CO2 EOR for Europe and the North Sea
Although not identical, it can be argued that much of the past experience from the US can be considered when evaluating the potential scope for offshore CO2 floods in the North Sea. Furthermore, within the EU there is a culmination of three issues that may help initiate the policy decisions necessary to ensure a future commercial role for CO2. These are:
- declining oil production from the NSCS and future costly decommissioning;
- increasing dependence upon energy imports; and
- growing commitment to reduce CO2-emissions on account of climate change.
With NSCS production peaking, most operators are making strategic decisions regarding decommissioning compared with economic life-extension. Annual platform operating costs often exceed US$50 million, while decommissioning costs can vary from US$150 to US$450 million depending upon the size of operations. A limited window of opportunity exists for deciding whether to implement a CO2- flood that is governed by the declining production profiles of each reservoir and availability of CO2. Decisions for securing supply and using CO2 will need to be taken within the next four to six years from the time of press. Unfortunately, decommissioning a field’s platform before tertiary recovery takes place is likely to preclude reopening a field for that next 6% to 15% of original oil in place and the oil and its associated tax revenues will be lost for the Government.
In 2001 the European Commission presented a paper proposing revised fiscal and market incentives to tackle key issues regarding the internal energy market, energy security and challenge of climatechange through 2030. A major conclusion was that Europe can become almost 70% dependent upon imported energy. The possibility of providing ‘clean’ coal, extended oil production, and ‘greener’ natural gas through decarbonisation, EOR and CO2 sequestration, is therefore of considerable relevance.
Future GHG emissions are being constrained in line with international commitments through National Allocation Plans. Emission trading is perceived as a key enabling mechanism that will facilitate real reductions of GHG emissions. The EU ETS began operation in 2005 and already recognises CO2 CCS as a remediation methodology subject to agreement of the necessary measuring and monitoring protocols.
The CO2 EOR in the UK and Norwegian Sectors
Although sequestering large volumes of CO2 from mainland Europe will be important for the EU, it would initially appear to be the governments of the UK and Norway that share the most immediate vested interests to create a demand for CO2 in the North Sea.
For the UK exchequer this could provide a substantial revenue stream from taxation on incremental oil, additional jobs and improved balance of payments due to reduced energy imports. Estimates within the Department of Trade and Industry (DTI) Sustainable Hydrocarbon Additional Recovery Programme (SHARP) put CO2 EOR incremental production between 0.9 and 2.3 billion barrels.
The Norwegian government is recognised as being well versed with managing its oil assets and still retains a large equity ownership through its stakes in Petoro (100%), Statoil (78%) and Norsk Hydro (44%) and a 78% offshore taxation rate. The Norwegian Petroleum Directorate conservatively estimates that a potential of 1.5 to two billion barrels CO2-incremental oil exists on the NCS with a value of US$45 to US$55 billion.
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