalent of two power plants will need to be equipped
for CO₂ capture and those two plants will need another sink for
their CO₂­ essentially right after achieving peak utilization. In
the immediate future, this likely means directing CO₂ to another
reservoir, but over time the demand for CO₂ for EOR will taper, and
the plants will need to find another destination for the captured CO₂
(i.e., transition to saline aquifer storage). Another option would be to adjust
CO₂ usage at the reservoir to optimize the system in favor of the
power plant, but this is likely to result in economically less favorable
conditions (longer payback periods and lower return on investment). Tools to
evaluate the potential reservoirs in the United States on both a performance
and cost basis will allow a robust economic and environmental assessment of
this transition.

The Department of Energy Office of Fossil Energy (FE) and
the National Energy Technology Laboratory (NETL) have developed multiple tools
to screen reservoir performance and cost: FE/NETL CO2 Prophet Model for
pattern-level performance screening, the FE/NETL Onshore CO2 EOR Cost Model for
cost and reservoir-level deployment, the FE/NETL Saline Aquifer Cost Model, and
the FE/NETL CO₂ Transport Model.

There are also environmental implications for this
transition. NETL has developed the CO2-EOR Life Cycle (CELiC) Model to provide
environmental impacts using data from the FE/NETL models. There are
environmental tradeoffs for implementing CO₂ capture – higher fuel
usage per MWh produced leads to higher impacts in some categories (e.g.,
eutrophication) and lower in others (e.g., global warming potential and
acidification). The net impacts for the system are dependent on how much CO₂
is stored per unit of crude produced and how the captured power plant compares
with the existing grid. In the near term, captured power plants should offer
significant reductions, particularly for GWP, relative to the current grid, but
as more plants implement capture and more renewables come online, the reduction
decreases. This may impact incentivization programs that seek to tie
environmental measurements of a product (e.g., GWP of a MJ of gasoline) to the
incentive.

Figure 1. Reservoir level oil
production and CO₂ sequestered over time for a reservoir.

References

1.  Kolster,
C., Masnadi, M. S., Krevor, S., Mac Dowell, N. & Brandt, A. R. CO2 enhanced
oil recovery: a catalyst for gigatonne-scale carbon capture and storage
deployment? Energy Env. Sci 10, 2594–2608 (2017).

DISCLAIMER

"This report
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Attribution

KeyLogic
Systems, Inc.’s contributions to this work were funded by the National Energy
Technology Laboratory under the Mission Execution and Strategic Analysis
contract (DE-FE0025912) for support services.