Energy & Environmental Research Center (EERC)

LANDSCAPE OF CCUS IN NORTH DAKOTA

CO2 & ROZ Conference

Midland, Texas

December 3–6, 2018

John Hamling

Assistant Director, Integrated Projects

© 2018 University of North Dakota Energy & Environmental Research Center.

BUILDING MOMENTUM

Image Credit – EERC

Image Credit – EERC

Image Credit – Minnkota Power Cooperative

Image Credit – EERC

Image Credit – NACCO Industries

A STATE OF ENERGY

• Oil (2nd)

• Coal (9th)

• Wind (5th)

• Ethanol (10th)

• Natural gas (11th)

Carbon capture, utilization,

and storage (CCUS) is key

to providing affordable,

reliable, safe, clean energy.

Image Credit – Steve Shook1

Encouraging the

commercial

deployment of CCUS.

AN ACTIVE REGION

Image Credit – EERC

GEOGRAPHY

21 hydrocarbon-bearing formations;

several contain multiple producing

horizons.

Multiple potential unconventional source

rock formations.

ROZ potential.

GEOLOGY

RESOURCE MANAGEMENT PHILOSOPHY

Mission to promote and develop North Dakota’s oil,

gas and fossil energy resources.

Public interest to promote geologic storage of carbon

dioxide.

CCUS enables reliable, affordable, safe, clean energy

through expanded use of a tremendous endowment of

fossil energy

Public accustomed to energy industry and the role it

plays.

RIGHT ENVIRONMENT

• Workable permitting and regulation:

– Unitization/amalgamation.

– Forced pooling (55%/60%).

– Mineral estate dominant; pore space owned by surface estate.

– State able to issue a determination of storage.

– Trust fund

– Certificate of closure:

♦ Once criteria are met, title and custody transfers to state.

♦ State manages storage facility during interim until federal government assumes responsibility.

♦ State maintains authority to access location and manage subsurface operations.

• Massive investment / rapid industry growth

NORTH DAKOTA’S

GOT CLASS!

I, II, III, IV, V, AND VI

Class I Class II Class III Class IV Class V Class VI

ND Dept of Health NDIC Oil & Gas

Division

ND Geological

Survey

ND Dept of Health ND Dept of Health NDIC Oil & Gas

Division

Hazardous and

nonhazardous fluids

(industrial and

municipal wastes).

Brines and other

fluids associated

with oil and gas

production.

Fluids associated

with solution mining

of minerals.

Hazardous or

radioactive wastes.

This class is banned

by EPA.

Nonhazardous fluids

into or above a

USDW and are

typically shallow.

Injection of carbon

dioxide for long-term

storage.

UNDERGROUND INJECTION CONTROL

INCENTIVES

12

• No sales tax on

capture-related

infrastructure

• No sales tax on CO2

sold for EOR

• Coal conversion tax: tax

reduction with CO2

capture (up to 50%)

• No sales tax on

construction of pipeline.

• Property tax-exempt for 10

years (equipment)

• No sales tax on CO2 EOR

infrastructure

• 0% extraction tax for 10 years for

tertiary incremental recovery

• Production tax still applies

• Severance tax ($0.375/ton)

• Lignite research tax ($0.02/ton)

• Projects beginning construction before January 1, 2024, can

claim credits for 12 years after operations begin.

• Tax credits claimed by the taxpayer capturing the emissions or

transferred to operators of CO2 EOR projects.

• Tax credit for CO2 stored in a qualified EOR project is

$15.29/tonne; increases annually to $35/tonne in 2026.

• Tax credit for CO2 stored in a saline formation is $25.70/tonne;

increases annually to $50/tonne in 2026.

45Q

• Credits trading for $136 to

$192 per ton.

• Stacked with 45Q

LCFS

RED TRAIL ENERGY

Seeks to develop a business case and implementation pathway for CO2 capture use and storage from a ND ethanol

production facility (~180,000 tons CO2 annually).

• Implementation plan

– Characterization

– Process engineering (capture, compression and injection design)

– Well, infrastructure and injection design

– Permitting

– MRV, accounting and certification

• Life cycle and market analysis (i.e., LCFS, 45Q, EOR …)

• Outreach and engagement

PROJECT TUNDRA

Seeks to construct the world’s largest integrated postcombustion carbon

capture unit in North Dakota and use the CO2 for enhanced oil recovery

(EOR).

– 95% capture at Minnkota Power’s Milton R. Young Unit 2 (MRY2, 470 MW, > 4 million tons CO2/year).

– State-of-the-art carbon capture technology provided by MHI.

– EOR in conventional oil fields transported by pipeline “energy corridor.”

– Secondary storage.

15

OOIP Estimates

300 Bbbl (Flannery and Kraus, 2006)

900 Bbbl (Continental Resources, 2011)

7.4 Bbbl (USGS, 2013)

24 Bbbl (Continental Resource, 2011)

Technically Recoverable

Reserve Estimates

BAKKEN SIZE OF PRIZE40,000 TO 85,000 WELLS OVER 20‒70 YEARS

Business as usual gets about

15 billion barrels.

A LOT OF BAKKEN OIL TO CHASE!

BAKKEN EOR TESTS

Seven North Dakota Bakken Injection Tests (NDIC Well #):

1. #9660: Water, Meridian tested March–April 1994 (50 days)

2. #16713: CO2, EOG tested September–October 2008 (29 days)

3. #17170: Water, EOG tested April–May 2012 (30 days?)

4. #16986: Waterflood followed by field gas injection, EOG

– Waterflood, tested April 2012–February 2014 (672 days)

– Field gas, tested June–August 2014 (54 days)

5. #24779: Vertical CO2, Whiting tested February 2014 (4 days)

6. #32937: Vertical propane, Hess tested May – July 2017 (at least 90 days)

7. #11413: Vertical CO2, XTO Energy tested June 2017 (5 days)

One Montana Bakken Injection Test:

1. Burning Tree State-36-2-H: CO2, Enerplus/Continental/XTO tested

January–February 2009 (45 days) Image Credit – EERC

XTO BAKKEN INJECTION TEST

• Vintage vertical well with no Bakken

oil production prior to injection.

• Injected 100 tons of CO2 into

unstimulated Middle Bakken

reservoir.

• Oil flowed following soak.

• Composition of the oil shifted.

• Suggests CO2 penetrated the matrix

and mobilized oil.

• Liberty Resources EOR pilot using rich gas (methane, ethane, and propane) in a cyclic multiwell huff ‘n puff (CMWHP) scheme.

• Evaluate CMWHP as means of conformance control.

• Determine ability of rich gas to mobilize oil in the Bakken and Three Forks.

• Determine the effects of rich gas EOR on the reservoir and surface infrastructure over time.

• Injection started in July 2018 (pretest).

• Field testing scheduled through summer 2019.

STOMPING HORSE

ROZ EVALUATION

Objective:

• Identify and evaluate potential ROZs in the Williston and

Powder River Basins.

Method:

• Basin evolution modeling to

characterize potential ROZs.

Results:

• Potential for ROZ fairways

interpreted.

ENORMOUS

OPPORTUNITY

86 conventional unitized fields:

• 280 million to 630 million bbl

of incremental oil

• 47 million to 283 million

metric tons of CO₂ needed

200+ conventional fields

• >1Bbbl of incremental oil

• >358 million tons of CO2

needed

Conventional +

Bakken Petroleum System:

– 4 Bbbl‒7.6 Bbbl of

incremental oil

– 2 Btons‒3.8 Btons of CO2

needed

…or more

Energy & Environmental

Research Center

University of North Dakota

15 North 23rd Street, Stop 9018

Grand Forks, ND 58202-9018

www.undeerc.org

701.777.5000 (phone)

701.777.5181 (fax)

John Hamling

Assistant Director for Integrated Projects

jhamling@undeerc.org

701.777.5472 (phone)

THANK YOU Critical Challenges. Practical Solutions.

This presentation was prepared as an account of work sponsored by an agency of the United States Government.

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express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any

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manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by

the United States Government or any agency thereof. The views and opinions of authors expressed herein do not

necessarily state or reflect those of the United States Government or any agency thereof.

LEGAL NOTICE: This work was prepared by the Energy & Environmental Research Center (EERC), an agency of the

University of North Dakota, as an account of work sponsored by the U.S. Department of Energy (DOE) National Energy

Technology Laboratory. Because of the research nature of the work performed, neither the EERC nor any of its

employees makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy,

completeness, or usefulness of any information, apparatus, product, or process disclosed or represents that its use

would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by

trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement or

recommendation by the EERC.