Lower fossil fuel prices could affect CCS substantially, speaker says

A wider spread between fossil fuel and renewable energy prices could create both opportunities and challenges beyond enhanced oil recovery (EOR) for carbon capture and storage (CCS) proponents, the executive director of the North American Carbon Capture & Storage Association told a Washington audience.

“Oil, coal, and gas are the cheapest they’ve been in about 10 years,” said Michael E. Moore, who also is vice-president for energy commodities and advisory services at FearnOil Inc. in Houston. “It means the spread between fossil fuels and renewables is going to get a lot wider, which could free money to do other things.”

EOR may be the best known and most immediate application for captured carbon dioxide, Moore said during a Mar. 8 presentation at the US Energy Association. But transportation and geology are among the wide range of variables that could have an impact on its growth, he said.

The US is the world’s EOR leader, including early work now under way to increase recovery rates from tight shale formations, he said. “Carbon dioxide is a commodity that can be used in a lot of places—not just shoved into the ground and left alone,” Moore said. “It’s important to make the core commodity that’s produced viable in a cleaner, greener environment.”

He said Wyoming has a lot of produced CO2 capacity from natural gas processing, while the Permian basin, East Texas, and other US Gulf Coast states also offer interesting possibilities.

Costs are the key

“New projects keep showing up and new studies are released,” Moore said. “The price points now don’t make it very attractive. But we know that the oil is there, and it can be produced if technology or the price points change. CCS technology has been around for decades. The key has always been costs.”

Produced CO2 increasingly contributes in other cases, Moore said. “Ethane is a stranded asset in North Dakota,” he said. “But when you mix it with CO2, it could start a good recovery project or two. Canada had a hard time selling bitumen produced from its oil sands in Europe until it did a few things. Carbon pricing isn’t a niche any more. A lot of countries have been doing it awhile.”

Pricing CO2 for EOR is relatively easy in West Texas because it has an established pipeline network where there can be a lot of interplay between sources and demand, he said. About 2% of a barrel of crude oil’s value is what’s being paid for 1 Mcf of CO2, depending on the operator, Moore said. “There’s also laboratory work under way with surfactants and foam to make CO2 more efficient in EOR,” he added.

Other factors become important if the captured CO2 comes from a regulated facility, Moore said. The US Environmental Protection Agency’s requirements, a producer’s reputation, and other factors all can come into play, he told his USEA audience. “Some companies are comfortable with all the responsibilities and obligations. Others aren’t,” he said.

He expressed optimism that CO2 transportation demand will be met easily because the bigger operators also operate interstate pipelines. “Look how fast they built pipelines to accommodate shale gas,” Moore said. “When your company is moving billion tons of captured CO2 into a state’s resource base, the stakes are substantial.”

Contact Nick Snow at nicks@pennwell.com.

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