Emission mission: Swapping carbon for more oil

Carbon capture EOR provides a unique set of opportunities for GCC

Heavy oil producers in the Middle East can benefit from CCS technology.
Heavy oil producers in the Middle East can benefit from CCS technology.

Carbon Capture and Storage provides a unique set of opportunities for GCC countries looking to improve their environmental credentials, maximise their proven oil reserves and the use of natural gas for power generation.

The idea of capturing emissions emanating from power plants or industry, and then storing them underground to prevent damage to the ozone layer, is an exciting one for governments and companies trying to reduce their carbon footprint in this day and age.

Consequently, carbon capture and storage (CCS) projects have sprung up around the world, and the International Energy Agency (IEA) has devised a roadmap that would see the technology contribute to the worldwide emission reduction targets for 2020 set out in the Kyoto protocol.

But the roadmap is optimistic, suggesting that over 3000 projects should to be operational by 2050. According to a study conducted by the Carbon Capture and Storage Institute in based in Canberra, Australia, there are currently only 243 projects worldwide, of which only 85 can be classified as large scale. Of these, only a meagre eight are actually in operation.

“In order to meet the IEA targets, a tenfold increase must be achieved,” says Peter Brooks who is the executive director at Worley Parsons Energy Services. If ambitious targets such as this should stand any chance, commercial viability for CCS projects is crucial. And while the technology has been developed, and is ready to be deployed, it is as yet not clear how a global scaling up would be funded.

One potential way of providing finance is the Clean Development Mechanism (CDM), an arrangement under the Kyoto Protocol that encourages developing countries to invest in emission-reducing projects, while industrialised countries can contribute to their emission reduction targets by investing in such projects in the developing world.

This market-based approach is promising, however the high costs of applying CCS is still proving to be an obstacle for the industry.

Financial help from governments is seen as essential for boosting CCS deployment by members of the oil industry. John Barry, vice president technical and production and Abu Dhabi country president at Shell, points to a project his company is undertaking in Canada.

“Unfortunately it is over a billion dollars in size when you look at the costs. Now that’s too much for us to bear as an industry partner to bear on our own. So the Alberta and Canadian governments are providing support, and are anticipated to provide more than half of the funding required.
This is a very good illustration of the way quite significant projects can be unblocked if the funds are made available,” he says.

But there is also a way to utilise CO2 emissions that brings significant benefits to oil and gas producing countries, and seems tailor made for the adaptation of CCS in the Gulf.

Fossil fuel producers have long used enhanced oil recovery (EOR) techniques to increase the amount of oil they can extract from a field.
Traditionally, they have used water and natural gas to create pressure to push the oil out of the reservoir. This is literally an energy- intensive endeavour, as the gas used in this process could be put to better use, namely as feedstock in power generation or petrochemicals production.

As the region is struggling to meet rapidly increasing demand for electricity, the supply of natural gas has become stretched, and countries such as Saudi Arabia had to embark on new gas field exploration projects to ensure an adequate supply could be maintained.

Captured emissions, rather than only being stored underground, can be used to create the necessary pressure in EOR applications, and so replace natural gas.

This entails savings, as natural gas can be sold or used elsewhere, offsetting additional costs of capturing and running emissions through the system.

“Given the twin challenges of CCS costing more relative to a non-CCS plant, and the current opportunities to offset these costs, EOR provides the earliest opportunities for CCS today, because the business case is somewhat economical,” describes Brooks.

This is good news for environmentally-conscious utilities,” he says. Not only would they be able draw on an increased use of natural gas, the cleanest of the fossil fuels, but power generation will be one of the key fields of CCS deployment.

“The next tranche of industries where CCS is applicable is fossil fuel power generation,” he adds.

Such analysis is in line with the thinking of regional decision makers, as Ghaniya Bin-Dhaaer Al-Yafei, CO2 strategic advisor at the Abu Dhabi Company for Onshore Oil Operations (ADCO), a subsidiary of the emirate’s NOC ADNOC, points out.

“This is one of our objectives, to be able to replace hydrocarbon gases with Co2 and therefore preserve the gas for other use. We need a lot of gas for our utilities,” she says.

Abu Dhabi is looking at ways to reduce its use of as much as 40% of the 5 billion cubic feet of natural gas produced daily in the UAE for this purpose.

On the back of this, ADCO has taken the initiative, and implemented the GCC’s first CCS EOR projects, a pilot project at the Rumaitha field.
Following the success of the pilot, Abu Dhabi is set to launch a bigger project in the same field. (See Boxout). Walid Fayad, partner at Booz & Company, is clear about the advantages of CCS technology for the oil-rich nations of the GCC.

“Looking at EOR’s benefits, our analysis suggests that they depend highly on a number of factors, including the oil price, but also the additional oil recovery rates associated with EOR,” he describes.

“In the cases that we analysed in countries in the GCC, the oil prices at current levels associated with the recovery rates resulted in additional benefits of US$50 per tonne of CO2 injected.

This leads us to believe that the net impact of CCS in conjunction with EOR will offset the cost of making the station’s resources CCS-compliant, and in some cases will even result in profits,” he adds.

Al-Yafei is reticent about getting too carried away with such optimistic numbers, but nevertheless joins in with the chorus of approval for the use of CCS in EOR operations.

She outlines the potential that carbon emissions have for recovering recalcitrant oil: “I heard a very optimistic scenario, where we could garner up to six billion barrels of additional oil with CO2 EOR. And maybe for the whole region we could go up to 46 billion barrels. This is assuming an incremental additional recovery of about 7%, which is very optimistic.”

It appears that CCS EOR dovetails quite neatly with the needs of the GCC countries, a thought given substance by Fayad’s assessment of the region’s sizable emissions and storage potential.

“We have analysed the current and expected applicable stationary emission sources where CCS can be implemented, and we have compared it with the storage potential from certain applicable oil fields, and we have found there is a good match,” he says.

Observers would be forgiven for their confusion at the opportunity presented to the oil industry to engage in environmental protection by boosting its output of fossil fuels.

Ironically, the region’s utilities and oil companies can now ‘green up’ by acting according to their self-interests.

Abu Dhabi leads the way: Adco, Adnoc and Masdar combine forces to implement first CCS EOR project in the GCC, Abu Dhabi has become the first GCC member to make use of carbon emissions for EOR when the NOC subsidiary Adco started infusing a daily dose 60 tonnes of CO2 into an area on the Rumaitha oil field in a pilot project.

The CO2 was supplied by the state owned renewable energy company Masdar, which acquired it from steel producers in the UAE’s largest emirate.

“We had thoughts about CO2 EOR in Abu Dhabi for a long time, maybe for the last 10 years, but because we didn’t have a source, there was no way we could plan for any implementation,” explains Ghaniya Bin-Dhaaer Al-Yafei, CO2 strategic advisor at Adco.

“But the arrival of Masdar gave us the confidence of CO2 source, and also the assurance that we will be supplied in delivery of CO2. One of the main purposes of the pilot was to explore the “injectivity” of the CO2 into the ground, in an area of the field that had previously been untouched by exploration.

“We also wanted to see whether the CO2 and the oil and the rock interact, because interaction can cause blocking of the rock if the rock dissolves with the acidity of the CO2, and then redeposits further down in the reservoir.”

Other factors that were being assessed included the impact of the CO2 on surface facilities, such as the pipelines, she adds. The pilot was deemed a success by the parties involved, and the green light has been given for a larger-scale project in a different section of the Rumaitha field.

The new project will require a total of 1,750 tonnes of CO2 to be pumped into the field. To ensure supply for this and future projects, Masdar is looking to build a 500 kilometre pipeline network that will transport the emissions from the source to the oil field.

The contract for the projects is due to be awarded this year. The first 50 kilometres, which are to supply the project with carbon dioxide from the state-owned Emirates Steel Industries plant, is expected to be completed by 2014, according to Keristofer Seryani, Masdar’s deputy manager for commercial development.

ADCO Snapshot
Abu Dhabi Company for Onshore Oil Operations (ADCO) operates onshore and in the shallow coastal waters of the Emirate of Abu Dhabi.

The original concession agreement was made with Petroleum Development (Trucial Coast) Ltd. on January 11, 1939, but geological work did not begin until after World War 2. Exploratory drilling began in Abu Dhabi in February 1950.

The first commercial oil discovery was made at Bab in 1960, and exports began from the Jebel Dhanna terminal on December 14, 1963. Today the company’s concession area covers more than 21,000 sq Km.

View from the top
Abu Dhabi Company for Onshore Oil Operations (ADCO) produces from six oil fields: Asab, Bab, Bu Hasa, Sahil, Shah and North East Bab (Dabbiya, Rumaitha and Shanayel).

These fields are linked by more than 450 kilometres of pipeline, with storage and shipping facilities at Jebel Dhanna, where tankers load crude oil for export to many parts of the world.

The majority – 60% in fact – of Abu Dhabi’s crude output is thanks to the activities of ADCO. However, with a raft of new projects the numbers will reflect an even greater proportion of the state’s revenues to the onshore operator.

“Today ADCO produces around 60% of the UAE’s crude, but we will play a more dominant role in output as we increase our oil production,” ADCO’s chief executive officer, Abdul Munim Saif Al-Kindy tells Oil & Gas Middle East.

The company is also the UAE’s largest producer of gas. “We produce around 4.5 billion cubic feet of gas per day from associated and non-associated production. Almost at point of source we pass this to our sister company GASCO,” he says.

Al Kindy adds that CCS projects intertwined with enhanced oil recovery techniques are at the heart of the company’s new development plans.
The company has major plans afoot to sustain that gas production.

“There are some really interesting recycling projects which will enable us to reduce the natural gas we currently use for injection, such as CO2 enhanced recovery techniques which warrant a proper investigation.”
In November 2009 the company began the first advanced CO2 injection project on a carbonate reservoir in the MENA region.

“If we can technically assert the value of CO2 in terms of enhanced oil recovery then we may start a much wider EOR scheme at one of our major fields by 2016,” reveals Al Kindy.

The general manager says that whilst the technical challenges and commercial viability issues of EOR projects remain significant, the way the company is formed with key stakeholder partners means it has access to global experience and knowledge when it comes to the understanding of CO2 injection projects.

Whilst many firms around the world are dabbling with carbon sequestration and storage, Al Kindy says the work being done at ADCO is helping the company consolidate a regional leadership role in developing and executing CO2 related EOR projects – actually increasing production.

“The application of CO2 has proven its worth in fully depleted reservoirs and sandstone formations, but some of the projects we have in our portfolio and in our sights will mean injection during the early stage of a big field’s life.

We don’t really know exactly how the field will react because there are a lot of variables including porosity, geology et cetera.”

Al Kindy hints that a wider supply issue may develop fruitful relationships within Abu Dhabi’s own borders, and form part of a much more significant carbon masterplan.

“Of course, the commercial aspect of establishing a carbon supply partner needs to be examined very closely, but I think we will have a lot of interesting opportunities to work [on] with Masdar.”

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