In the second of two articles on CO2 utilisation, we look at the prospects for enhanced oil recovery in Europe.
By Virginia Marsh
Enhanced oil recovery (EOR) has been a critical driver behind the deployment of carbon capture, utilisation and storage (CCUS) – the majority of existing CCUS/CCS projects around the world involve EOR, a process that can bring both economic and climate benefits. However, the uptake of EOR in Europe has been limited to date; the STRATEGY CCUS project has been working with regions, companies and other stakeholders to explore the opportunities it could bring.
Pioneered in Texas in the 1970s, EOR is a well-established technology, which involves injecting gas – usually CO2 – into existing oil fields to boost recovery rates. Among other effects, this increases the overall pressure within an oil reservoir, forcing the oil towards production wells. Some of the injected CO2 is retained while the CO2 that returns to the surface can be separated and reinjected for permanent storage. According to the IEA, around a fifth of total oil production comes from EOR. As such, it is by far the biggest external market for *CO2, accounting for almost 90% of demand, while the additional income it generates has made investment in CCUS economically viable. At present, EOR is the only form of large-scale, permanent carbon sequestration that is profitable.
Croatia a pioneer
Within Europe, Croatia, one of the eight regions covered by STRATEGY CCUS, has been a pioneer of EOR. Ina, its national oil company, began pilot CO2-EOR operations at two mature oil fields, Žutica and Ivanić, in 2003, moving to full-field injection in 2014/15, says Jerko Jelić-Balta, Ina’s Director of Field Development. To support this, the company has built new CO2 pipelines, injection wells and two CO2 compressor stations – the gas must be compressed, dried and cooled, before being transported and injected into the formation.
The results have been good: in the first five years of full operations approximately 1billion m3 of CO2 was injected in the two fields – all of the CO2 produced by Ina’s Molve natural gas processing plant.
Among CO2-EOR’s advantages is existing knowledge of the reservoirs. As well as production history, their long-term storage capacity is proven, having held hydrocarbons for tens of thousands of years. Saline aquifers – the porous, brine-filled rocks underground that are the main alternative – have often not yet been explored in detail. At the same time, oil and gas companies have geoenergy experience and skills transferable to running CCUS/CCS operations.
Legal changes needed
In terms of barriers and risks for CCUS projects, Jerko at Ina says CO2 availability remains an issue and that tax and regulatory changes are also needed to encourage CO2 storage through EOR. Petrokemija, the Croatian fertiliser producer, is interested in developing CCUS and has held talks with Ina in the past about becoming a potential supplier. Petrokemija’s Ivica Losso agrees that legal changes are needed.
“One of the main barriers for implementing CCUS projects in Europe is the lack of a legal framework and the EU’s Emissions Trading Scheme,” he says.
At present, the CO2 retained via EOR is not included in the ETS, meaning companies get no credit for the avoided CO2 emissions. This is in contrast to the US where CO2-EOR is eligible for the 45Q federal tax credit, which offers $35 per tonne of CO2 sequestered by EOR.
“It is clear that including CO2-EOR in EU ETS for CCUS would make a big difference in terms of CO2 storage,” says Maja Arnaut, a STRATEGY CCUS researcher at the University of Zagreb and lead author of a recent paper on EOR. Exclusion from the ETS means the cost of EOR has to be covered by the additional oil production, ruling out some more marginal operations. In Croatia, for example, while Ina is likely to proceed with a third EOR operation, EOR may not be economically viable at other smaller fields – unless changes to the ETS are made.
“We hope that, in future, in Europe also that if you permanently store CO2 that can be accounted for as avoided CO2,” she says.
Promise in Romania
CO2-EOR is also under consideration in Romania, where STRATEGY CCUS is working in the Galaţi region, home to both large emissions sources and promising potential storage sites.
“The onshore storage possibilities involve depleted or almost depleted hydrocarbon fields for which CO2-EOR could be implemented,” says Alexandra Dudu, head of CO2 geological storage at GeoEcoMar, a Romanian national research institute and STRATEGY CCUS partner. “The offshore storage and utilisation options include almost depleted oil fields, also suitable for EOR, as well as deep saline aquifers.”
Feedback from stakeholders participating in STRATEGY CCUS outreach meetings has been positive, she says. “The emitters seem to be very interested in implementing CCS due to the increasing price of EU emissions allowances and the need to become carbon neutral. At the same time, the oil operators are interested in becoming CO2 storage operators and might consider deploying CO2-EOR.”
In fact, one of the scenarios modelled for Galati region by STRATEGY CCUS includes CO2-EOR as an opportunity to accelerate CCUS implementation. Transportation links in the region are good and the distances between emitters and onshore sinks are small. The offshore part can be accessed through river transport, taking advantage of the Danube, which runs through the region. This is an opportunity, since the existence of good transportation links represents another important factor in designing successful CCS/CCUS projects. In some parts of Europe, distance between emitters of CO2 and potential users and gaps in transport infrastructure are obstacles.
“Although EOR or sequestering is not at the higher end in terms of costs, what is limiting its positioning as a feasible solution for industrial CO2 is the lack of infrastructure to do so, particularly in Portugal and Southern Europe,” says José Carlos Lopes of the University of Porto and chief technology officer at CoLAB Net4CO2, a tech start-up developing new processes to support CO2 use.
“This clearly calls for national and international concerted action to speed up EOR’s development either in terms of pipelines or shipping routes. This ends up being a much stronger barrier than public acceptance.”
* Urea is the single biggest market for CO usage but is an example of internally sourced CO – it is generated in ammonia production and used to manufacture urea on-site.
Technical and environmental viability of a European CO2-EOR system
IEA analysis: Whatever happened to enhanced oil recovery?
Graphic courtesy of the Global CCS Institute