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www.senergyltd.com/carbon
Revised Economic Assessment of CO2 EOR in Mature UK North Sea Fields
David S Hughes (david.hughes@senergyworld.com)
Carbon Storage SpecialistSenergy Alternative Energy
Background
UK Government committed to decarbonising UK electricity supply as part of its CO2 emissions reduction strategy (by at least 34% by 2020 and 80% by 2050 – from 1990 base)Carbon capture and storage at coal fired power stations is beginning in the UK with a 2 million tonne per year trial (from 2014)Longer term (2030s) once CCS becomes proven technology the amount of CO2 captured will likely exceed 100 million tonnes per yearFor the storage part of the CCS chain offshore depleted oil and gas fields are being considered as well as saline aquifersWith oil fields there is the opportunity to use the CO2 for enhanced oil recovery (EOR)
BGS February 2005
Geographic Information System for CO2 Sources and Sinks (GESTCO)
Issues Around Using CO2 for EOR in North Sea
Using CO2 for enhanced oil recovery (EOR) in UK North Sea oil fields is often held up as an opportunity to kick start the UK carbon storage industryTrue that supercritical CO2 is a good solvent and at the pressures and temperatures found in North Sea reservoirs can flush remaining oil from rocksBut no offshore applications of CO2 EOREven onshore only amounts to one third of one percent of worldwide oil production although now expanding rapidly
Also often mentioned that CO2 can be stored in our old oil fieldsBut nearly all have been developed by water injection with an approximate balance between amount of water injected and the amount of oil and water producedSo not opportunity for storage-only in oil fieldsBut gas fields developed by pressure depletion are the leading hydrocarbon field candidates for early storage projectsBut most perceived capacity is in saline water bearing formations (aquifers)
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Size of CO2 EOR Prize
Offshore UK oil in place 40-42 billion barrels, recovery to date 24 billion barrels from 220 fields
16 billion barrels from top 30 fields
DECC estimates of UK offshore CO2 EOR potentialup to 1 billion barrels incremental oil
up to 0.5 billion tonnes of CO2 stored
CO2 EOR Onshore vs. Offshore
Onshore AdvantagesCO2 supply networkHigh well density, pattern flood, relatively cheap to redrill/refurbishRelatively low secondary oil recovery (35-45%)Phased implementationLarge surface area available for facilities
Offshore ChallengesLimited CO2 supply at present but significant quantities likely to become available on 10-20 year timescaleFewer wells, peripheral flood, expensive new wells and workoversHigh secondary oil recovery (50-70%) therefore smaller targetSingle implementation (i.e. no chance to introduce the project in phases)Existing facilities mainly incompatible with high CO2 content in fluidsLimited weight and space for new facilities
Additional ~20 years from existing facilities
CO2 reception facilities and controls
Flow lines to injectors (CO2 and water) and control valves
Gas/liquid separation facilities capable of handling high content CO2 in produced fluids
Separation of CO2 and hydrocarbon gas (or just separate enough for fuel gas)
Dehydration and compression of produced gas for reinjection
Start-up CO2 pumps
Production well tubing needs replacing with stainless steel (to deal with produced CO2)
Baseline measurements for subsequent monitoring
Offshore CO2 EOR Implementation (Capex)
Attic oilOil trapped under shalesOnly partially
swept by water
Waterflood residual oil
Targets for CO2 Injection (SPE 78298)
Earlier screening study suggested Claymore is leading candidate for single field evaluationAround 1450 MMstb initially in place, around 46% recoverable from peripheral waterflooding (initial pressure and temperature ~3800 psi and 170°F)Scott and Buzzard were identified from screening as other possible candidates and together with Claymore comprise the clusterScott has around 950 MMstb initially in place, around 47% recoverable but is deeper and hotter than any CO2 project to dateBuzzard has around 1100 MMstb initially in place, around 50% recoverable but not clear that the CO2 would be miscible
Single Field and Cluster CO2 EOR Evaluations
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DECC website Exponential decline P70 CO2 P30 CO2
Claymore CO2 EOR Evaluation
CO2 miscible with reservoir oil at current operating pressure
Incremental oil recovery profiles constructed for 70% probability (1/7th remaining oil) and 30% probability (1/5th remaining oil)
Incremental oil 119 million barrels (8% of oil initially in place) for P70 and 163 million barrels (11% of oil initially in place) for P30
CO2 delivered 49 million tonnes
CO2 recycled 152 million tonnes
Begin 2017 end 20430
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Imported CO2 (million te/y) Recycle CO2 (million te/y)
Oil Recovery Rate
CO2 Injection Rate
Claymore CO2 EOR Economic Evaluation
Capital costs £1.1- 1.2 billion (new auxiliary CO2 platform, adaptation of existing platform, well upgrades, baseline monitoring)
Operating costs £90 million per annum (include requirements of measurement, monitoring and verification programme)
Price assumptionsOil £50 ($70) per barrel
CO2 neither cost nor subsidy
Discounted cash flow gives internal rate of return 12-16% (before tax)
Unrisked
Oil and CO2 prices subject to market forcesProject economics can be improved by reducing capital costs and risks associated with converting facilities and wells
$50-120 per barrel
€ -50 (cost) to €100 (subsidy) per tonne
±20%
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Sensitivity analysis (P30 case)
7% 9% 11% 13% 15% 17% 19% 21% 23%
Opex
Capex
CO2 Price/Subsidy
Oil Price
IRR (%)
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Cluster P70 Cluster P30
CO2 is miscible with reservoir oil at current operating pressure in Scott; more problematic in Buzzard
Incremental oil 237 million barrels for P70 and 331 million barrels for P30
Spread over 2018-2043
CO2 delivered 155 million tonnes at around 11 million tonnes per year for 13½ years from 2017
CO2 injection starts in Claymore and Scott in 2017 and in Buzzard in 2024
Oil Recovery Rate
Delivered CO2 Requirement
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Cluster CO2 Requirement
11 million tonnes/year
Cluster CO2 EOR Evaluation
Capital costs for converting facilities at Scott estimated at £1.2 billion and at Buzzard £700 million (total including Claymore £3.1 billion)Operating costs estimated at Scott £45 million per annum and at Buzzard £55 million per annum
Price assumptionsOil £50 ($70) per barrelCO2 neither cost nor subsidy
Discounted cash flow calculations give internal rate of return 13-18% (before tax)Unrisked
Oil price $50 to 200IRR 7% - 33% P70IRR 12% - 40% P30
CO2 cost/subsidy €-50 (cost) to €100 (subsidy) per tonne
IRR <0% – 38% P70IRR 6% – 41% P30
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IRR Sensitivities
Cluster CO2 EOR Economic Evaluation
Contrary to many expectations most North Sea oil fields cannot be used solely for CO2 storage because produced fluids have been replaced by waterThe redevelopment of a mature North Sea field for CO2 EOR is a major undertaking equivalent in complexity, scale and cost to the original developmentEach project will need to be the subject of detailed engineering design and economic appraisal including a full assessment of the risksUnrisked CO2 EOR may be viable in the North Sea fields at an oil price of $70 per barrel or aboveTaking risks into account, it is unlikely that CO2 EOR will viable in North Sea fields at an oil price less than $100 per barrelIf a subsidy is available for the CO2 stored then the project could be economic at an oil price significantly lower than $100 per barrelCO2 EOR has never been applied offshore so early projects will carry significant additional technical and financial risksDevelopment of a CCS infrastructure in the UK could lead to the application of CO2 EOR in some fields
Conclusions from Single Field and Cluster EOR Evaluations
EOR vs. Storage
Around 85% of oil is carbon, around 75-80% of gas is carbon
If burned, a barrel of oil (30°API) would release around 0.4 tonnes CO2 and the associated gas 0.02 to 0.1 tonnes
Net CO2 injected to produce an incremental barrel of oil ranges from 0.25 to 0.8 tonnes (the lower value corresponds to when WAG is used, higher value for continuous CO2 injection)
BUT net CO2 stored is less
Energy is consumed separating CO2 from produced gas, and dehydrating and compressing it for reinjection
This energy has associated CO2 emissions which need to be accounted for
Little Creek, MississippiDimensionless oil recovery
Incr
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CO2 injected in hydrocarbon pore volumes
Figure from Denbury Resources Inc presentation, 12th Annual CO2 Flooding Conf, Midland, Tx, Dec 2006
So what does the future hold in UKCS?
Supply of CO2 will develop from CCSInitial offshore projects will be storage only, but proximity and availability of CO2 likely to provide niche opportunities for EOR initially possibly in the smaller fieldsIf successful, redevelopment of larger mature (and abandoned?) fields may occurNew specialist CO2 operators may emergeOnce EOR phase complete some extra opportunity to store additional CO2 in ‘pressure space’ between operating pressure and original pressureAdjustment of tax regime may be needed to make offshore EOR economicRegulation around CO2 storage will be significant burden (CO2 is being both injected and produced)
In 1977 Prof. George Stewart of Heriot-Watt University was the first person to consider the use of EOR in UKCS fields. His study was funded by the then Department of Energy (now DECC)The conclusion of his report states: “Carbon dioxide miscible flooding is concluded to be the potentially most promising EOR technique for offshore application. The provision of the very large amounts of CO2 necessary for substantial enhanced recovery is technically feasible; in the long term the combustion of coal to provide electrical energy, low-grade heat and pure carbon dioxide for EOR may be the most attractive approach to an integrated energy and hydrocarbon resource policy.”
Nothing’s New!
Acknowledgements
The single field and cluster economic evaluations presented were undertaken by Senergy Alternative Energy as part of the “Opportunities for CO2 Storage around Scotland an integrated strategic research study” coordinated by the Scottish Centre for Carbon Storage (www.erp.ac.uk/sccs) and funded by both the Scottish Government and industryA summary of this study can be downloaded at http://www.scotland.gov.uk/Publications/2009/04/28114540/0Permission to present this material is gratefully acknowledgedDepartment of Energy and Climate Change (DECC) who have sponsored my visit here
Senergy CO2 Storage Training Course
One day training course
Introduction to the Geological Storage of Carbon Dioxide (CO2)Tuesday 29th September 2009
Mantra on Little Bourke, MelbourneCourse outline and registration at: www.senergyworld.com/training
Previously presented in Perth, Canada, USA and on seven occasions in UK
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