Security within reach

One promising technological solution that could possibly meet all three needs is the use of captured, anthropogenic carbon dioxide (CO₂), derived from the exploitation of lignite coal reserves, to drive electric power generation and support enhanced oil recovery (EOR) from existing and future oil and gas wells.

Anthropogenic CO₂: from waste to commodity resource

In one corner of the US energy world (metaphorically and geographically), we have anthropogenic CO₂, a byproduct of lignite coal gasification. Long-considered one of the "dirtiest," lower-grade forms of coal due to its high sulfur content, lignite remains one of the most plentiful types of coal in the United States. It also is one of the most widely available types of coal across the globe. Gasification of lignite can be made possible through the use of new technologies, and while bringing with it the cost of capturing and storing CO₂, it also transforms lignite coal into ammonia and other chemicals, including CO₂, which is traditionally considered a waste product, yet is now a useful commodity product.

In the other corner, we have extensive oil reserves, many of which already have been relieved of their initial 18% to 20% of available petroleum through natural pressure. Many of these wells also have been subjected to waterflooding, a process that generally recovers another approximately 20% or so of the oil or gas in the well. This leaves nearly 60% of the well still untapped oil and gas in mature oil fields, and for which the next step to for extraction is the injection of CO₂ at supercritical pressures and temperatures, which then interacts with the oil to form a miscible substance, thereby achieving total oil recoveries of up to 65%.

The US Department of Energy estimates that 20 billion tons of captured CO₂ could produce 67 billion barrels of economically recoverable oil. Approximately 90% of this CO₂ could be sourced directly from industrial activities within the United States.

Technologies do exist that can help produce, capture, and bring anthropogenic CO₂ to these mature oil fields, where it can be used for enhanced oil recovery efforts. For example, Southern Company, working with the DOE and other partners, has developed cleaner, less expensive, more reliable methods for producing electricity with coal that also support EOR production. Rather than burning coal directly to make electricity, through gasification technology the coal is broken down into chemical components, impurities removed before it is fired, avoiding certain emissions, and taking gases that result from this chemical breakdown to fuel integrated gasification combined cycle power plants. These plants are more efficient and therefore cleaner than traditional coal-fired power plants.

A process called Transport Integrated Gasification uses air rather than pure oxygen, and lower-grade sub-bituminous and lignite coals, resulting in a lower cost in the gasification process. This helps to make carbon capture and geological storage more economical than capture and storage at existing coal plants. The TRIG technology is installed in the first ever coal gasification plant in Kemper County, Mississippi, and its CO₂ offtake will support the EOR production for producers along the Gulf Coast region. The question, therefore, is to what extent these types of technology can provide anthropogenic CO₂ needed for EOR production.

Between the coal, power generation, and oil and gas industries, these new technologies could possibly provide a profitable pathway to energy security in the US for the next 100 years, if not longer. What's more, this technology transforms what was once considered an unusable and not highly sought after type of coal into a marketable coal that transforms CO₂ into a valuable commodity and resource, while generating power and producing oil and gas. This is an opportunity that the United States cannot afford to ignore. Studies already conducted in Europe and elsewhere have indicated that such technology has considerable potential to improve oilfield recovery rates. Even the World Bank has noted that the use of captured CO₂ can help ensure that existing oilfields are used for their full potential, rather than being closed prematurely and replaced by the opening of new fields.

What are the benefits of marrying lignite and EOR production through coal gasification technology?

Marrying lignite gasification technology with EOR production offers benefits in each of the key areas as stated earlier.

Long-term energy security. There is no doubt that coal and oil resources are finite. The primary question facing the United States - and the world, for that matter - is whether or not traditional energy sources are sufficient to supply future power needs while other sources are being explored and developed. The effects of energy shortages and energy inequality are well documented, and energy shortages and disputes should be minimized, if not prevented altogether.

The United States is currently in a strong position as a producer and supplier of energy. By promoting the use of anthropogenic CO₂ through coal gasification for EOR production, we can greatly extend the period during which we can ensure energy security, for this country and for many other nations.

Environmental quality. These new technologies not only help remove CO₂ and other potential waste products from being released into the environment while generating power, they create a market in which carbon sequestration is not simply mandated, but is a desirable and potentially profitable activity. When CO₂ becomes a valuable resource, it is in the best interests of everyone to capture as much of it as possible, further limiting potentially negative effects on air quality and climate change while meeting our nation's energy needs, whether through power generation or oil and gas production.

Economic growth. CO₂ EOR offers significant economic benefits at every stage of its production and use, not the least of which is job creation. The development, implementation, and construction of CO₂ capture technologies, pipelines, EOR facilities, and other infrastructure assets can generate several waves of job creation, from scientists and technology professionals, to construction and oil field workers. Economic growth will, in turn, lead to increased tax revenues for local, state, and federal governments.

For the coal industry, these technologies create a market for coal gasification byproducts and reduce the costs associated with carbon sequestration and storage. And as the economics of carbon capture technologies expand and improve, their deployment becomes increasingly cost-effective for oil companies as well, enabling them to exploit valuable oil resources that were previously left untapped.

What could be the challenges ahead?

The arguments for the increased use of CO₂ capture technologies and their deployment in EOR make considerable sense, at least on paper. Why have we not seen greater adoption of these technologies in the real world?

Long-term commitment, short-term thinking. In their early stages, all new technologies are expensive. This is as true for computers and cars as it is for carbon sequestration and EOR. Twenty years ago, cell phones weren't just large, they were prohibitively expensive for the average consumer. Today, virtually everyone around the world can afford a basic smartphone, and it has become a primary form of communication for billions of individuals. It is the same story for flat-screen television sets and laptop computers.

In each of these industries, customer adoption of these new products and processes was not the sole driver of lower prices. Rather, government involvement and direct investment promoted the development of cost-effective technologies and widespread infrastructure that ultimately created sustainable markets for producers while reducing per-unit prices for consumers.

The US federal government should again take a long-term approach with an increased focus on the development of technologies for coal gasification and CO₂ capture, thereby supporting EOR production. Tax and employment credits provided today, for example, can go a long way toward helping support coal- and oil-company use of these tools. If they have the will, lawmakers can create a 20-year plan to encourage this growing industry - which, in comparison to more than a century of potential energy security, is a very small price.

Misalignment of federal agency objectives. In Washington, DC, the DOE and the Environmental Protection Agency appear to be at odds when it comes to CO₂ policy. While the DOE has expressed support for the use of CO₂ in EOR, the EPA has raised numerous roadblocks. The EPA has suggested, for example, that if a producer of CO₂ sells that product to a customer downstream, that customer will likewise need to establish a complex monitoring and reporting system under the Clean Air Act.

What a difference it might make if both agencies could come to an agreement about the many benefits of these technologies and work together to remove the regulatory barriers that limit their continued development and use. Rather, our government should create a pathway to explore the real-world impacts of these technologies so that their benefits can be fully demonstrated and promoted.

Lack of infrastructure. One of the biggest challenges facing the industry is how to move anthropogenic CO₂ from coal-fired power plants to oilfields? Pipelines are the logical choice, but as of today, such a national grid does not exist. Industry players must work together with government to develop a rational solution to this problem. And, the states must work to protect the interests of the owners and operators of these pipelines so they are not classified as common carriers. If a pipeline dedicated to CO₂ off take from a power plant is to supply EOR production, the power plant and the EOR producer must be able to rest assured that they will have complete control over the pipelines in order to meet emission requirements and contractual commitments. And what always must be kept in mind is that the creation of the necessary infrastructure is about more than up-front costs - it is also about the creation of jobs and increased tax revenues.

Discuss now, but don't forget to act

EOR is an exciting option with broad potential to create energy security, promote environmental quality, and promote economic growth, while enhancing the use of our natural resources that otherwise would be unmarketable - lignite coal - and helping to solve our nation's growing energy crisis. The time is now to begin discussing these technologies more broadly.

But the importance of acting quickly should not get lost in that discussion. One way or another, we are facing a future in which increased energy demands may be met with decreased energy supplies. We must take action today to prevent that gap from occurring.

About the author

Marc C. Hebert is a partner with Jones Walker LLP in the firm's Business & Commercial Litigation Practice Group. He represents clients in the energy, marine, transportation, and manufacturing industries, and before US federal courts, US federal agencies, the US Congress, and foreign governments on regulatory, administrative, and legislative matters. He has published articles and spoken at seminars about international trade, maritime and energy and environmental law and policy.