High Oil Prices Bring a Smile To Carbon-Dioxide Producers
05/14/2008 By Tom Nicholson
Kinder Morgan LLC A well is tapped in Colorado to supply carbon dioxide to enhance production from depleted oil reservoirs in Texas and Oklahoma. Rising oil prices are prompting costly efforts to enhance production from marginal reservoirs, using methods such as carbon-dioxide flooding to boost oil production. In response, suppliers are investing in or making plans for new CO2 wells, pipelines, compression facilities and other infrastructure.
“We are certainly seeing opportunities in this emerging market,” says Rob Smith, senior vice president of energy, chemicals and industrial at CH2M Hill, Denver, which is performing front-end engineering design for several CO2-related projects.
Most activity is centered around oil fields in Texas and major CO2 fields in Colorado, Mississippi and Louisiana. “It’s still a relatively small part of our portfolio at this point, but it’s growing significantly. We have recently seen several requests-for-proposals related to the CO2 market,” says Smith.
Major CO2 producers such as Kinder Morgan LLC and Denbury Resources Inc., both of Houston, indicate new investments for expansion and new construction of CO2 drilling and transportation infrastructure this year and next.
Denbury plans to invest $700 million to construct a 314-mile, 24-in. pipeline to pump CO2 from fields near Donaldson, La., to the Hastings oil field near Houston. Kinder Morgan is investing in CO2 drilling and transport operations in southern Colorado, with plans to expand infrastructure, such as new pressurization and dehydration facilities along its 504-mile CO2 pipeline from Cortez, Colo., to the Permian Basin oil fields in western Texas. The $200-million expansion includes more than a dozen new CO2 wells, and 10 miles of added pipeline.
Among oil producers “there is a tremendous push to convert from water flooding to CO2 flooding,” says Tim Bradley, president of Kinder Morgan. “Right now, there is big activity in the market in oil fields in Texas, Wyoming and Mississippi.”
Oil producers pump CO2 deep into oil fields, where the gas mixes with and swells the crude, decreasing its viscosity and enabling it flow more freely, greatly increasing recovery over the traditional water-flooding method. Doug McMurray, Kinder Morgan’s vice president of minerals business, points to examples of oil wells where production was increased by as much as 20,000 barrels per day through CO2 flooding. “There are formerly dead fields in Mississippi where wells had dried up that are now able to produce up to 4,000 barrels per day with CO2 flooding,” McMurray says.
“There is a lot of interest in CO2 happening quickly,” says Roy Long, oil and gas exploration and production technology manager at the National Energy Technol-ogy Laboratory, Morgantown, W.Va. Not only the major producers want CO2,“small oil operations in Oklahoma are having CO2 shipped in by truck,” he says.
Driven by concern over climate change, the growing interest in CO2 has sparked a rush of research for technology to make commercial use of industrial CO2, Long says. “There are still challenges to making industrial CO2 emissions viable, but there have been some promising developments in capturing CO2 from natural-gas and coal-gasification operations,” Long says.
Kinder Morgan and Denbury both operate facilities to separate CO2 from natural-gas processing facilities. Alstom Energy Inc., Windsor, Conn., has several pilot projects for a chilled-ammonia process that can be retrofitted to coal plants to capture CO2.
CO2 costs about $2 to $3 per thousand cu ft, according to NETL. “It has become a valuable commodity,” Long says. Extracting CO2 from coal gasification plants “is still currently cost-restrictive to commercial viability, but time will tell how quickly industry and technology will respond.”
