CCS (and CO2 EOR) in the Permian Basin – An Overview of the

Science and Training Program

August 18, 2010

Steve Melzer

Dwight Rychel

Carbon Capture & Storage Technology

Permian CCS Center

Three World Class Organizations

Petroleum Technology Transfer CouncilTech Transfer, Workshops, Newsletter, Tech Alerts

www.pttc.org

American Association of Petroleum Geologists

37,000 Members, Publications and ConferencesDistance Learning www.aapg.org

Applied Petroleum Technology AcademyCO2 Course, CO2 Conference www.aptapb.org

A Brief Introduction of the Presenters

• L. Stephen Melzer – APTA &

• Dwight Rychel – Petroleum Tech Transfer Council

• Other Instructors* (Dr. Trentham, Univ Tx Permian Basin &

Mr. Robert D. Kiker, APTA)

* Other Instructors will be present for day-long Course

Carbon Capture And Storage

Today’s Webinar Topics

1. Course and Industry Overview – SM, BT

2. CO2 Supply and Demand, Marketplace, Sources - SM

3. CO2 EOR Industry and the CCS Technology Baseline - SM

4. Synergies of Carbon Management and CO2 EOR - DR

5. CO2 Capture Technologies – DR

6. MVA – Measurement, Verification and Accounting – DR

7. CO2 Transportation - SM/BK

8. Reservoir Characterization – SM/BT

9. Overview: The Business of CO2 - SM

Course and Industry Overview

Steve Melzer

The Foundation – CO2 EOR

• CO2 Sourcing (Capture, Processing, Compression)

• CO2 Transportation (Pipelines)

• CO2 Injection

• Reservoir Engineering

These are all technologies from EOR - So what is missing for conduct of Carbon Capture and Storage (CCS)?

Glossary of Key Terms

• Anthropogenic CO2

• Pre-Combustion Capture

• Post Combustion Capture

• Oxy-Fuel or Oxy-Firing

• MVA (Monitoring, Verification and Accounting)

• Permanence

Quick Conversion Aids

• 17.5 mcf ~ 1 ton of CO2 (or 19.25 mcf/metric ton)

• 50 mmcfpd ~ 1 million tons of CO2 per year

• 2 mcf CO2 ~ 1 bbl in the reservoir

• For a CO2 utilization factor of 8.75 mcf/bbl of oil, 1 ton of stored CO2 gives up 2 bbls of oil produced

• 450 mmcfpd from a 1 gigawatt coal fired plant*

* Melzer number; you’ll see a range of values quoted elsewhere

(dependent on coal type, plant type, and % capture)

The CO2 Infrastructure

The U.S. Industry Players

• On the Sourcing Side Natural AnthropogenicExisting Operators Oxy, KM, Exxon Exxon, Dakota

Denbury Gasification, SandRidge

Future Operators Summit, Tenaska

NRG, AEP

Hydrogen Energy, et al

• On the Pipeline Side Oxy, KM, Exxon, Denbury, Dakota Gas,

SandRidge, Core, Chaparral, Encore

• On the Injection Side CO2 EOR Companies (23 listed in Other Slides)

CO2 Supply and Demand, Marketplace, Sources

Steve Melzer

North American N-CO2 and A-CO2Ref: Semi-annual CO2 School (www.aptapb.org)

Large CO2 Suppliers At Maximum Capacity

• McElmo Dome/Doe Canyon Source Fields 1.2-1.3 bcfpd Limited by Cortez Line Capacity

• Sheep Mountain on Decline (~2-3 years life left) 35 mmcfpd

• Bravo Stable but Expansion is a Challenge 225 mmcfpd

• West Bravo Dome 110 mmcfpd

• South Permian by-product CO2 (is Currently 80 mmcfpd

Processing/Compression Limited but about to change)

• Total Permian 1.65-1.75 bcfpd

• Shute Creek Wyoming 230 mmcfpd

• Denbury Resources Mississippi 800 mmcfpd

• Dakota Gasification 150 mmcfpd

• Total non-Permian 1.18 bcfpd

Total avg. 4th Q 2009 CO2 Sales: 2.9 bcfpd(enough to accommodate 6.5 GW coal power plants)

Yearly Ave

A Quick Look at the PB CO2 Supply and Demand

• Estimated Shortfall of CO2 in the Marketplace today = 350 mmcfpd or about 20% undersupplied

• But the real shortfall is very likely considerably higher than that (projects begin planning when CO2 is shown to be available & at an affordable price)

Where the Supply Relief Will Come From(all A-CO2)

• Phase I Century Plant (late 2010): Natural Gas by-product

• Phase II Century Plant (~ 2012)

• Summit Energy’s Tx Clean Energy Coal Plant in Ector County – 2015-6

• Tenaska Trailblazer Plant in Nolan County –2015-6

Total could be as much as 850 mmcfpd

CO2 EOR Industry and the CCS Technology Baseline

Steve Melzer

CO2 EOR

Primary, Secondary & Tertiary

Ref: Hess’ CO2 Conf Presentation – 12/2001

A New Concept Being Pioneered in the Permian

The 250 Million Barrel Metrics

• The Seminole CO2 ROZ Project Should Yield 250 mmbo

• 250 million barrels of oil yields:– $17 billion in total oil revenue (@ $70/bbl oil)

– 3,000 direct jobs over 30 years

– State and Local Taxes which will easily total $1 billion

– Opportunity for storage of 2 tcf (125 million tons or the equivalent of 24 years of the CO2 emission stream of 500 megawatt power plant)

– This can be done with 25 sections of 200’ net ROZ

• If EOR Opportunity is there, Storage During EOR is easily the first choice (…and justifies a long pipeline*)

* More to be said about this later

Synergies of Carbon Management and CO2 EOR

Dwight Rychel

CO2 EOR as Storage

Synergies of Carbon Management and CO2 EOR (1)

• The source CO2, whether natural or anthropogenic is delivered to the injection site via pipeline

• CO2 is injected into the geological formation

• CO2 is monitored with pressure readings, tracers and production and injection tests

• CO2 is recycled, but ultimately all is retained except for the small recycle losses at the surface

• More storage capacity is available than in pure injection due to the withdrawal of oil and water

CO2 EOR is the Bridge to Commercialization of CCS

Synergies of Carbon Management and CO2 EOR (2)

• Existing Pipeline Infrastructure and Transportation Expertise

• Existing Market and Revenue

• Established Regulatory Framework

• DOE Funding Support

• Need: MVA Program Development to Assure Permanence

Comparing EOR to Pure Storage

Synergies of Carbon Management and CO2 EOR (3)

Storage Only EOR .

∙ CO2 Injection ∙ CO2 Injection + oil, water and CO2

Production + CO2 Recycle

∙ Large Footprint (Pressure ∙ Smaller Footprint (Pressure Control)

Plume)

∙ Inferred trapping ∙ Demonstrated Trapping

∙ Few Wells ∙ Many Wells

∙ Sparse Information ∙ Dense Information

∙ Low well failure risk ∙ Higher well failure risk

Comparing EOR to Pure Storage – Cont’d

Synergies of Carbon Management and CO2 EOR (4)

Storage Only EOR

∙ All Cost ∙ Comparable Cost plus Revenue

∙ Slowly Evolving Framework ∙ Historic Frameworks for

for permitting and pore permitting and pore space access

space access (“tweaks” on-going in Tx)

∙ High Risk: Public Acceptance ∙ Demonstrated Public Acceptance

Value that EOR Brings to CCS Projects

Synergies of Carbon Management and CO2 EOR (5)

• Offset some of the cost of capture

• Significant Volumes – rate and overall

• Infrastructure Development

• Mature and allows focus to develop needed technologies, especially MVA and Capture

• Established Public Acceptance

Need to Reconcile Regulatory Frameworks

Synergies of Carbon Management and CO2 EOR (6)

• EOR is permitted as Class II UIC

• Geologic Storage is permitted as Class I, II, V

– Class VI is proposed

• Class II wells are cased and cemented to below USDW

• Class VI wells are cased and cemented to below USDW plus long string casing and injection tubing, annulus testing and downhole shutoff valves

CO2 Capture Technologies

Dwight Rychel

CO2 Capture Technologies

Pre-Combustion

IGCC – FutureGen

Oxy-Combustion

Pure Oxygen vs. Air in Boiler

Post Combustion

Adsorption

Solvent

Integrated Environmental Control Model – www.iecm-online.com

Discuss and Evaluate all CO2 Capture Processes

Pre-Combustion

CO2 Capture Technologies (1)

• Integrated Gasification Combined Cycle (IGCC)– Polygeneration of a variety of products

– 354 gasifiers at 113 facilities

– Generally new construction vs. retrofit

• Use solid fuels (petroleum residuals, petroleum coke, refinery wastes, coal) to produce a synthesis gas containing H2 and CO with CO2 and Sulfur byproducts

• Moving bed reactors, Fluidized bed gasifier, Entrained flow reactor

• Other: Pressure Swing Adsorption– Dry Solvent

– Various Membranes

Oxy Combustion

CO2 Capture Technologies (2)

• First proposed for CO2 removal in 1981 by researchers at Argonne National Laboratory

• Uses pure oxygen for combustion – produces flue gas consisting mainly of CO2 and water vapor

• Over 15 plants worldwide using substantially different designs, both new and retrofit

• Advantages: Uses conventional boiler technology, nitrogen free combustion, lower emissions

• Disadvantages: Boiler design difficult to optimize, large scale (expensive) oxygen production required (very expensive)

Post Combustion Capture

CO2 Capture Technologies (3)

• Adsorption– Physical – Zeolites, Carbon

– Chemical

• Solvents– Chilled – ammonia, many others

– Not Chilled – amine

• Enzyme based capture – CO2 Solutions claims enzyme based technology reduces size of CO2 adsorber columns by 90% vs MDEA (low energy solvent)

• Other – Membranes, Ionic Liquids

• Very energy intensive, up to 35% parasitic load – large footprint

Proprietary Processes

CO2 Capture Technologies (4)

• Ammonia/Chilled ammonia processes

– Powerspan

– Alstom

• Amine based processes

– MEA, DEA, DGA, MDEA

– Aker Kvaerner

– Cansolv

– Fluor

– Mitsubishi Heavy Industries

Monitoring, Verification and Accounting

Dwight Rychel

(MVA)

Monitoring, Verification and Accounting (1)

• CO2 EOR currently has no MVA requirements, federal or state – Reservoir Surveillance Occurs w/o Regulator Involvement

• Texas proposing revision to Class II UIC regulations in the fall of 2010

• DOE has published best practices manual

• Ultimately, most believe CO2 EOR should be allowed to opt-in to qualify as GS

MVA Objectives for Sequestration

Monitoring, Verification and Accounting (2)

• Monitoring CO2 plume migration, geomechanical activity, integrity of cap rock, etc

• Verification that CO2 remains stored – 99% for 1,000 years

• Accounting for volume injected, losses for credits

• Drivers are regulatory and avoidance of adverse legal and financial impacts

Shallow Monitoring

Monitoring, Verification and Accounting (3)

• CO2 Soil Flux Measurements

– CO2 emitted from soil surface

• CO2 Phase Tracers

– Injected with CO2

– Monitored and collected in areas of potential pathways

• Groundwater Samples

• Above Ground Measurements

Deep Monitoring (Time Lapse)

Monitoring, Verification and Accounting (4)

Surface Seismic (4 – D)

Vertical Seismic Profiling (VSP)

Gravity Wireline

Crosswell Tomography

Logging

Core+ Increasing resolution

– Decreasing area of investigation

CO2 Transportation

Steve Melzer

CO2 Pipelines (List of Major Lines)

CO2 Pipelines (List of Major Lines)

Reservoir Characterization

Steve Melzer

Reservoir Characterization (1)

• The Reservoir Characteristics that are important to EOR are also important for storage:

• A Good Tool for a Deeper Understanding of Flooding (The KinderMorgan Spreadsheet Model)

STORAGE EOR

Permeability Injectivity Injectivity, ROR

Porosity Storage capacity Oil in place

Thickness Storage capacity Oil in place

Compartmentalization Storage capacity Sweep efficiency, recovery

Reservoir Characterization (2)

The Kinder Morgan Spreadsheet Scoping Model

Freeware at http://www.kne.com/business/co2/tech.cfm

Oil Response To CO2 Injection

Reservoir Characterization (3)

Basis for the KM

Scoping Model

(San Andres)

Overview: The Business of CO2

Steve Melzer

The Business of CO2

• LEGAL ISSUES

– STORAGE RIGHTS AND MINERAL RIGHTS

• POLICY ISSUES

– STATE AND FEDERAL ACTIONS/PROGRESS

• ENVIRONMENTAL ISSUES

– PERMANENCE, STEWARDSHIP & LONG-TERM LIABILITY

• MAKING MONEY (who and how?)

Introducing the Full One-Day Course

on Carbon Capture and Storage in the Permian Basin

An Overview of the Science and Training Program

CCS (and CO2 Flooding) in the Permian Basin

• An all day workshop to learn the technical, financial and legal issues relating to extraction, transportation, injection and monitoring of CO2 and the similarities and differences between CO2 EOR and geological storage.

– Midland, Texas, September 9th

– Houston, Texas, September 10th

• See “Calendar of Events” at the Permian Basin CCS Training Center Website, www.permianbasinccs.org

Time for Some Questions

Permian CCS Center

CCS (and CO2 EOR) in the Permian Basin – An Overview of the

Science and Training Program

Steve Melzer

Dwight Rychel

Carbon Capture & Storage Technology

Additional Reference Materials

The ‘Significant’ CO2 Companies

+

+ Includes non-operating owners

10

23

“Quaternary” Oil

Note: This Quaternary Peak Assumes full field deployment and a 200’ net

thickness ROZ at 32% residual oil saturation

CO2 EOR* Rules Of Thumb

Reservoir Characterization

• PERCENT OF OOIP (ORIG OIL IN PLACE)– 8 TO 18 (12)

• RATIO – TERTIARY REC / (PRIM + SEC REC)– 20 TO 35 (25)

• VOLUMETRIC SWEEP EFFICIENCY (E)– 25 TO 50 (35)

• RATIO – Et / E(P+S)– 50 TO 60 (50)

CO2 SWEPT VOL ~ 1/2 -3/5ths

WATERFLOODED VOL

CO2 CONTACTS ~ 1/4TH -1/2

OF RESERVOIR VOL

* Miscible Flooding