Carbon Dioxide Enhanced Oil Recovery (CO2-EOR) is gaining more traction around the world, not only because of its favorable economics, but also as part of sustainable practices, as well as preserving natural gas currently used for gas injection, for power generation purposes. Until recently, in any CO2 EOR projects naturally occurring CO2 was used. However, with modern carbon-capturing and storage (CCS) technologies, whereby CO2 generated by the power industry and other energy intensive manufacturing, such as steel and aluminum, is captured, stored and can be used.
The principle of CO2 EOR is common to many other ways of secondary and primary recovery methods. CO2 is injected into a reservoir to the space between the rocks to push the oil out. One of the technical reasons why injecting CO2 is beneficial is due its ability to mix with oil, also known as miscible with oil. Why it is required? Oil and water cannot be mixed into a homogeneous liquid, which in turn makes it less effective when water is used to push the oil. However, if the injection material (CO2) is miscible with the oil, it will become a homogenous mixture that will allow the forces of injected CO2 to be used effectively in "detaching" the oil from the rock and moving it more easily towards a producing well. The miscibility is achieved when high density (compressed) CO2 is used and with light crude oil.
The system works as a closed loop, whereby CO2 coming to the surface with oil, is separated and re-injected back to the formation. Pictures below show the complete process.
Utilization of CO2 EOR requires is significant amount of planning and engineering, not only due to down-hole conditions and reservoir modeling, but as a result of extremely corrosive nature of CO2. Well design, handling facilities and alike, all must be able to handle pure CO2. This includes utilization of corrosion resistant materials, such stainless steel and various grades of superalloy steel, elastomers (rubber) materials for packers, internally coated and fiberglass lining for tubing and many more. This, in turn, hugely affects the costs and lead times.
While onshore, the logistics makes it easier to conduct a CO2 EOR project, in the offshore environment it is more complex, challenging and costly, due to the fact that existing infrastructure was not designed to accommodate it, in terms of weight, space, power and materials used in the equipment installed.
Depending on the size of the project, a specialized platform might be required to embrace offshore CO2 EOR projects. There are a number of constraints that should be considered and planed in advance, such as tanks and storage capacity, manning capacity to accommodate the required crew, pumping and supply capacity. In general, best practices and facilities for onshore CO2 EOR may not apply offshore.
Supply & Demand Dynamics
Global demand of CO2 EOR services is relatively low and clustered around onshore fields in North America, because of the natural source and low cost of CO2. Due to costs involved, this method has not become particular popular with many operators, mainly due to availability of industrial CO2. Over the long term, as costs and technology of carbon capture and storage (CCS) provide betters economics for CO2 EOR, this method will be used more widely, especially in countries who are parties to the Kiyoto Protocol.
Potential (as of 2009) global oil production and CO2 demand (storage) volumes from CO2 EOR (source: Advanced Resources International Inc)
Another driver of CO2 EOR is the new technology that would provide higher oil recovery rate. This is driven by the fact that a number of oil fields that have a strong natural water driver can achieve a relatively high recovery rate of around 50%. This in turns provides no incentives for operators to use CO2 EOR at the current level of technology, as it makes the projects uneconomical. Hence, next generation CO2 EOR is required to cover this gap.
According to a 2010 paper by Michael Codec, 47% of the worldwide CO2 EOR potential is in the Middle East. CO2 EOR here is at its grassroots with research facilities established and a number of trial projects were conducted. Although the full scale CO2 EOR may be years away, NOCs in the region, especially ADNOC, are actively implementing roadmaps that will allow those projects to progress. Currently, availability of industrial CO2 is the biggest constraint and as it hugely impacts economics of the CO2 EOR projects. The first in the region CO2 compression facility in Abu Dhabi and a 50km pipeline is being built, with a planned delivery date in 2016.
It is also understood, that extension of offshore concessions in UAE will stipulate the requirements of applying EOR to increase the recovery rate to more than 60%. Rumaitha and Bab oilfields in UAE are other potential candidates for CO2 EOR.
Cost & Price Analysis
EOR production is considered as a long term project undertaking in itself and requires a large number of equipment and packages. Studies, pilot projects, engineering design, equipment procurement, feedstock planning, drilling and other materials, play important role in EOR projects. Upfront capital costs in EOR projects are significant.
Cost wise, CO2 EOR services are composed of a number of various components, such as industrial CO2, Carbon Capture and Storage technologies (CCS) and policies, as well as equipment required for CO2 EOR projects. Due to limited applications of CO2 EOR projects, there is no public data available to be analyzed and understand price trends. However, up-front and operating costs would be very high and very challenging to manage. Controlling costs of CCS and CO2 EOR projects, especially offshore, is very challenging.
Almost every EOR project is bespoke and requires a large number of studies, pilot projects and simulation. As a result of this, equipment and packages are not standard and may require bespoke engineering and manufacturing every time, which in turn reduces the diversity of available suppliers, increases costs and lead times.
The most critical levers that would influence the costs and procurement decisions are
- A comprehensive FEED study
- Analysis of supplier market and their capabilities.
While there are numerous engineering companies providing the services of FEED studies, companies who specialize in the EOR studies and consultancies are in a better position to produce a more valuable and meaningful FEED - as they have large exposure to varus EOR projects.