NETL: Carbon dioxide for EOR provides model for pipeline system

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Feb. 3 -- A private sector model with a state-based regulatory system, instead of one that is federal, will “most likely result in a robust” US carbon dioxide pipeline system, according to a new report funded by the US Department of Energy’s National Energy Technology Laboratory.

The approach oil producers used to develop pipelines to transport CO2 to fields for enhanced recovery is a good starting point, NETL added. But a federal role that includes incentives to encourage private construction of CO2 pipelines would be an important factor in moving the concept forward, it said.

The report, “A Policy, Legal, and Regulatory Evaluation of the Feasibility of a National Pipeline Infrastructure for the Transport and Storage of CO2,” analyzes a potential system which would move CO2 from power plants and other large sources to designated underground storage locations.

The Southwest Regional Carbon Sequestration Partnership (Secarb) contracted with the Interstate Oil & Gas Compact Commission to develop the report, which was undertaken by the DOE-funded Pipeline Transportation Task Force that IOGCC and the Southern States Energy Board lead. PTTF is comprised of regulators, policymakers, and industry representatives and is trying to overcome hurdles associated with CO2 pipeline development, NETL said.

In its executive summary, the report said use of CO2 for EOR remains the primary driver for US carbon capture and storage (CCS) deployment. “However, national carbon control policies on the horizon could lead to expanded deployment of CCS in the near future,” it said. “If CCS continues to evolve, a national CO2 pipeline infrastructure of sufficient scope and capacity will be needed to handle the expected volumes.”

Effective model
It said the US has developed an effective model for geologic storage of CO2 in the Permian basin while effectively producing more crude with EOR. While CO2-driven EOR is not focused on carbon storage, it has resulted in a large volumetric amount of storage at a regionally significant scale of up to 35 million tons/year, the report said.

“The potential for oil recovery from large reservoirs in the Southwest drove the industry to find a way to connect sources of CO2 with sinks or reservoirs that could benefit from CO2-driven EOR,” it noted. “This was accomplished using a private capital model with relatively small incentives from federal and state governments. Oil revenues provided the cash flow and debt collateral.”

This private sector response has been replicated throughout much of the US with minimal federal oversight, leaving most of the regulatory responsibility to the states, the report indicated. Natural CO2 fields were expensive to develop, but less expensive than the investment required for CO2 captured from coal-fired power plants or industrial sources, it said. “If federal carbon reductions are imposed, the scale of CO2 infrastructure in the southwestern US, although large, will pale in comparison with envisioned US CCS infrastructure,” it said.

A national CO2 pipeline transportation network is necessary because many large carbon-generating plants are not near low-risk, high-volume sinks, and not all capture technologies can be moved to areas with large storage capacities, the report said.

It noted that while the 4,000 miles of CO2 pipelines have already been built through a variety of business models (open access, dedicated access, interstate, and intrastate), each used a private-sector approach with limited government involvement from either a regulatory or financial standpoint.

State, federal roles
States have dominated the regulatory model by providing siting, construction, and operating regulations and some economic regulation on a state-by-state basis, the report said. The federal government regulates safety parameters of CO2 pipelines and right-of-way provisions where the pipelines cross federal land, it said.

“The IOGCC/SSEB Pipeline Transportation Task Force believes the model that will most likely result in a robust CO2 pipeline system in the US is a private sector model, with a state-based regulatory framework, rather than a federally dominated or expanded regulatory role,” the report said. “While the PTTF believes that the current level of federal regulatory oversight is sufficient, members recommend a federal role that includes incentives to encourage the private construction of CO2 pipelines.”

CO2 pipeline economics have been led so far by private sector market demand primarily for EOR, it said. EOR sinks could function as significant anchors for future CO2 pipeline to meet costs of long-distance transportation from sources which otherwise might not have an available link because of distance and costs, it suggested.

“A federal mandate that requires carbon capture will not change CO2 pipeline distances, the costs of transportation, location of sinks, CO2 sources, and the potential adverse reactions from population centers,” the report pointed out. “These factors must be considered when evaluating carbon capture mandates, their efficacy, and the significant challenges of capturing and transporting enormous quantities of CO2 across the US.”

Economic aspects
The report’s final section examines the economic aspects of more extensive CO2 pipeline development. It looks at all aspects of physical infrastructure expenses, including capital and material costs, land acquisition costs, and operational and maintenance expenses. Options such as cost recovery for pipeline infrastructure in regulated utility markets and federal economic incentives, such as income and property tax incentives, grants, and loans) to offset pipeline infrastructure expenses are also examined.

“To date, the states have enabled a market-based, robust system to transport CO2 for use in EOR,” the report said. “Build-out of an extensive pipeline system to accommodate CO2 transport from several hundred coal plants most likely will occur over an extended period of time. State solutions and interstate compacts are expected to offer the support necessary for those installations.

“However, there may be scenarios in which federal agencies could play a more significant role in the development of the pipeline infrastructure,” it continued. “An aggressive, short lead-time program that requires CO2 to be disposed of also could require further federal participation. If a large number of power plants and other sources are required to sequester CO2, adequate storage sites might require long distance pipelines that cross state lines, which could necessitate a mix of state and federal activity to address those challenges.”

Contact Nick Snow at nicks@pennwell.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

BHI: US oil rig count rises for first time in 30 weeks

07/02/2015 A sudden 12-unit jump in oil-directed rigs during the abbreviated week ended July 2 represented their first rise since Dec. 5, 2014, and helped lif...

Quicksilver Canada gets LNG export approval

07/02/2015 Quicksilver Resources Canada Inc. has received approval from the National Energy Board of Canada to export 20 million tonnes/year of LNG from a pos...

Origin lets contract for Otway basin fields

07/02/2015 Origin Energy Ltd., Sydney, has let a $1.3 million (Aus.) contract to Wood Group Kenny for provision of a detailed engineering design for the onsho...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...

Woodside-led Browse FLNG venture enters FEED phase

07/01/2015 The Woodside Petroleum Ltd.-led Browse LNG joint venture has entered the front-end engineering and design phase for a floating LNG (FLNG) developme...

Case for Keystone XL has grown stronger, TransCanada tells Kerry

06/30/2015 Canada is taking strong steps toward combating climate change, and the proposed Keystone XL pipeline crude oil pipeline remains in the US national ...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected