Oil & Gas - Maximising Recovery Programme (formerly SHARP) IOR Views

Proven Technology

BP notes that the component technologies in their proposed scheme are already proven. This also applies to enhanced oil recovery by CO2 which has over 30 years of history in the USA. While water will only displace about two-thirds of the oil it contacts, displacement by CO2 can approach 100%. This is because CO2 will typically behave like a solvent under reservoir conditions. The questions then are why it has not been more widely used historically and what has changed to make enhanced oil recovery by CO2 injection appear more attractive now.

There may be three elements:

1. Growing environmental concerns;
2. Technology enhancements, possibly catalysed by the environmental concerns;
3. Current higher oil prices. However, there will be different views on how long current oil prices are sustainable. Nonetheless, it appears that historical oil prices have had an impact.

CO2 enhanced oil production started to grow most significantly during the early 1980s when the oil price was at a historical high of about $30 per bbl, or over $50 per bbl in today’s money.

The potential for CO2 enhanced oil recovery was also recognised in the UK. BP had conducted a test in the Egmanton oilfield in the East Midlands in the late 1970s (Grist et al, Europec, 1980 and 1982), and in the early 1990s AEA Technology on behalf of the DTI (Foulser, SPE 25028, 1992) estimated around 1 bn bbls incremental recovery from the UKCS depending on oil price.

Based on information in the 12 April 2004 edition of the Oil and Gas Journal, incremental oil from CO2 projects has grown to some 220,000 bpd, mainly in the USA. This survey may miss some projects, but nonetheless this production is quite small compared to the world’s supply. This is despite the general view that the projects have been promising, yielding an increase of between 7-15% of oil initially-in-place compared to water injection.

Oil Price

However, as with a number of other EOR projections, the constraints relate mainly to cost compared to oil price. The cost of obtaining CO2 with sufficient purity and pressure is high compared to the relatively low cost of the oil during the late 1980s and 1990s. Most of the world’s experience has been with naturally occurring CO2. Some projects turned out less economic than projected due to a greater CO2 requirement than predicted. There have also been a variety of operational problems associated with corrosion.

There have been no CO2 EOR schemes in the North Sea to date. However, there has been an ongoing interest about the potential as both the UK and Norway look for ways to extend their oil reserves.

The Norwegian Petroleum Directorate (NPD) reported on the potential for CO2 injection for Ekofisk and Gullfaks. These projects would require a break-even oil price between $23-33. The delay between investment and incremental oil was also recognised along with a variety of risks in the application. The projected oil price was not given, but as an example the reference case for the Energy Information Administration in their “Annual Energy Outlook” of January 2005 was $27 to $30 for the foreseeable future. Thus using CO2 for enhanced oil recovery was seen as unattractive for these fields in relationship to the expected oil price.

Nonetheless, there has been growing interest in CO2 opportunities even before the recent oil price rises. This is seen in the increasing volume of literature on the subject, reflecting the environmental concerns. The 5 September 2005 edition of the Oil and Gas Journal discusses the environmental background and refers to a number of initiatives most of which pre-date the recent oil price rises.

BP Project

For their scheme, BP refer particularly to the environmental benefit of injecting CO2 created in the process they are currently studying and believe subsidies will be necessary similar to those for wind or other renewable energy sources.

Lord Browne, CEO of BP, outlined the main elements in the Financial Times on 12 July 2005. They are looking at building a power plant that would convert natural gas into carbon dioxide and hydrogen. The latter would be used to generate electricity while the carbon dioxide is stored underground in the Miller oil field in the North Sea, which is coming to the end of its life. Lord Browne noted this had never been done before, and the power plant would prevent as much carbon dioxide entering the atmosphere as if you took 300,000 cars off the road. It would produce more carbon-free electricity than all of the UK's wind farms combined.

Schematic of proposed “decarbonised fuel” project combined with CO2 EOR and storage in Miller field (click here for animated version).

According to the BP website and other information, the process at Scotland's Peterhead power station would create 350 megawatts of carbon-free electricity, or enough to power a quarter of a million homes in the UK.

Around 90% of the carbon dioxide created during the process would be transported by an existing pipeline to the Miller field for enhanced oil recovery and long-term geological storage. It has been estimated that injecting the carbon dioxide into the Miller field could extend its life by about 20 years and recover some 40 million barrels of additional oil. The project would also permanently store 1.3 million tonnes of carbon dioxide per annum, the equivalent of the 300,000 cars mentioned by Lord Browne.

While each of the component technologies is already proven, their proposed combination in an integrated “Decarbonised Fuels” system is unique. It would be the world's first industrial scale project to generate electricity in this way.

The concept of increasing oil reserves while helping to deal with an important environmental issue seems intuitively attractive. We will eagerly await more information as BP makes it public, and hope for a successful outcome from their engineering studies. The decision is due in 2006 with operations expected to commence in 2009.

It is also possible recent higher oil prices may impact views about the potential. UK cases may be more favourable than for Norway where the NPD note their potential gas power plants are spread out in geographical terms, and it would be a challenge to transport CO2 out to the fields on the Norwegian shelf. They also noted research, development of technology and demonstration projects will, in time, help to achieve reduced capture costs. There does appear to be a generally favourable atmosphere about exploring the opportunities for enhancing production by CO2 injection while helping to save the planet.