Progress and Outlook of Yanchang Integrated CCUS Demonstration Project. Shaanxi Yanchang Petroleum (Group) Co., Ltd,China

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1 Progress and Outlook of Yanchang Integrated CCUS Demonstration Project Shaanxi Yanchang Petroleum (Group) Co., Ltd,China

2 Yanchang Petroluem Shaanxi Yanchang Petroleum (Group) Co., Ltd is one of four qualified enterprises for oil and gas exploration and production in China, and also a large integrated energy chemical company aiming at the high efficiency use of coal, oil and gas. In 2015, Yanchang became No.380 of Fortune Globe top 500 companies. Oil & Gas Exploration Oil & Gas Production Oil Refining Oil & Gas Transportation Oil & Chemicals Trading Coal Mining Chemical Engineering Equipment Manufacturing Engineering Construction Research Development Solar Photovoltaic Financial Service Business of Yanchang Petroleum

3 Part 1 Part 2 Part 3 Part 4 PROJECT BACKGROUD Carbon Emission Reduction is a global Issue In 2014, China released China s National Plan on Climate Change ( ),has pledged to reduce carbon emission by 45% for per unit GDP by 2020 from the 2005 level. In 2015, China signed U.S.-China Joint Presidential Statement on Climate Change In 2016, China signed the Paris Agreement on Climate Change 3

4 Part 1 Part 2 Part 3 Part 4 PROJECT BACKGROUD Social Responsibility Development Need CO 2 Near Zero Emission in Coal Chemical Industry Yanchang Petroleum is the largest provincial state-owned enterprises in north-west China. It s our responsibility to fight against climate change. Water Shortage during Water Flooding Development PROBLEM S Low Permeability Oilfield Development 4

5 Part 1 Part 2 Part 3 Part 4 Advantages of Yanchang CCUS Project Advantages Coal Chemical Industry Abundant CO 2 Source Low Cost, High Purity CO 2 Source- Sink Matchin g CO 2 -EOR and Storage Good Geological Conditions for Safety Storage Huge storage capacity in oil reservoir and saline aquifer CO 2 -EOR 5

6 Part 1 Part 2 Part 3 Part 4 Advantages 1 Abundant Carbon Dioxide Sources and Huge Storage Space in Ordos Basin (1)Abundent CO 2 Emission Source More than 100 mtpa CO 2 emission in Ordos Basin (2)Storage Capacity 1.2 billion tonnes of oil reserve is suitable for CO 2 -EOR, 0.4 billion tonnes of CO 2 can be safely sequestrated. (3)Saline Aquifer Huge Storage capacity in Saline Aquifer (>1 billion tonnes) 6

7 Part 1 Part 2 Part 3 Part 4 Advantages 2 Yanchang s Unique Source-Sink Advantages Yanchang s business is including multiple coal chemical plants and oil & gas fields, which is unique source-sink conditions for CCUS project.t Oil & Gas Exploration Oilfield Development 陕北油区 煤化工 燃煤电厂分布图 Coal Mining Coal Chemical Plants 7

8 E1603 P-102 P-1542 P-1546 P-1545 Part 1 Part 2 Part 3 Part 4 PROGRESS 1. Low Cost CO 2 Capture Technology in Coal Chemical Industry Project Highlights CO 2 Source: Coal Gasification Process High Purity: CO 2 = 99.6% Low Capture Cost: <120 Yuan ($19) Low Transportation Cost E1621 E1622 V1621 E1605 T1621 E1623 E1624 P1621 T1603 E1614 V1606 T1604 P1606 T1605 T1606 E1617 E1620 非变换气冷却器 1# 甲醇深冷气 2# 水分离器非变换气冷却器非变换气洗涤塔 3# 甲醇深冷气 4# 甲醇深冷气甲醇加压泵 H2S 浓缩塔 H2S 馏分换热器回流罐甲醇再生塔甲醇深冷气再生回流泵醇水分离塔尾气吸收塔醇水分离塔再沸器废水冷却器 T1601 E1606 E1603 E1604 V1602 V1603 V1605 E1612 E1613 E1610/A/B/C/D E1612 E1618 E1609 E1615/A/B V1604 变换气洗涤塔循环甲醇冷却器 1# 甲醇冷却器 1# 甲醇深冷器 1# 甲醇闪蒸罐 2# 甲醇闪蒸罐酸性气分离器再生塔回流深冷器 H2S 深冷器 1# 贫甲醇冷却器醇水分离器进料换热器贫甲醇冷却器 2# 贫甲醇冷却器醇水分离器进料换热器贫甲醇储罐 E1612 去硫回收 E1623 E1614 非变换气 E1621 T1621 V1606 去膜分离 P1606 E1624 P1621 E1613 V1621 T1603 T1604 E1622 V1605 E1615A T1605 脱盐水 V1607 T1606 变换气 E1601 E1606 E1605 E1615B 去甲醇 合成 E1617 T1601 E1604 V1602 V1603 E1610 补甲醇 V1604 补甲醇 碱液 V1601 E1607 E1619 S1601 E1609 E1618 S1602 E1620 去污水 E1608 E108 C1601 E1617 E-439 P1601 P1603/A/B 去甲醇灌区 P1604 P1605 P1607 E1601 V1601 E108 C1601 变换气冷却器 1# 水分离器循环气预热器循环气压缩机 E1607 V1607 E1617 E1608/A/B/C P1601/A/B E1619 P1603/A/B S1601 甲醇换热器 甲醇闪蒸罐 N2 预冷换热器 3# 贫甲醇冷却器 H2S 浓缩塔甲醇泵 贫甲醇冷却器 Rectisol Process 甲醇再生塔给料泵 富甲醇过滤器 P1604/A/B P1605/A/B S1602 P1607/A/B 贫甲醇泵醇水分离塔给料泵富甲醇过滤器尾气洗涤水泵 Location of CO 2 Capture and Injection Sites 8

9 Part 1 Part 2 Part 3 Part 4 PROGRESS 1. Low Cost CO 2 Capture Technology in Coal Chemical Industry In November 2012, a 50,000 t/a CO 2 capture facility has been built at Yulin Coal-chemical Plant. 99.6% purity of CO 2 is captured using a Rectisol process, then delivered to injection sites for CO 2 -EOR and storage. 50,000 t/a CO 2 Capture Project Operated by Yulin Coal Chemical Company 9

10 1 0 Part 1 Part 2 Part 3 Part 4 PROGRESS 2. CO 2 -EOR Experiment Assessment Establishing a CO 2 -EOR assessment system based on physical simulation experiment in formation conditions. Test: Minimum Miscibility Pressure(MMP) Test CO 2 -Oil Phase Behavior Test Influence of CO 2 Injection on Reservoir Influence on CO 2 -EOR Efficiency Channeling and Sealing system Modified starch gelatum system Flowing gelatum Fracture sealing

11 1 1 Part 1 Part 2 Part 3 Part 4 PROGRESS 3. Injection-production Casing String Design and Anti-corrosion Technology Injection-production casing string design has been optimized, Anti-corrosion technology has been determined as ordinary steel+ inhibiter Injection system Production system

12 1 2 Part 1 Part 2 Part 3 Part 4 PROGRESS No. Reservoir 4. CO 2 geological Storage Capacity Assessment System A new CO 2 geological Storage Capacity Assessment System has been established in consideration of interaction between CO 2 -EOR and Storage. The result shows the effective CO 2 storage capacity could be 0.4 billion tonnes in Yanchang oilfield. Geological Reserves (10 4 t) Storage Capacity (10 4 t) EOR (%) Incremental Oil Production Tonnes of CO 2 Storage Coefficient 1 杏子川 - 化子坪区 - 长 2 层 靖边 - 乔家洼 - 长 6 (Jingbian) 永宁 - 永宁油区 - 长 西区 - 义吴 - 长 4+5 长 6 长 定边 -- 延 七里村 - 郭旗西区 - 长 直罗 - 埝沟 - 长 南区 - 湫沿山 - 长 吴起 - 油沟 - 长 4 长 5(Wuqi)

13 Part 1 Part 2 Part 3 Part 4 PROGRESS 5. Underground Surface Atmosphere CO 2 Storage Monitoring System Casing string Monitoring Soil Gas Monitoring Online Monitoring System 3D-Seismic Monitoring Vegetation Physiological & Biochemical Analysis 1 3 Sample Analysis

14 1 4 Part 1 Part 2 Part 3 Part 4 PROGRESS 6. CO 2 -EOR and Storage Pilot Test 1 Jingbian CCS Pilot Site Pay-zone Depth:1300m-1600m Injection Pressure: 8.3Mpa Reservoir Temperature:44 Liquid Production/well: 0.53m 3 /d 1.05m 3 /d Oil Production/well: 0.17 t/d 0.33 t/d Water-cut: 64% Since September 2012, the total amount of CO 2 injection is 87,300 tons.

15 1 5 Part 1 Part 2 Part 3 Part 4 PROGRESS 6. CO 2 -EOR and Storage Pilot Test 2 Wuqi CCS Pilot Site Pay-zone Depth:2000m Injection Pressure: 9.5Mpa Reservoir Temperature:60 Liquid Production/well: 2.88m 3 /d 3.07m 3 /d Oil Producton/well: 1.91 t/d 2.23 t/d Water-cut decrease: 6.5% Since September 2014, the total amount of CO 2 injection is 380,000 tons.

16 1 6 Part 1 Part 2 Part 3 Part 4 PROGRESS 7. Yanchang 360,000 t/a Integrated CCUS Demonstration Project The feasibility study of 360,000 t/a CCUS Demonstration Project has been approved, the project is now in the construction scheme design phase. 360,000 t/a CO 2 Capture Project in Yulin Energy and Chemical Company

17 1 7 Part 1 Part 2 Part 3 Part 4 FUTURE PLAN Phase 1:36 万吨 / 年 CCUS 示范工程 360k tons/year CCUS project. Phase 2:100 万吨 / 年 CCUS 工业化应用 1 million tons/year CCUS project. Phase 3:400 万吨 / 年 CCUS 推广应用 4 million tons/year CCUS project. CO 2 Capture Site CO 2 Injection Site(Phase 2) Pipeline(Phase 1) Pipeline(Phase 3) CO 2 Injection Site(Phase 1) CO 2 Injection Site(Phase 3) Pipeline(Phase 1)

18 Well Testing in Yanchang oilfield Wuqi reservoir Date: 27 st June 2018 Vahab Honari

19 Acknowledgements Professor Andrew Garnett; Professor Jim Underschultz; Professor Xingjin Wang For their contribution and support, UQ would like to acknowledge: Commonwealth Government of Australia; ACA Low Emissions Technology Pty Ltd (ACALET). Disclosure The UQ-Surat Deep Aquifer Appraisal Project (UQ-SDAAP) is forecasted to run until end April 2019 within total current budget limit of up to AUD$8.1 million. The project is currently funded by the Australian Government, through the CCS RD&D programme, by ACA Low Emissions Technology (ACALET) and by The University of Queensland. Disclaimer The information, opinions and views expressed here do not necessarily represent those of The University of Queensland, the Australian Government or ACALET. Researchers within or working with the UQ-SDAAP are bound by the same policies and procedures as other researchers within The University of Queensland, which are designed to ensure the integrity of research. The Australian Code for the Responsible Conduct of Research outlines expectations and responsibilities of researchers to further ensure independent and rigorous investigations.

20 Research Collaborators: China University of Mining Technology Beijing, Yanchang Petroleum Company, Thanks also to APLNG, Bridgeport Energy, Shell/QGC and Armour Energy for provision of proprietary data and models for the wider Surat Deep Aquifer Appraisal Project. Acknowledgements to Schlumberger, Computer Modelling Group and IHS Markit for provision of modelling software

21 Yanchang oilfield map Location of CO 2 Capture and Injection Sites

22 CO 2 geological Storage Capacity Assessment System No. Reservoir Geological Reserves Storage Capacity EOR (10 4 t) (10 4 t) (%) Incremental OilProduction Tonnes of CO 2 Storage Coefficient 1 杏子川 - 化子坪区 - 长 2 层 靖边 - 乔家洼 - 长 6 (Jingbian) 永宁 - 永宁油区 - 长 西区 - 义吴 - 长 4+5 长 6 长 定边 -- 延 七里村 - 郭旗西区 - 长 直罗 - 埝沟 - 长 南区 - 湫沿山 - 长 吴起 - 油沟 - 长 4 长 5(Wuqi)

23 Wuqi CCUS Pilot Site Pay-zone Depth:2000m Injection Pressure: 9.5MPa Reservoir Temperature:60 Liquid Production/well: 2.88m 3 /d 3.07m 3 /d Oil Production/well: 1.91 t/d 2.23 t/d Water-cut decrease: 6.5% Since September 2014, the total amount of CO 2 injection is 380,000 tons.

24 Project objectives Design and implement a long pumping test in Wuqi reservoir (tight reservoir with average permeability of 2mD). Achieve a relatively large radius of investigation. Quantify any existing heterogeneity/fracture in the reservoir. Use dynamic reservoir pressure response acquired from this test to de-risk the prediction of carbon storage capacity and injectivity.

25 Static and History matched dynamic model Wireline logs were interpreted and grid properties were upscaled/distributed across the model. Experimental data for Wuqi fluid and rock properties were incorporated into the model. 4 water injection wells (blue stars) were in the selected area of interest for this study. The monthly historical water injection rates were used in conjunction with history production rates to calibrate the sub-sector model.

26 Interference test design trial using two monitoring wells Well 106 (blue star) was considered as injection well and 101 (located 270 m apart from 106) and 103 (located 325 m apart from 106) (green stars) as the monitoring wells. Only well 101, 103 and 106 were shut-in in the model during the test. The initial shut-in period of at least 60 days (for base case K=2mD) would be essential to acquire interpretable data at the observation well. This needs to follow up with 120 days of injection and 30 days of FO. The flow rate needed to be 7 m 3 /day (44 bblday). 2000m

27 Fissured system Transition Fall Off period 60 days Initial shut-in relaxation (101 and 103), 120 days INJ at rate of 44 STB/day (7m 3 /day) and 30 days FO (210 days total) Bourdet (2002) Chaudhry (2004) Initial shut-in period Injection period Flooded zone Partially flooded zone Nonflooded zone Interpretation of FO pressure response at injection well (106) using IHS WellTest software Pressure response in injection (106) and two monitoring (101 and 103) wells modelled in Petrel RE The ROI at injecting well was about 140 m. This is just at the outer edge of water flooded zone. Calculated permeability at the injection well was 0.29 md.

28 60 days Initial shut-in relaxation (101 and 103), 120 days INJ at rate of 44 STB/day (7m 3 /day) and 30 days FO (210 days total) Monitoring well 101 Monitoring well 103 Interpretation of INJ pressure response at observation wells (101 and 103) using type-curve matching described by Earlougher (1977). The INJ data at observation well was matched with the type-curve, resulting in K=0.45 md and 0.51 md at well 101 and 103, respectively.

29 CO 2 Injection period CO 2 Fall Off period 60 days Initial shut-in relaxation (101 and 103), 120 days INJ at rate of 44 STB/day (7m 3 /day) and 30 days FO (210 days total) followed by 60 days of CO 2 injection (4000 sm 3 /day) and 90 days of shutin (BHP<=200bar) The log-log plot derived from the CO 2 injection into the water flooded oil reservoir would potentially predict the gas front and water front as well as the formation (relative) permeability change when CO 2 is introduced to the reservoir. All interference test sequences Water front CO 2 front Pressure response in injection (106) and two monitoring (101 and 103) wells modelled in Petrel RE Interpretation of FO pressure response at injection well (106) using IHS WellTest software

30 Summary This is a low permeability reservoir. Thus, any new disturbance to the reservoir system causes long lasting effects that make the data collection/interpretation challenging. The interference test with two monitoring wells sequence with a follow-up CO 2 injection test is the most favourable, achieving the test objectives of establishing the reservoir characteristics and constraining dynamic CO 2 storage capacity within a reasonable testing time. The largest current uncertainty remains to be the bulk reservoir permeability.

31 Summary (2) Based on assumptions about permeability the best test options are: Phase 1 Interference test: A days initial shut-in relaxation at the monitoring (101 and 103) wells, B days INJ at the injection (106) well at rate of 44 STB/day and C days FO; Phase 2 The INJ-FO test will be followed by CO 2 INJ and FO with the period of D and E, respectively. Note*: As the test is being run and real time P/T readout is observed, we will be able to determine which permeability scenario is most likely and make decisions on test segment duration accordingly. Average permeability (md) Initial shutin time (day) Injection period (day) Fall off period (day) CO 2 injection (day) CO 2 falloff period (day) Total testing period (day) A B C D E F

32 Thank you