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Mon 17 Nov 2008 04:00 AM

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Carbon conundrum

Minimising the environmental impact of fossil fuels and enhancing oil recovery are front running issues for oil companies world wide.

Minimising the environmental impact of fossil fuels and enhancing oil recovery are front running issues for oil companies world wide.

The oil and gas industry is embroiled in the challenge of worldwide climate change more than most, with fossil fuels contributing much of the harmful carbon dioxide (CO2) released into the atmosphere.

The greenhouse effect - CO2 and other greenhouse gases absorbing infrared radiation from the sun, resulting in global warming - has been recognised by all but the most ardent industrialists as a real phenomenon, and in turn governments and companies have begun pushing development of technologies to address the situation.

One such technology is carbon capture and storage (CCS), which involves reducing carbon in the atmosphere by capturing it. What is then done with the captured carbon has been an obvious stumbling point for the development of the technology, but now there is a viable solution provided by the oil and gas industry - enhanced oil recovery (EOR) injection of CO2 into reserves that are depleting.

Greenhouse gases or man-made CO2 capture will play a huge part in Shell’s future. We are working on developing capturing techniques for CO2 that would otherwise be emitted, such as industrial flue exhausts. - Val Brock, Shell

CCS comes in three main types: pre-combustion capture, post-combustion capture and oxy-fuel combustion. Pre-combustion capture is the decarbonisation of fossil fuels, at the moment possible with coal and natural gas through coal gasification or reforming. The fuel is converted to hydrogen and CO2, with the CO2 then either used for EOR or stored, and the hydrogen used for electricity production and potentially for cars and heating appliances.

Post-combustion capture involves capturing CO2 from exhaust, done by absorption in a suitable solvent or using high-pressure membrane filtration. Oxy-fuel combustion is essentially post-combustion, but by burning the fossil fuel in pure oxygen it results in a much more concentrated stream for easier purification.

CO2 has been used in EOR programmes to coax more oil from the reservoirs. But it is only now that companies, including the likes of majors Shell, BP and ExxonMobil, are seriously looking at the development of CCS from power stations and refineries to be injected into fields around the world.

The main concern with the technology has been the costs and the increased energy needed. It has often resulted in many empty promises made by governments and companies alike, who claim to be delivering CCS soon yet fail to deliver.

"CCS in power plants makes sense economically only for large, highly efficient plants. At present, the increased use of fossil fuels resulting from CCS could be as high as 35%-40%. It is expected to decline to 10%-30% in next-generation plants, and could be as low as 6% for more speculative designs," a report from the IEA (International Energy Association) says.

IEA are adamant however of how important the technology could be to the world, stating that fossil fuels provide the world currently with 80% of its energy with little to suggest much will change for decades to come.

"Global energy related CO2 emissions increase 55% between 2004 and 2030 in a business-as-usual outlook. It is increasingly clear that this development path is not sustainable, and that CO2 capture and storage is a critical technology to significantly reduce CO2 emissions," says the report.

Shell is one company that is looking to develop the technology by working with industry and government to find the most cost-effective solutions to the technical challenge involved. The storage of the gas would be done either through injection into old oil and gas reservoirs, or in saline aquifers deep beneath the surface.

Shell has been looking at the possibility of developing the technology in Oman, and in particular in conjunction with Petroleum Development Oman (PDO), which has maturing oil fields which require EOR to keep them productive.

"The main change in PDO's strategy towards EOR is due to the maturity of the company's producing oil fields. All fields, anywhere in the world, have limited recovery from primary mechanisms and Oman is not an exception," says Xu Dong Jing, manager of Shell Technology, Oman. "We have now reached a point when we need to embark on tertiary recovery mechanisms."

While the supply of natural gas for EOR was the only realistic option to most producers, with CO2 there is now an attractive alternative which would free up the natural gas for domestic use or exportation.

"The gas injection projects are dictated by geography and demand, and ultimately, which solution you pick becomes an economic question. Where there is a market demand for that gas it may be preferable to exploit that, so usually hydrocarbon gas injection is done where there is a surplus of that gas. In the future the Middle East will see a move towards using CO2 so that the hydrocarbon products streams can be more efficiently used," says explains Val Brock, business development manager for EOR, Shell.

"Greenhouse gases or man-made CO2 capture will play a huge part in our future. We are working on developing capturing techniques for CO2 that would otherwise be emitted, such as industrial flue exhausts," adds Brock.

In 2007 BP and Rio Tinto - the largest coal mining company in the world - formed a 50:50 joint venture company named Hydrogen Energy International (HEI). Headquartered in London, UK, the company has more than 100 staff working around the world and two offices where their two major projects are to be based: California and Abu Dhabi.

HEI intends to be a "low carbon fuel supplier", with focus on the conversion of fossil fuels into low-carbon hydrogen fuel, which will be used in power generation, industry and ultimately the transport sector. The CO2 produced during the separation will be then stored in deep saline aquifers or used in EOR injection, as proposed for the Abu Dhabi project.

"Our pre-combustion technology allows us to take a range of fossil fuel feedstocks (natural gas, petroleum coke and coal) and convert them into low-carbon hydrogen using proven technologies coupled with geological storage of CO2," says Paul Bryant, regional director Eastern Hemisphere, HEI."The Middle East is rich in opportunity for Hydrogen Energy's technology. Many of the countries in the region are juggling the combined challenges of growing power demand, limited supplies of feedstock; whether natural gas or coal, the requirement for EOR to boost production and increasing international pressure to address environmental issues," he continues.

Furthermore, he points out that the region has the enviable position of having large potential carbon reservoirs close to where CO2 can be captured through the Hydrogen Energy process, making EOR a valuable driver for the development of these projects.

"The best example of the interest in CCS in the region is here in Abu Dhabi where the government, through its visionary project Masdar, has created a dedicated project team that will look for opportunities across Abu Dhabi and beyond. Similarly, the Masdar CO2 network that will run across the Emirates will create additional opportunities as demand is created for CO2. We see Masdar as an important partner here in the region," says Bryant.

The best example of the interest in CCS in the region is here in Abu Dhabi where the government, through its visionary project Masdar, has created a dedicated project team that will look for opportunities across Abu Dhabi and beyond. - Paul Bryant, Hydrogen Energy

Masdar is Abu Dhabi's multi-billion dollar initiative for renewable energy. The Abu Dhabi Future Energy Company (ADFEC) was set up to develop and execute Masdar initiatives, and recently it announced that it had signed an agreement with Gulf Petrochemical Industries Company (GPIC) to monetise the emission reduction associated with CCS, as well as the development of a JV project.

The project, which will capture carbon dioxide from flue gas and then recycle the captured gas as feedstock in the production of urea and methanol, is expected to reduce more than 100 000 tonnes of CO2 equivalent per year as of 2010.

Speaking at the time of the signing, Sultan Al Jaber said: "Masdar is introducing the CDM (clean development mechanism) to the hydrocarbon-based fertilizer industry in the Gulf region. The CDM provides an incentive to GPIC to develop the CO2 capture project, and we expect this project to pave the way for more carbon reduction initiatives in the industry."

While Hydrogen Energy's Abu Dhabi. Masdar and GPIC projects seem to suggest that CCS may be about to take off in the region, there is a still a question over the high costs involved and relative lack of experience in using the technology. Yes, the producers may see the potential in CO2 EOR for their reservoirs, but are they ready to adapt and to spend to provide for this?

"It is acknowledged that to continue such rapid economic growth in the Middle East we will be dependent on all forms of power generation for some time. Even with the rapid growth in renewable generation and decreasing costs, large scale ‘base-load' generation is required and this can only come from fossil fuels," says Bryant.

"To neutralise the environmental impact of fossil fuel based generation, technology such as that being commercialised by Hydrogen Energy becomes a vital piece of the puzzle. It provides large scale carbon capture and a clean source of fuel for base load power production."

The biggest drawback for the use of CCS is undoubtedly the cost of the technology. According to Bryant, what will be needed in the future to offset the costs will be a carbon market, and until this is achieved a commercial value for CO2. The importance of projects such as in California and Abu Dhabi for EOR cannot be underestimated. Bryant predicts that through EOR projections in Abu Dhabi estimate that an ultimate recovery of 2.5 to 3.5 barrels can be made for every tonne of CO2.

Meanwhile majors are looking to develop new technologies that will reduce the cost of CCS technology. ExxonMobil announced recently that it was to commit US $100 million to complete the testing of an improved natural gas treating technology which could make CCS more affordable.

ExxonMobil will build a commercial demonstration plant in Wyoming, USA, where it will display Controlled Fee Zone technology, or CFZ - a cryogenic separation process that freezes out the CO2, as well as other harmful components like hydrogen sulphide (H2S), before melting and removing it from the natural gas.

"This technology will assist in the development of additional gas resources to meet the world's growing demand for energy and facilitate the application of carbon capture and storage, to reduce greenhouse gas emissions," says Mark Albers, senior vice president of Exxon Mobil.

As for the safe storage of the CO2 is oil reservoirs, Bryant asserts that EOR should ensure the gas is locked underground securely, just as the oil and gas has been trapped in position for many thousands of years.

"Structures will be chosen for their technical suitability and integrity for CO2 storage. The same sub-surface structure that has held oil and gas in place for hundreds of thousands of years will continue to provide safe storage for CO2 storage. Monitoring of the reservoir will be conducted throughout the period that CO2 injection into the reservoir is ongoing," he says.

It is now up to the oil producers with depleting reservoirs to seek CO2 EOR, creating a demand that will help develop CCS initiatives. Current CCS projects taking place around the world, such as in Abu Dhabi and California, should provide us however with an indication of CCS's potential in the future of fossil fuel energy.

Abu Dhabi ProjectConstruction of Hydrogen Energy's Abu Dhabi project is now under way, and is expected to be supplying Abu Dhabi's grid with 420 MW of power by 2013 - 5% of all Abu Dhabi's current power generation capacity. The CO2 will be transported and injected into one of Abu Dhabi's oil fields, replacing natural gas currently used for EOR, which could then be used domestically or for export.

Once completed, the plant will be the fist industrial-scale installation of an integrated hydrogen power and CCS system. Up to 1.7 million tonnes of CO2 will be transported along a pipeline and injected into oil reservoirs every year. The project will require a total of US $2 billion, excluding the CCS.

"In Abu Dhabi - our most advanced project - we will deliver 420 MW of low carbon power to the Abu Dhabi grid by 2013. This represents around 5% of Abu Dhabi's projected peak, power demand or put another way; sufficient to meet the demands of Yas and Sadiyat island developments combined, with low carbon power, explains Bryant.

"The project will take natural gas and convert it through a chemical process into hydrogen and CO2 - the hydrogen used as fuel for a combined cycle gas turbine power station. The CO2 will be re-injected, via the Masdar Carbon Capture Network, to one or more of ADNOC's oil fields, where it will be used for EOR and ultimately stored."

It is predicted that during the lifecycle of the plant 50 mega tonnes of CO2 will be captured, and that 20 billion barrels of additional reserves could be accessed using EOR in Abu Dhabi's fields.

At present the 1.8 bcf/day of natural gas injected into oil fields will become available either for domestic demand or for exportation. The value potential from the CO2 injection in Abu Dhabi is therefore considerable, Bryant claims.

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