Occidental Petroleum CEO Vicki Hollub announced plans for the first post-FUTURE Act carbon capture project at the CO2NNECT 2018 conference in Jackson Hole on June 18th, just four months after enactment of the FUTURE Act in February 2018.
Occidental will collaborate with White Energy to study the economic feasibility of capturing carbon dioxide (CO2) at two of White Energy’s ethanol facilities in Texas and transporting it to the Permian Basin where Occidental would geologically store it through existing enhanced oil recovery (EOR) operations.
“The collaboration between Occidental and White Energy is a direct result of the passage of the FUTURE Act,” said Occidental Petroleum President and CEO Vicki Hollub.
“White Energy is committed to the development of clean, renewable fuels. This project would enable us to capture the CO2 produced at our plants and redeploy it in an environmentally responsible way,” added White Energy President and CEO Greg Thompson.
As part of the collaboration, Occidental Petroleum and White Energy will conduct a six-month long engineering study to examine the costs of building a carbon capture facility. If the two firms determine the project is economically feasible, operations could begin as soon as 2021.
Occidental estimates that CO2-EOR can increase oil recovery by 10 to 25 percent in the fields where it is employed, while providing permanent geologic storage of the CO2, as verified by monitoring and reporting, and achieving net emissions reductions after accounting for the additional oil produced.
According to Occidental, “The U.S. Environmental Protection Agency (EPA) approved Occidental’s two Monitoring, Reporting and Verification (MRV) plans for CO2 EOR fields in its Permian Basin operations. These plans, which were the first-ever approved by EPA, demonstrate that the captured CO2 is safely and permanently stored and establish a framework to quantify the amount of CO2 sequestered.”
Why This Matters
In just the first few months since enactment, the FUTURE Act has already spawned a new carbon capture project and engaged a new corporate partner in using carbon capture technology, demonstrating the positive impact of reform of Section 45Q.
The involvement of an ethanol producer in this first project is also a strong indicator of the potential for the FUTURE Act to promote expansion of carbon capture across multiple industries nationally.
Backgrounder on CO2-Enhanced Oil Recovery (EOR)
Enhanced oil recovery (EOR) is the process of injecting CO2 into already developed oil fields to yield additional oil production. EOR is generally used to produce additional oil that would not otherwise be recoverable from existing, mature fields that already bear the footprint of oil and gas production.
For EOR applications, CO2 can be captured from a power plant or industrial facility and compressed before it is transported via pipeline to an oilfield. CO2 injected into an existing oilfield makes it easier to extract oil and improves yields from existing wells, while accomplishing safe and permanent storage of the captured CO2 in the context of monitoring, verification and reporting.
EOR increases American oil production and reduces carbon emissions. Producing more domestic oil through EOR also further displaces more carbon-intensive imported heavier crudes and lowers our trade deficit by reducing expenditures on oil imports.
Since the first oil was produced commercially with CO2 in 1972, more than 130 additional EOR projects have been developed in 10 U.S. states. Current EOR projects produce approximately 400,000 barrels per day utilizing CO2, representing more than four percent of domestic production, delivered by nearly 5,000 miles of pipelines.
Twelve U.S. states in five geographic regions now house CO2 pipeline infrastructure, including the Permian Basin of Texas and New Mexico, the Northern Rockies and Plains, the Gulf Coast, the Southern Plains and northern Michigan.
Existing pipeline networks vary in size: The largest is in the Permian Basin – a 2,470-mile integrated pipeline network; and the smallest is in Michigan – a 14-mile pipeline transporting CO2 from a natural gas processing plant to local oilfields. Taken as a whole across the country, this system supplies more than 70 million tons of CO2 per year for EOR.
Over the life of an EOR project, for every 2.5 barrels of oil produced from a conventional oilfield, it is estimated that EOR can safely store on average one metric ton of CO2. ARI estimates a market potential to store 11 to 24 billion metric tons from EOR in conventional oil fields based on the estimates cited above for economically recoverable oil production.
EOR using power plant and industrial CO2 can result in a 63-percent net reduction in CO2 emissions for every barrel of oil produced.
According to the International Energy Agency, there is worldwide potential to store 140 billion tons of CO2 in oil reservoirs through CO2-EOR, which would result in a net emissions reduction by 88 billion tons of CO2. This is more than 40 times the current U.S. annual power sector emissions.