The Role of EOR in CO 2 Capture and Storage Lessons and Opportunities

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1 The Role of EOR in CO 2 Capture and Storage Lessons and Opportunities Xavier H. Maasarani New Business Development Manager Shell EP International Kuwait, 7-8 February 2012 Copyright Shell International B.V. February

2 DEFINITIONS AND CAUTIONARY NOTE Copyright of Shell International B.V. February

3 ENERGY OUTLOOK GLOBAL ENERGY MIX SHELL STRATEGY 1 Upstream 2 Downstream 3 Climate change CCS and energy efficiency Grow gas and biofuels 4 Financial Copyright of Shell International B.V. February

4 SHELL S RESPONSE TO THE CO2 CHALLENGE Supplying More Natural Gas Supplying More Biofuels Progressing CCS Energy Efficiency In Our Operations and in Helping Others Copyright of Royal Dutch Shell Plc 4

5 SHELL DEVELOPING CCS TECHNOLOGIES FOR THE FUTURE Copyright of Shell International B.V. February

6 SHELL INVESTING IN THE CARBON CAPTURE VALUE CHAIN CAPTURE SOURCES N 2 O 2 N 2 O 2 Post Combustion Shell-MHI alliance Cansolv technology Mongstad project Coal Gas Biomass Power & Heat CO2 Separation Air CO 2 Pre Combustion Shell Gasification technology Coal Biomass HR Gasification Air/O 2 Steam CO 2 Separation H 2 Air Power & Heat N 2 O 2 CO 2 CO 2 Compression Oxyfuel Shell R&D Coal Gas Biomass Power & Heat O 2 CO 2 & Dehydration Air Air Separation N 2 Industrial Processes Shell techology Coal Gas Biomass Air/O 2 Process + CO 2 Separation Project Quest and Barendrecht Raw material Gas, Ammonia, Steel Copyright of Royal Dutch Shell plc 6 CO 2

7 CO 2 EOR STORAGE, HOW IT WORKS CO 2 CAPTURE CO 2 TRANSPORT CO 2 OIL BRINE PROCESSING CO 2 INJECTION 1. CO 2 capture pre-/post-combustion industrial Oxy-fuel or other sources 5. Oil separated for export, water disposal Oil 6. CO 2 recycled back to reservoir Gas Source CO 2 pipeline 2. CO 2 transported offshore by pipeline 3. CO 2 injected into reservoir, alternating cycles with water Flowlines Wells 4. CO 2 sweeps oil from reservoir CO 2 Flood 7. CO 2 left in reservoir after EOR Large investment typically required for CO 2 EOR projects Complex with specialized capabilities needed Copyright of Shell International B.V. February

8 CO 2 EOR STORAGE, HOW IS DIFFERENT FROM CCS After injection stops in CCS aquifer storage, most CO 2 is trapped structurally or stratigraphically, but is still a mobile phase CO 2 progressively becomes locally immobilized through residual, solubility and mineral trapping During the EOR operation some CO 2 is trapped by capillarity residual trapping and dissolution. Therefore, more or less contained. After injection stops in conventional WAG EOR project, most CO 2 left in reservoir is already present as an immobile trapped saturation or dissolved in brine Much reduced scope for lateral or vertical migration Copyright of Shell International B.V. February

9 BRIDGE COMMERCIAL GAP TO MARKET DRIVEN CCS A Need to refocus and expand R&D for a range of CCS technologies B Earlier deployment through demonstration No early adopters and high start-up costs so the demonstration phase will need help ,000 Number of installations The CO 2 market drives deployment C A) Industry developing technology and capabilities B) Government financial support for large scale demonstration projects and infrastructure C) Cap & trade framework, liability issues resolved Steady state where CO 2 price support CCS Power generation without CCS Capital costs for new CCS technologies will drop with repetition, economy of scale and infrastructure planning EOR projects can help enable early capture demonstrators Government support will be required to close the commercial gap for earlier deployment projects Copyright of Royal Dutch Shell plc

10 EXAMPLE OF ACTIVE GOVERNMNET SUPPORT: Alberta Canada s investment in CCS demo projects (>11MTpa) $3bln in public funding $7bln total investment CO 2 is sourced from different locations, transported by pipelines to suitable oil or gas reservoirs for EOR After the depletion of the reservoir, the CO 2 remains permanently stored in the depleted field oil pools are technically suitable. 110 pools have > 1MT CO 2 capacity. 988 MT CO 2 stored (Bachu, 2004) Alberta Carbon Trunk Line an analog for a transnational Middle East CO 2 infrastructure Copyright of Shell International B.V. February

11 CO 2 EOR TAKING A GAME WE KNOW INTO THE FUTURE SHELL INTO THE FUTURE OF CO 2 EOR DENVER UNIT CO 2 PROJECT Proven Technology 30+ years experience Difference for the Future Anthropogenic CO 2 Carbon Capture and Storage alternatives Next Wave Integration Source-Sink frameworks Developed by Shell Largest CO 2 project in the world more than 400 MMscf/d sustained CO 2 injection in >100 patterns over 200 MMscf/d gas processing/recycling on site surveillance and management of CO 2 EOR in various areas Cost reductions Recovery improvements Copyright of Shell International B.V. August

12 CO 2 - EOR CAN T PAY FOR CCS BUT HAVE ADVANTAGES CO 2 EOR (Pros / Cons ) Cost and revenue CO 2 injection (WAG) > oil and CO 2 production > recycling CO 2 highly soluble in oil and brine Trapping mechanism proven Pressure maintenance No public un-acceptance Historic framework for permitting and monitoring (reservoir surveillance) Immobile nature of CO 2 after EOR projects should reduce the need for long term MMV Many wells oil fields have significantly more potential leak paths from abandoned E&A wells and production wells, which may not have been abandoned with CO 2 storage in mind Conventional EOR projects are optimized to maximize oil recovery and minimize CO 2 usage CCS (Pros / Cons ) Cost only CO 2 injection Weak CO 2 dissolution in brine Assumed trapping Extensive areas of pressure increase in target reservoir Poor public acceptance Strict regulatory requirements for permitting and monitoring Significant uncertainty on who should be responsible for long-term liability for pure CCS (requirement for MMV) Few wells CCS REQUIREMENT TO ACCELERATE DEPLOYMENT Close commercial gap for early CCS projects Enable deployment of CCS in emerging economies Progress CCS regulatory framework to implementation Achieve Public awareness and support for CCS Build on proven CO 2 -EOR industry where possible Assess available pore space, develop CO 2 transport/hubs Global knowledge sharing to maximize learning from early projects 12

13 IT S ALL ABOUT THE BALANCE MATERIAL BALANCE CARBON ROUTES FINANCIAL BALANCE STAKEHOLDERS BALANCE Above ground REVENUE - Oil / gas CDM Public fund Regulator On ground COSTS = Capture Transportation Processing Storage Industry Public Below ground BALANCE > 0 To be determined by market forces Make carbon tradable leads to efficiency Shell believes that a market-based approach is most appropriate to achieve a credible and sustainable CO 2 price Copyright of Royal Dutch Shell plc 13

14 Q & A 14

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