AN UPDATE: U.S. COAN UPDATE: U.S. CO22 EOR STATUSEOR STATUS Steve MelzerSteve Melzer

Casper, WY

July 11 & 12, 2012

Melzer CO2

nsulting

COCO22 EOR Progress: EOR Progress: LetLet’’s Examine Several Frontss Examine Several Fronts

2

1. Overall U.S. Status2. Regional EOR & Supply Status

A. Wyoming/RockiesB. Permian BasinC. Gulf Coast

3. EOR and CO2 Storage4. Newsworthy Announcements/Events5. Technical Advances/Challenges6. Reservoir Target Expansions

and Finally………….

7. Can I Really Make a Career in Oil/Gas?

Overall U.S. EOR StatusOverall U.S. EOR Status

Re: Oil & Gas Journal Production Edition, April 2, 2012and Univ Tx of the Permian Basin’s Petroleum Industry Alliance

3

A COA CO22 EOR Progress ReportEOR Progress Report

““EOR Continues its Climb up the HillEOR Continues its Climb up the Hill””

5

COCO22

EOR PROJECT GROWTH*EOR PROJECT GROWTH*

* Oil & Gas Journal 4/2/12 & UTPB Petroleum Industry Alliance

8 projects/yr

COCO22 EOR Production Growth*EOR Production Growth*

6

11,000 bopd / yr

Permian Basin

Gulf Coast

Wy/Rockies

Coffeyville GasifierMidContinent

The COThe CO22

Suppliers, Transportation and EOR CompaniesSuppliers, Transportation and EOR Companies

Data source: Oil & Gas Journal Annual Production Report, Apr 19,

2010, and UTPB Petroleum Industry Alliance (5/2010) 

8

Trinity CO2

Regional EOR and CORegional EOR and CO22 Supply StatusSupply Status

9

U.S. COU.S. CO22 Supply (Capacities)Supply (Capacities)

for the Big Three + ND Regionsfor the Big Three + ND Regions

• Wyoming/Rockieso Established 160 mmcfpd in 1986 (Shute Creek Plant)o Expansion to 240 mmcfpd in 2011 (Shute Creek Expansion)

• Permian Basino Original ~100 mmcfpd in the 1970’s (Val Verde Nat’l Gas Plants)o Mid-80’s an Incremental 1 bcfpd (McElmo, Bravo Domes & Sheep Mtn)o Source Expansions at McElmo in early 2000’so 2009 Expansion of McElmo Dome + Addition of Doe Canyon and Pump Stations on

Cortex Pipeline - to 1.3 bcfpd

• Gulf Coasto Development of Jackson Dome in the 1980’s - to 100 mmcfpdo Expansions at Jackson in early 2000’s - to 400 mmcfpdo Additional Drilling at Jackson Dome in late 2000’s - to 1 bcfpd

• Dakota Gasification – 160 mmcfpd

TOTAL U.S. CO2 SOURCE CAPACITY Dec 2011 = 3.2 bcfpd

10

U.S. COU.S. CO22 SourcesSources

as of Dec 2011 and Ranked by Size of Sourceas of Dec 2011 and Ranked by Size of Source

11

Permian BasinGulf CoastWyoming/RockiesOther

CO2 Volumes in mmcfpd

U.S. COU.S. CO22 SourcesSources

Changes from Dec 2008 to Dec 2011Changes from Dec 2008 to Dec 2011

CO2 Volumes in mmcfpd

In Three Years the CO2 Supply Grew by 40% (from

2.3 bcfpd to 3.2 bcfpd)

2008

EOR and COEOR and CO22 StorageStorage

13

A Myth That You May Hear• CO2 stores only about half of the injected CO2

What that implies is that half the CO2 is vented (which is quite obviously not the case)

The problem stems from the way we define retention• In the definition, we use total injected volumes (which includes

the recycle) in the denominator instead of only the purchased volumes

• So, ultimately, with roughly an equal volume of recycle as purchased volumes, the retained (stored) CO2 amount appears to be 50%

• If we would have used just the purchased volume, the ‘retained’ volumes would be close to unity

The two following examples are illustrative

CO2prod = 715,736,915 Mcf (40.9 MM tons = 37.2 MM MT)

CO2inj = 705,312,883 Mcf (40.3 MM tons = 36.6 MM MT)

Total emission contribution ~ 600,000 tonsReduction in emissions ~ 98.5% (compared to‘conventional’ recovery of same volume of oil)

CO2prod = 715,736,915 Mcf (40.9 MM tons = 37.2 MM MT)

CO2inj = 705,312,883 Mcf (40.3 MM tons = 36.6 MM MT)

Total emission contribution ~ 600,000 tonsReduction in emissions ~ 98.5% (compared to‘conventional’ recovery of same volume of oil)

You Saw This (Glen’s) Slide EarlierFor Wyoming CO2 Stats

CO2 Balance

You Saw This (Glen’s) Slide EarlierFor Wyoming CO2 Stats

CO2 Balance

An Example of Reported COAn Example of Reported CO22

Losses Losses  During CODuring CO22

EOR in a Very Large Permian EOR in a Very Large Permian  Basin Case HistoryBasin Case History

Reference: Docket Number (08-AFC-8A) Amended Application For CertificationHydrogen Energy California Power Plant Licensing Case

Amended Application For Certification

http://www.energy.ca.gov/sitingcases/hydrogen_energy/documents/index.html

OEHI Project Overview Workshop Presentation. Posted: June 26, 2012. (PDF, 27 pages, 988 kb)

Other Pertinent Data from Reference: Hydrogen Energy California Power Plant Licensing Case

Docket Number: 08-AFC-8A(Amended Application For Certification)

http://www.energy.ca.gov/sitingcases/hydrogen_energy/

A Recently Reported Very Large (Oxy) Case History

COCO22

EOR/Storage Statistics:  EOR/Storage Statistics:  

Oxy Case HistoryOxy Case History

• Total CO2 Purchased Amount = 115 million MT*• Total CO2 Injected Amount = 252 million MT• Total CO2 Recycled Amount = 137 million MT• Operating & Fugitive Losses = 0.3%• Percent Sequestered = 99.7%

* Note that this is a very large EOR project: Equals a Cumulative 2.2 Trillion ft3 of Purchased CO2

Newsworthy Newsworthy  Announcements/EventsAnnouncements/Events

(or(or…….a look into the future).a look into the future)

18

The Single Most Important  Limiter for EOR Growth 

Making CO2 Capture Affordable for EOR Projects

• Lots of Cost Challenges for Capturing Industrial CO2

• Oil Price has Helped Greatly with EOR Industry’s Ability to Pay More for the CO2

• Industry is Slowly Dispelling the Myth that EOR Targets are Small and Insignificant Compared to CO2 Capture Volumes, e.g., EOR technology, ROZs, higher oil prices

Background

COCO22 Supply Supply 

(the Leading Indicator of EOR Growth)(the Leading Indicator of EOR Growth)• Rockies

o Lost Cabin and GreenCore Pipeline (Wy/Mt) – Capture and PL under Construction 50o DKRW Coal Gasification (Wy) - In Financing 230o Riley Ridge (Wy) – Plant w/o CO2 Capture Currently Under Construction 130

• Permian Basino Century Plant (Ph 1&2) – Ph 1 Complete, 2 under construction ?o Texas Clean Energy Project – Air Permit Approved, In Financing 125o Tenaska Trailblazer Project – Air Permit Approved, On hold 250o St. Johns Dome - Under Study 350o McElmo Dome – Upgrade AFE’d 100o Doe Canyon – Upgrade AFE’d 100

• Gulf Coasto Faustina Petroleum Coke Gasification Project (La) – Under Constructiono Air Products Port Arthur Hydrogen Generation Plant (Tx) – Nearing Completion 100o NRG W.A. Parish Plant (Tx) – Post Combustion Capture (status uncertain) 50o Southern Company’s Kemper County Capture Project (Al) – under constructiono Leucadia Methanol Plant (La) – permitted 100

• MidContinento Coffeyville Gasification Project (Ks) – Capture Under Construction 50

• Othero Hydrogen Energy California (Ca) – Permitting 100o Indiana Gasification, LLC (In) – Permitting 275

Total Incremental CO2 =

410

(120%)

925

(50%)

250

(25%)

50

375

2010(63%)

COCO22 EOR EOR 

(Follows the Available CO(Follows the Available CO22

Supplies)Supplies)

• Rockies Next 2 Yrs 2-5 Yrs 5+ Yrso Grieve xo Bell Creek (Mt) xo Cedar Creek Anticline (Mt/SD) x

• Permian Basino Seminole ROZ Expansions x xo West and East Seminole xo Goldsmith Expansion xo Means ROZ x xo South Hobbs (NM) x xo George Allen xo Greenfield ROZs xo Etc. x x

• Gulf Coasto Hastings Expansions (Tx) x x xo Citronelle (Al) xo Conroe (Tx) x x

• MidContinento Burbank (Ok) x x

• Othero Elk Hills (Ca) x xo Ventura (Ca) x x

Other Potentially Significant Other Potentially Significant  Initiatives/Events/AnnouncementsInitiatives/Events/Announcements

• DOE and CCUS

• National Coal Council’s Recent Report

• NEORI’s Work

• Indiana Department of Environmental Management (IDEM) issuance of a final PSD/Title V permit for Indiana Gasification Project

Technical Technical  Advances/ChallengesAdvances/Challenges

((LetLet’’s Get Geeky for a Bit)s Get Geeky for a Bit)

23

EOR Project ObservationsEOR Project Observations• If Scaling Tendencies, Asphaltene and/or Parafin

Problems are Noted in a Project during Primary or Secondary Phases of Production, CO2 Phase will Most Often Demonstrate Accelerated Rates and Tendencies.

• Some Projects Display Significant Losses in Injectivity During the WAG Cycle and Some (generally smaller) Injectivity Losses upon Reinjection of CO2 while Other Projects Do Not

• Blowdown Phase of CO2 Can be Quite Unsuccessful

24

Reservoir Target Reservoir Target  ExpansionsExpansions

25

Permian Basin and Wyoming Permian Basin and Wyoming  (Big Horn) ROZ Studies(Big Horn) ROZ Studies

• Many Basins in the World Possess Multiple Stages of Tectonics• If a Basin has a Post Oil Entrapment Stage, Water Can

Encroach Upon an Oil Reservoir and Sweep the Mobile Oil Out – A Residual Oil Zone (ROZ) Will be left Behind (We Call these “Naturally

Waterflooded” Reservoirs)

• If the Residual Oil Saturation Left Behind is Sufficient (>20-25%), EOR Processes Will Work There Just Like they Have Worked in Man’s Water Floods

• Some Basins Possess Huge Amounts of Oil in the ROZso Permian Basin San Andres Appears to have in Excess of 100 billion barrels

in Place in the ROZso Big Horn Basin Also Has a Huge Target Resource of Oil in Place

26

Unconventional* Reservoir FrameworkUnconventional* Reservoir Framework

Source RocksSource Rocks

Original Entrapments

Original Entrapments Conventional Oil,

Gas, and Heavy Oil Reservoirs

Conventional Oil, Gas, and Heavy Oil

Reservoirs

* Reservoirs Not Part of Modern, Conventional Entrapments

Looking Back

HC Maturation >> Original Entrapment >> Tectonic >> Modern Entrapment& Generation Readjustment

Shale O/G Accumulations

The Industry’s ‘Lookback’

27

MIDDLE SAN ANDRES PALEOGEOGRAPHY with Location of Industry Documented ROZ Zones/Fields*

VACUUMFIELD

GuadalupeMountains

MidlandBasin

DelawareBasin

CentralBasin

Platform

Shelf Margin “reef”

TexasNew Mexico

Midland

San Angelo

Restricted Carbonate Shelf

OpenMarine

MarathonOverthrust Belt

NORTHWESTSHELF

NORTHERNSHELF

EASTERNSHELF

WASSON FIELD (3)

SEMINOLE FIELD (4)

* Adapted from Sagnak (2006), Chevron Presentation at the 12/06 CO2 Flooding Conference

GOLDSMITH FIELD

HANFORD FIELD

28

MEANS FIELDHobbs

The List of OnThe List of On‐‐going ROZ COgoing ROZ CO22

EOR EOR  ProjectsProjects

(All (All BrownfieldsBrownfields

in the Permian Basin)in the Permian Basin)

Rumored Additions: 

Conoco

at East Vacuum (2012)Chevron at Central Vacuum (2012)XTO at CA Goldsmith (2013?)Tabula

Rasa at E. Seminole and Lindoss

(2013)A Greenfield ROZ (Operator wants to remain Confidential)

29

ON-GOING AND PLANNED ROZ CO 2 EOR PROJECTSas of Jan 2012 IN THE PERMIAN BASIN REGION OF THE U.S.

Top MPZType and Depth,operator Field State County (ft) Pay zone_______________________________________________ ________________________ ___________________Active CO2 miscible

1 Chevron Vacuum San Andres Grayburg Unit NM Lea Co. 4,550 San Andres2 Fasken Hanford Tex. Gaines 5,500 San Andres3 Hess Seminole Unit-ROZ Phase 1 Tex. Gaines 5,500 San Andres4 Hess Seminole Unit-ROZ Phase 2 Tex. Gaines 5,500 San Andres5 Hess Seminole Unit-ROZ Stage 1 Full Field Dev Tex. Gaines 5,500 San Andres6 Hess Seminole Unit-ROZ Stage 2 Full Field Dev Tex. Gaines 5,500 San Andres7 Legado Goldsmith-Landreth Unit Tex. Ector 4,200 San Andres8 Occidental Wasson Bennett Ranch Unit Tex. Yoakum 5,250 San Andres9 Occidental Wasson Denver Unit Tex. Yoakum 5,200 San Andres10 Occidental Wasson ODC Tex. & Gaines 5,200 San Andres11 XTO/ExxonMobil Means Tex Andrews 4,500 San Andres

EXTENDING EOR BELOW THE OIL/WATER CONTACTEXTENDING EOR BELOW THE OIL/WATER CONTACT

Gross Net Permeability InitialThickness Thickness Porosity Range OOIP Oil Saturation

Main Pay Zone (MPZ): 160’ 126’ 12% 0.8-120 md 1 billion stbo 0.84Residual Oil Zone (ROZ): 246’ 197’ 12.6% 0.5-270 md 960 million stbo 0.32

Reference Slides are from the 2001 and 2008 COReference Slides are from the 2001 and 2008 CO2 2 FloodingFlooding ConferencesConferences

Gas CapGas Cap

Residual Oil ZoneResidual Oil Zone

Main Pay ZoneMain Pay Zone

Seminole Field

30

A NEW FOURTH PHASE? A NEW FOURTH PHASE? ‘‘QUATERNARYQUATERNARY’’

OIL*OIL*Total, Primary, Waterflood, Main Pay and ROZ CO2 Performance

(the Concept of "Brownfield" Quaternary Oil)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0 10 20 30 40 50 60 70 80 90 100

Year

Ann

ualiz

ed O

il Pr

oduc

tion

in b

opd

TOTAL OIL - bopdProj Primary-bopdProj Waterflood-bopdMain Pay EOR BaselineQuat 2.0 Oil - bopd

Primary Production

Peak

Tertiary CO2

Production Peak

Secondary Production

Peak

Quaternary CO2 ROZ Production Peak

Primary Cum = 125 mm bbls

Secondary Cum = 325 mm bbls

Tertiary Cum = 200 mm bbls

Projected Quaternary Cum = 200 mm bbls

* SHAPE OF THE CURVE WILL BE DICTATED BY THE * SHAPE OF THE CURVE WILL BE DICTATED BY THE AVAILABILITY OF AMPLE, AFFORDABLE COAVAILABILITY OF AMPLE, AFFORDABLE CO22

31

…….and the ROZ     Production in Aggregate

Permian Basin ROZ Production RollupPermian Basin ROZ Production Rollup33

Now Exceeds 11,000 bopd!!

and Finallyand Finally…………

Can I Make a Career out of the Can I Make a Career out of the  U.S. Oil and Gas Business?U.S. Oil and Gas Business?

34

HubbertHubbert Curve Curve 

(Woops(Woops…….what happened?).what happened?)

35

Violating the Classic Hubbert Curve

Permian Basin Historical Production

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

1940 1950 1960 1970 1980 1990 2000 2010 2020

Year

Prod

uctio

n (M

BO

PD)

0

5,000

10,000

15,000

20,000

25,000

30,000

Wel

ls C

ompl

eted

per

Yea

r

Wells Completed per YearHistorical Production (actual)EOR & Infill Wedge (estimated)Hubbert Curve (Primary & WF)Hubbert Curve (EOR & Infill)Hubbert Curve (combined recovery)

EOR & InfillWedge

(2.5 B bbls)

CombinedRecovery

(34.5 B bbls)

Primary & WFDevelopment

(32 B bbls)

Analysis Provided by Oxy Permian (2005)

Really Non‐Classic “Hubbert Curve”

Pk of 1.0 MM bopd

0.6 MM bopd & headed ‘North’

Compliments of Drilling Info

Texas RRC Districts Around Midland

Well Count

1971

EIA Violating the Hubbert Curve

Ref: EIA Annual Energy Outlook 2012, p. 95, Jun 2012

And the EIA Forecast*And the EIA Forecast*39

* AEO2012 dtd 6/12

AEO2112 Reference

Case Forecast

It is Official: Hubbert’s Curve is Dead

The EndThe End

Thanks Need to go to EORI and to Lon Whitman Thanks Need to go to EORI and to Lon Whitman for his Expert Help on several of the Slidesfor his Expert Help on several of the Slides

The COThe CO22 Conference Week is Coming!Conference Week is Coming!41

Be Part of the Conversation

For More Information See www.CO2Conference.net (Registration Begins after Labor Day)

We are seeing some really interesting things in the field

Backup SlideBackup Slide

42

Large Scale Power Plants w/ CCS  Projects (North America) 

USACapture

Project Name Leader Feedstock Size MW Process CO2 Fate Start-up Location

TCEP Summit Power Coal 400 Pre EOR 2014 Texas

Trailblazer Tenaska Coal 765 Post EOR 2014 Texas

Kemper County Southern Coal 582 Pre EOR 2014 Mississippi

HECA SCS Petcoke 390 Pre EOR 2014 California

FutureGen FutureGen Alliance Coal 200 Oxy Saline 2015 Illinois

WA Parish NRG Energy Coal 60 Post EOR 2017 Texas

CanadaCapture

Project Name Leader Feedstock Size MW Process CO2 Fate Start-up Location

Boundary Dam SaskPower Coal 110 Post EOR 2014 Saskatchewan

Bow City BCPL Coal 1000 Post EOR 2017 Alberta

Belle Plaine TransCanada Petcoke 500 Pre Undecided Undecided Saskatchewan