Abby L. Harvey
GHG Monitor
6/27/2014
While the use of captured carbon dioxide for enhanced oil recovery has historically been a difficult subject to breach politically, it is vital to the future of the American energy sector and must be tackled head-on by the government, a group of panelists and former lawmakers stated at an event hosted by the National Enhanced Oil Recovery Initiative (NEORI) this week. The process of injecting carbon dioxide into depleted oil wells to recover otherwise unattainable residual oil is not new but the process has seen little legislative support and its use in conjunction with captured carbon remains limited, Brad Crabtree, Vice President for Fossil Energy at the Great Plains Institute explained during the event. This fact was reiterated by former Representative Richard Gephardt (D-Mo.) who stated he was shocked to discover years ago that carbon was being collected from natural sources. “I mean, here we’ve been talking for 10 years about what we’re going to do with CO2 and now I find out we’re taking it out of the ground where it’s there captured naturally and we’re putting back in the ground to get oil,” Gephardt said.
The problem, as boiled down by the panel, exists mostly in the cost of carbon capture technology. Until the cost of the technology is reduced by either technology advancement or government funding, those interested in purchasing captured CO2 will have a hard time convincing producers to invest in the process. Because CCS technology is not yet mature, as with any new technology, costs remain high, to drive those costs down the technology must be further developed, panelists suggested, and in that process EOR should be considered a partner technology. “As I have learned more about the potential for enhanced oil recovery for the US and the critical role that captured carbon can play, it makes great sense to me to provoke the development of both carbon capture technology and enhanced oil recovery together,” former Senator Tim Hutchinson (R-Ark.) said during the event.
A further problem to consider when integrating CCS and EOR is that both processes require large investments making it difficult to find a counterpart on the other end of the chain willing to make an investment at the same time, Hunter Johnston, Counsel for Leucadia Energy said. “Not only does the industrial project to capture the CO2 require a large investment, it takes a massive amount of investment in the oil field to set up the oil field to be suitable for CO2, so that investment has to occur either before or simultaneously with the investment for the industrial projects. It’s a chicken and the egg kind of scenario preventing CCS from moving forward for EOR being more widely utilized,” Johnston said.
Thomas Altmeyer, Vice President of Government Affairs for Arch Coal Inc. said that Arch wants to see the development CCS and EOR technologies progress. “I personally, and my company are disappointed in how slowly this is going. We are not newcomers to this effort,” Altmeyer said, noting that the coal industry has tackled many challenges presented to them in the past and has continued to prosper. To get to a point where CCS and EOR technologies are viable, Altmeyer said, the federal government has to offer more support in the form of increased funding and legislation. “The U.S. can be a leader in this technology but we need more help from the government,” Altmeyer said.
Many panelists noted legislation recently drafted by Sen. Jay Rockefeller (D-W.Va.). The “Expanding Carbon Capture through Enhanced Oil Recovery Act” would modify and expand the Sec. 45Q Carbon Dioxide Sequestration Tax Credit, making the pool of credits available larger and, in an effort to ensure multiple projects can receive credits, the bill would also limit the amount of credits for any given project. Both measures would allow for the reservation of these tax credits for future use. This would address the uncertainty the current system causes. Under the current system credits are allocated on a first-come first-serve basis, which makes it difficult for businesses to take the credit into consideration when doing financial planning.