EOR on the UK Continental Shelf - Part of a Bigger Picture?
Higher oil prices may well increase the enthusiasm for EOR on the UKCS. For CO2 injection there is an important wider strategic benefit which needs to be factored into the considerations. Dr Jon Gibbins (j.gibbins@imperial.ac.uk) from the Energy Technology for Sustainable Development Group in the Mechanical Engineering Department as Imperial College takes a look at the bigger picture.
Meeting CO2 Emission Targets
If optimism about EOR in the UK sector of the North Sea has grown since the survey undertaken about a year ago for the DTI's report on "Implementing a Demonstration of Enhanced Oil Recovery Using Carbon Dioxide" it should not just be because of the 10 -15 $/bbl increase in oil price!
Over the same period awareness of the contribution that carbon capture and storage (CCS) can make to reducing UK and global CO2 emissions has also increased. This will be reinforced by the publication of the IPCC Special Report on Carbon Dioxide Capture and Storage in the second half of 2005.
2005 is also likely to see a debate on how the UK is going to meet its CO2 emission targets for 2020, and the UK initiative in the G8 on Climate Change announced by the Prime Minister in September. Current predictions (Figure 1) show an emissions 'gap' for the UK of perhaps 20 MtC/yr in 2020. The timing is just right for CCS+ EOR to make a significant contribution to reducing UK CO2 emissions over this time scale, and also to enhance UK energy security, balance of payments and employment by allowing increased production of indigenous oil, gas - and coal.
Figure 1: Latest Baseline UK Carbon Emissions Projections to 2020 by Broad Sector, Including UK Climate Change Programme Measures but not Effect of EU ETS (Data from Table 6, Updated UK Energy Predictions, DTI Working Paper, May 2004 - http://www.dti.gov.uk/energy/sepn/uep.pdf)
Longer Term
But 2020 is only just the beginning, for the UK and the world, as will become very apparent in the G8 discussions during 2005. Current thinking is that we should probably aim to stabilise atmospheric CO2 levels at no more than 550 ppm, or twice pre-industrial levels, to keep climate change consequences within tolerable levels. If this to be achieved then global CO2 emissions have to level off by the middle of the century and fall thereafter (Figure 2).
The UK can contribute to achieving CO2 stabilisation targets by reducing its own emissions, but at only about 2% of the current world total our direct contribution is limited. Additional results might be achieved by opening up CO2 sinks in the North Sea for use by other European countries. Demonstrating technologies that can be transferred to fast-growing fossil fuel economies, such as China and India, could have even larger benefits, especially when backed up by UK financial and emission trading expertise and services. Finally, a lot can be achieved just by exercising leadership to get things moving earlier. If even five years are lost waiting for global consensus on climate change to emerge naturally as a result of increasingly obvious warming signals, then this represents a very significant part of the time available.
Figure 2: Emission Trajectories Consistent with Various Atmospheric CO2 Concentration Ceilings (J. Edward, NREL Energy Analysis Forum, Understanding the US Strategic Interests in Expanding Renewable Energy Systems Worldwide, Washington, DC, June 11-12, 2003 - http://www.nrel.gov/analysis/forum/docs/jae_edmonds.2.ppt)
Incentives
But North Sea operators have to deliver value to their shareholders and cannot afford to worry about this long term climate change stuff? Well, even with higher oil prices, the oil industry is unlikely to be able to undertake extensive EOR developments in the North Sea without some government support. This means gaining the support of a broad range of politicians, NGOs and the public, for whom tackling climate change will be much more important than increasing the revenue opportunities for oil companies.
Examples of necessary government support would include licensing EOR schemes for CO2 storage under EU ETS, including the issue of long-term stewardship. Long term arrangements with the power industry will also be needed to ensure large scale CO2 supplies. Tax incentives for EOR, at least to minimise sensitivity to oil price fluctuations, could obviously have a large effect on take-up. There may also need to be adjustments to arrangements for platform decommissioning if fields are to have a second lease of life as CO2 storage sites. Developments in the prospects for EOR and CO2 storage could be increasing North Sea asset values within as little as five years, but only if the oil industry ensures that its EOR interests are consistent with, and hopefully contribute to, the underlying long term drivers.
This is not to say that the oil industry has to lead this process. If the government is serious about CCS, including EOR, then it will need to set up a UK Carbon Capture and Storage Authority. By analogy with other authorities this will be independent from government but will have clear terms of reference to work with the key industry stakeholders, including offshore operators and service industries, to deliver UK policy objectives. The UKCCSA would have the task of making sure that the UK 's natural and man-made infrastructure assets were used effectively and safely, and could offer the long-term stewardship that commercial organisations cannot provide.
Clearly a UKCCSA is not going to be set up tomorrow. Apart from the constraints of the UK election cycle, the UK can lead on tackling climate change but cannot afford to get too far ahead. There must be a firm expectation that the world will be following in any post-Kyoto measures, and that Europe is fully committed. Under these circumstances, costs for some existing areas of the UK economy are likely to be offset by the advantages of an established lead in new sectors - plus the fundamental benefit of having the world as a whole moving towards atmospheric CO2 stabilisation. But if the oil industry can keep in mind the larger underlying purpose of CO2 injection, as well as enhanced oil recovery, it will hopefully have the vision to respond encouragingly to future government initiatives before the UKCCSA framework is in place to guarantee the bottom line.
Commercial Drivers
What is required is an assessment, from the oil industry perspective, of the commercial drivers that would deliver EOR, and most importantly also deliver enhanced CO2 storage. But this must be done realistically! CCS+EOR is not competing against renewable energy options, which will be have to be developed about as fast as we can anyway to meet long term demands. But is competing against CCS without EOR, with CO2 injected in gas fields and/or aquifers, and against nuclear power. The new DTI CAT (carbon abatement strategy) and a complementary proposal to the Research Councils 'Towards a Sustainable Energy Economy' (TSEC) programme should be examining these issues during 2005. It is essential that more operators and service providers understand the need to undertake this type of study, and in particular to work themselves on devising the imaginative solutions that will be required to make CCS+EOR a technically and commercially viable option for delivering UK energy and climate change policy objectives in the next decade.