Carbon Dioxide EOR Update and Developments The Concept of Residual Oil Zones and

Opportunities for Flood Target Expansions

Global CCS Institute Regional Meeting

Austin, TexasDoubleTree Hotel

November 8, 2011

L. Stephen MelzerTexas Carbon Capture & Storage Association

&

TWO PATHWAYS TO CCS

• DRIVER: A TOP-DOWN GOV’T IMPERATIVE

– CLIMATE CHANGE LEGISLATION

– COST OF CARBON• Emission Trading• Carbon Tax

• DEEP SALINE FORMATIONS– LARGE VOLUME SINKS– WIDESPREAD GEOGRAPHICAL

OPPORTUNITY– ‘WASTE’ INJECTION

• DEVELOP REGULATORY FRAMEWORK

• DRIVER: SELECTIVE (MARKET) INCENTIVES

- UTILIZE A LARGE MARKET TO DEMAND-DRIVE CAPTURE

- RECOGNIZE AND EXPAND THE LARGE CO2 EOR MARKET

• DEVELOP STANDARDS FOR COMMODIZATION AND TRANSPORTATION OF CO2

• AUGMENT EXISTING REGULATORY FRAMEWORKS

• PUT THE ENTREPRENEURS TO WORK

A Heart-felt Tribute to

4

Carbon Dioxide EOR Update and Developments The Concept of Residual Oil Zones and Opportunities

for Flood Target Expansions

• Where CO2 EOR has Been• Where it is Now?• Where is it Going?

– Some Organizational Forecasts– The “New” - Expansion of Targets from

Traditional Ones– Convergence with Carbon Capture and

Storage?

5

Before we Jump off into EOR, Let’s Give Some Credit to:

• The Oil Majors and their Developmental Work on CO2 EOR• King Hubbert – circa 1950’s• The UTPB CO2 ‘ROZ Team’ in Midland/Odessa• The Research Partnership to Secure Energy for America (RPSEA)• The U.S. DOE, National Energy Technology Laboratory and Advanced

Resources, International

As you Shall See; Much Work Remains to be Done so….

Future ‘Thanks’ Likely to Go to:

• RPSEA • USDOE and NETL• International Research• Cooperating Industry Partners……

I probably need to apologize up front as Some of this is going to need to be a bit “Geeky” here

Carbon Dioxide EOR Update and Developments

The Concept of Residual Oil Zones and Opportunities for Flood Target Expansions

7CONVENTIONAL CO2 EOR RESERVOIR EXPLOITATION

A Real Life Example8

PRIMARY PHASE SECONDARY TERTIARY

Background – US EOR History*

Thermal Declining

CO2 Inclining

* National Petroleum Council Study On-shore Oil Topic Paper – Sep ‘11

GRAPHICAL HISTORY OF PERMIAN BASIN CO2 EOR

11

Growth of CO2 EOR: U.S. & Worldwide*

WW & U.S. CO2 EOR PRODUCTION1986 - 2010

0

50

100

150

200

250

300

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

YEAR

CO

2 EO

R P

RO

DU

CTI

ON

- kb

opd

ALL OF U.S. Worldwide

* Ref: O&GJ Biennial EOR Editions & UTPB Petr Industry Alliance

Where We Are Today

13

Permian Basin

Wyoming/ N. Rockies

Denbury Gulf Coast

14

Current Status (U.S. CO2 EOR)*

• Active Projects 106• Acres Under Flood 450,000• Number of Producing Wells 9,980• Number of Injection Wells 6,850• Total Production 340,000• EOR Production 262,000

* Ref: O&GJ Biennial EOR Edition & UTPB PIA Industry Alliance – Mar ‘10

5.6% U.S. Production

Where CO2 EOR is Going

16

The BaselinePerm Basin & U.S. CO2 EOR History

0

50

100

150

200

250

30019

72

1976

1980

1984

1988

1992

1996

2000

2004

2008

2012

Year

Ann

ual C

O2

EOR

Oil

in k

bopd

PB CO2 EOR OIL (KBOPD)

U.S. CO2 EOR OIL (KBOPD)

Supply Limited ‘Decline’

17Nat’l Resource Defense Council’s Look at EOR Growth

• An Aggressive Capture Plan, Time frame of 2010 – 2030, Uses a 5-year ramp up of Oil Production from Available CO2 Volumes, Termination of CO2 Volumes is a function of Time Frame of Study

Figure B: CO2 Captured EOR Vols and CO2 EOR Production (thru 2055)

0

100

200

300

400

500

600

2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

Year

Assu

med

CO

2 Ca

ptur

e V

olum

es(m

mto

nnes

per

yea

r)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

CO2

Capt

ure

Vols

in b

cfpd

and

Oil

Pro

duct

ion

in m

mbo

pd

CCS Power CO2

CCS Power CO2 {Rt Scale}

5-yr Ramp up Method: Oil Rec -(Rt Scale)

Aggressive Capture Case

Ref: http://www.adv-res.com/pdf/v4ARI%20CCS-CO2-EOR%20whitepaper%20FINAL%204-2-10.pdf

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Energy Information Agency (2011)C

O2

EO

R P

rodu

ctio

n in

mm

bopd Adding ‘Pure’ Industrial Sources

These Projection Do Not Include Sourcing of CO2 from Select, Dilute (Power Plant) Industrial Sources

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RESIDUAL OIL ZONES (ROZs) A GAME CHANGER?

WHERE ARE THEY AND HOW FORMED? Origins of Residual Oil Zones and Identification Methodology

• ROZ Origins

• The Fascinating ROZ Science – State of the Knowledge

• ROZ Types – Examples

• Benchmarking the Engineering (Commerciality)

• Brownfields and Greenfields

• A Wyoming Example

• We’ve Only Just Begun – So Much Work Yet to be Done

Historically, the Industry (and Policy Makers) has Looked at EOR Targets Like we Looked at Waterflood Targets

(i.e., Main Pay Zones only)

The Industry is (very quietly) Re-examining (challenging) that Perspective

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Original Oil Accumulation Under Static Aquifer Conditions (A Hypothetical Example)

W E

22

Original Accumulation Subject to a Westward Regional Tilt

W E

TYPE 1 ROZ

W E

23

Original Accumulation with a Breached then Reformed Seal

ORIGINAL POST BREACH

TYPE 2 ROZ

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Change in Hydrodynamic Conditions, Sweep of the Lower Oil Column, Oil/Water Contact Tilt, and Development Of The Residual Oil Zone

TYPE 3 ROZ

W E

25

A Curious and Very Quiet Exploitation ‘Thing’ Has Moved Forward in the Permian Basin

MIDDLE SAN ANDRES PALEOGEOGRAPHY with Location of Active Industry ROZ Zones/CO2 EOR Projects*

Hobbs

VACUUMFIELD

GuadalupeMountains

MidlandBasin

DelawareBasin

CentralBasin

Platform

Shelf Margin “reef”

TexasNew Mexico Midland

San Angelo

Restricted Carbonate Shelf

OpenMarine

MarathonOverthrust Belt

NORTHWESTSHELF

NORTHERNSHELF

EASTERNSHELF

WASSON FIELD (DENVER & BENNETT RANCH UNITS

SEMINOLE FIELD

* Adapted from Sagnak (2006), Chevron Presentation at the 12/06 CO2 Flooding Conference

GOLDSMITH FIELD

HANFORD FIELD

There are 9 total ROZ projects now

with two more scheduled for

start by early ‘12

EXTENDING THE EOR BELOW THE OIL/WATER CONTACT

Gross Net Permeability InitialThickness Thickness Porosity Range OOIP Oil Saturation

Main Pay Zone (MPZ): 160’ 126’ 12% 0.8-120 md 1 billion stbo 0.84Residual Oil Zone (ROZ): 246’ 197’ 12.6% 0.5-270 md 960 million stbo 0.32

Reference Slides are from the 2001 and 2008 CO2 Flooding Conferences

Gas Cap

Residual Oil Zone

Main Pay Zone

Remember this Slide?

PRIMARY PHASE SECONDARY TERTIARY

A NEW FOURTH PHASE? ‘QUATERNARY’ OIL*Total, Primary, Waterflood, Main Pay and ROZ CO2 Performance

(the Concept of "Brownfield" Quaternary Oil)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0 10 20 30 40 50 60 70 80 90 100

Year

Ann

ualiz

ed O

il Pr

oduc

tion

in b

opd

TOTAL OIL - bopdProj Primary-bopdProj Waterflood-bopdMain Pay EOR BaselineQuat 2.0 Oil - bopd

Primary Production

Peak

Tertiary CO2

Production Peak

Secondary Production

Peak

Quaternary CO2 ROZ Production Peak

Primary Cum = 125 mm bbls

Secondary Cum = 325 mm bbls

Tertiary Cum = 200 mm bbls

Projected Quaternary Cum = 200 mm bbls

* REQUIRES AMPLE, AFFORDABLE CO2

THUS, THE TARGETS FOR CO2 EOR HAVE BROKEN FREE FROM JUST THE MAIN PAY ZONES

A Very Important Sidebar

‘Brownfields’ and ‘Greenfields’

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LET’S INTRODUCE SOME TERMINOLOGY

IT’S TIME TO TALK ABOUT SWEEP IN TERMS OF

BROWNFIELDS* AND GREENFIELDS

TYPE 3 ROZ

Greenfield = Effectively no Main Pay Zone

* Residual Oil Zone Beneath a Main Pay Zone

WE HAVE ONLY BEGUN THIS ROZ JOURNEY

• What about ROZ Origins and Distributions in other Basins?

• What about the Size of the Greenfields?• What about the Relative EOR Performance of

ROZs to Waterflooded MPZs?• What about Commercial Thresholds of

Residual Oil Saturation Levels?

It is Clear Now that ROZ Targets are Immense – But Just How Large are They?

The End

Questions?

www.CO2Conference.net

If this ROZ Work Strikes your Fancy

Check out the Website: www.residualoilzones.com