Lack of CO2 Supplies for CO2-EOR

Today, the main barrier to reaching higher levels of CO2-EOR production, both in the U.S. and worldwide, is insufficient supplies of affordable CO2.61 The establishment of CO2 sources and the growth of CO2 flooding in West Texas, Wyoming, and Mississippi in the U.S. provide three independent case histories as support. Today, all three areas are constrained by CO2 supply, and CO2 production from current supply sources is fully committed. As an example, as shown in Figure 8, after nearly a decade where CO2 supplies in the Permian Basin outpaced demand in CO2-EOR projects, since 2004 there has been a shortfall of CO2 supply.

Figure 8. CO2 Supply and Demand in the Permian Basin

Efforts have been underway to alleviate to some degree this CO2 supply shortage for CO2-EOR in the Permian Basin. Three pump stations have been added to the Cortez CO2 pipeline from McElmo Dome natural CO2 field to upgrade throughput to enable transport of up to 25 million metric tons per year of CO2. The Doe Canyon CO2 source field, just north of McElmo Dome, was drilled and volumes from that field were added to the enhanced volumes at McElmo Dome to keep the CO2 pipeline full.62 In addition, a new area of Bravo Dome was developed by the Hess Corporation, called West Bravo Dome, and some upgrades at Bravo Dome were completed by Oxy to keep their CO2 supplies from these natural source fields from declining, and to keep the CO2 pipeline from this region full.

All these projects were completed by the end of 2009 and the aggregated Permian Basin CO2 deliveries reached 34 million metric tons per year. These new supplies were absorbed quickly in the marketplace, and a significant shortage still remains.

In fact, given this situation, the Permian Basin may be the world’s first example of a “demand pull” on anthropogenic CO2 capture.63 Legislative and regulatory activity in the State of Texas is evolving to support increasing CO2 supplies from anthropogenic sources to serve the CO2-EOR market. This combination of unmet demand for CO2 and a supportive political/regulatory climate has stimulated several new projects to increase anthropogenic CO2 supplies for the West Texas CO2-EOR market:

  • The SandRidge/Oxy gas separation plant in Pecos County, Texas plans to provide more than three million metric tons per year of by-product CO2 to be utilized by Oxy for CO2-EOR.64
  • Summit Energy’s 400 MW integrated gasification combined cycle (IGCC) power/poly-gen plant in the Permian Basin plans to provide three million metric tons per for CO2-EOR.65
  • The Tenaska Trailblazer Energy Center plans to generate 600 MW net using best available supercritical steam, pulverized coal technology to provide as much 4.5 million metric tons per year of CO2.66

58 http://www.baardenergy.com/orcf.htm

59 http://www.rentechinc.com/natchez.php

60 http://www.dkrwenergy.com/fw/main/Overview-46.html

61 Hargronve, Brian, L. Stephen Melzer, and Lon Whitman, “A Status Report on North American CO2 EOR Production and CO2 Supply,” presented at the 16th Annual CO2 Flooding Conference, Midland Texas, December 9-10, 2010

62 2009 Annual Report and 10-K (pp. 24-25) for Kinder Morgan Energy Partners, Press Release, “Kinder Morgan Energy Partners Announces the Development of New CO2 Source Field and Major Expansions to Existing CO2 Operations” January 24, 2007, and 2010 KMP Analyst Conference Presentation, January 28, 2010, Tim Bradley presentation on “CO2

63 Tom Doll, Tracy Evans, L. Stephen Melzer, ”North American CO2 Status,” presented at the EORI 3rd Annual CO2 Conference, Casper, WY, June 2009

64 SandRidge Energy, Presentation at Investor/Analyst Meeting, March 3, 2009 and Sandridge Energy, Inc., 2009 Annual Report

65 “Summit Power begins FEED study for Texas IGCC-CCS project,” Carbon Capture Journal, July 22,2010 (http://www.carboncapturejournal.com/displaynews.php?NewsID=603)