Oil prices above $75/bbl and increased need for carbon capture programs are quietly converging as a possible long-term boost for the increased use of enhanced oil recovery (EOR), according to industry sources working to drive commercial-scale projects with the help of the U.S. Department of Energy (DOE) and selected state initiatives.

Indicators that the use of EOR by injecting captured carbon dioxide (CO2) rather than steam into mature oil plays is poised to grow come from a variety of indicators, according to Mike Moore, executive director of the North American Carbon Capture and Storage Association (NACCSA).

There has been a shift of focus by DOE to EOR as a source for clean coal and carbon capture efforts, Moore told NGI. But there were a couple of milestones last month in California and Indiana that also show the CCS and EOR marrying prospects are heating up.

The United States Energy Association (USEA) hosted an all-day meeting in Sacramento at the end of June specifically examining the challenges and policy moves needed for California to seize "opportunities for carbon capture, storage and utilization in EOR." That same day, Indiana's Department of Environmental Management issued a final air quality permit for Indiana Gasification LLC, a multi-billion-dollar integrated gasification and combined-cycle project involving CCS and EOR, proposed by New York City-based Leucadia Holding Corp.

Moore said there is interest in both states in "tagging" CCS projects to EOR, even though some experts say the opportunities to do this nationally are not as widespread as saline CO2 storage opportunities. "In the past, [EOR] was the step-sister to CCS, but now it has become the tail that is wagging the dog," he said.

The air permit issued to the Indiana project is a major milestone for advocates for both more capturing of carbon and more use of that captured CO2 in oilfields, according to Moore. "It is the last piece of the equation that may have changed the entire playing field," he said.

The 1,030-page permit documents limit the CO2 provider's air emissions responsibility to the relatively small amount of the gas that escapes during the capture and shipping process, Moore said.

Although he said the issue will probably continue to be debated, Moore's interpretation of the Indiana permit is that it allows the seller of CO2 to drop any responsibility or obligation for the CO2 once the gas is put in the hands of the EOR operator. "That operator uses the CO2 and injects it underground with a Class II permit that says when you're done with it, you walk away," he said.

Noting that the industry so far seems unaware of the significance of the Indiana DEM action, Moore said that if the permit withstands challenges, it "will lift a tremendous piece of costs -- the environmental management costs -- off the back end of these projects for the providers of the CO2."

For advocates wanting to accelerate carbon capture, EOR is the only way to make the process economic, said Rich Myhre, a vice president at the Oakland, CA-based energy consulting firm of Bevilacqua-Knight Inc. and a consultant on CCS to the California Energy Commission.

"Until there is a policy-driven value on CO2 -- such as a cap-and-trade system -- until that is in place, the revenue from EOR is thought to be needed to give the [CCS] projects any chance of success," Myhre said. "The good news is that EOR is going well and they're improving the science of EOR generally, beyond just CO2.

"It doesn't work for all oilfields, though. It works best on lighter oils. And because of the dense phase, you don't want a shallow field." As a result, fields with waxy, heavy crude are better for steam flood as an EOR component, he said.

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