## Nea r -Term Projections of CO 2 

## Utilization for Enhanced Oil Recovery April 7, 2014

DOE/NETL-2014/1648 OFFICE OF FOSSIL ENERGY 

## National Energy Technology LaboratoryNear-Term Projections of CO 2 Utilization for Enhanced Oil Recovery



## Disclaimer This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or im plied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or re presents that its use would not infringe privately owned rights. Reference therein to any specific commercial pr oduct, process, or service by trade name, trademark, manufacturer, or othe rwise does not necessarily consti tute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed therein do not necessarily state or reflect those of the United States Government or any agency thereof. All exhibits have been created by Advanced Re sources Interna tional, Inc., unless otherwise noted.Near-Term Projection of CO 2 Utilization for Enhanced Oil Recovery



### Author List:

Energy Sector Planning and Analysis (ESPA) Matt Wallace, Vello Kuuskraa Advanced Resources International, Inc.

NETL Contact

Phil DiPietro

This report was prepared by Energy Sector Plan ning and Analysis (ESPA) for the United States Department of Energy (DOE), National Energy Technology Laboratory (NETL). This work was completed under DOE NETL Contract Number DE-FE0004001. This work was performed under ESPA Task 150.07.04. The authors wish to acknowledge the excellent guidance, contributions, and cooperation of the NETL staff, particularly: Evelyn Dale , NETL Technical Monitor



### DOE Contract Number DE-FE0004001Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

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## Table of Contents Executive Summary ............................................................................................................. ............1 1 Purpose of the Report........................................................................................................ ............5 2 Status of CO 2 Enhanced Oil Recovery .........................................................................................5 3 Outlook for CO 2 Enhanced Oil Recovery .....................................................................................7 4 Study Methodology ........................................................................................................... ............9 4.1 CO 2 Supplies for EOR ..........................................................................................................9 4.1.1 Regional CO 2 Supplies ................................................................................................10 4.2 CO 2 Utilization by EOR ......................................................................................................11 4.3 CO 2 -EOR Oil Production ....................................................................................................12 4.3.1 Baseline CO 2 -EOR Oil Production .............................................................................12 4.3.2 Near-Term CO 2 -EOR Oil Production .........................................................................12 4.4 Regional CO 2 -EOR Production...........................................................................................13 5 Results and Discussion ...................................................................................................... .........13 6 References .................................................................................................................. .................22Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

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## Exhibits
Exhibit ES-1 Current CO 2 -EOR operations and CO 2 sources (2012) ............................................ 1 Exhibit ES-2 Utilization and storag e of natural and anthropogenic CO 2 with EOR ...................... 2 Exhibit ES-3 Projected CO 2 -EOR operations and CO 2 sources (2020) ......................................... 3 Exhibit 2-1 Annual CO 2 -EOR production ...................................................................................... 6 Exhibit 2-2 Current CO 2 -EOR operations and CO 2 sources (2012) ............................................... 7 Exhibit 3-1 Near-term projection of CO 2 -EOR oil production by region ...................................... 8 Exhibit 3-2 Projected CO 2 -EOR operations and CO 2 sources (2020) ............................................ 8 Exhibit 4-1 Probability-a djusted industrial CO 2 supplies due online by 2020 ............................. 10 Exhibit 4-2 CO 2 utilization ratios by phase .................................................................................. 11 Exhibit 5-1 Utilization of natural and industrial CO 2 with EOR .................................................. 14 Exhibit 5-2 Utilization of natural and industrial CO 2 for EOR by region .................................... 14 Exhibit 5-3 Projected near-term CO 2 utilization by region and source ........................................ 15 Exhibit 5-4 Projected CO 2 -EOR production by region ................................................................. 16 Exhibit 5-5 Projected near-term CO 2 -EOR oil production ........................................................... 17 Exhibit 5-6 Major U.S. CO 2 pipelines in 2012 (5) ....................................................................... 18 Exhibit 5-7 New natural gas processing and industrial CO 2 sources announced between 2010 and 2013 .......................................................................................................................... ............. 19 Exhibit 5-8 CO 2 sources announced between 2010 and 2013 and associated oil production by region ........................................................................................................................ ............ 20 Exhibit 5-9 Baseline vs. upside projection of CO 2 -EOR production by 2020 .............................. 20 Exhibit 5-10 Projection of 1 billion metric tons of CO 2 stored from current natural gas processing and industrial sources ........................................................................................................ .... 21Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

iii 

## Acronyms and Abbreviations AEO Annual Energy Outlook ARI Advanced Resources International, Inc. Bcfd Billion cubic feet per day CCS Carbon capture and storage CO 2 Carbon dioxide CTL Coal-to-liquids CVR CVR Energy, Inc. DKRW DKRW Advanced Fuels, LLC DOE Department of Energy EIA Energy Information Administration EOR Enhanced oil recovery ESPA Energy Sector Planning and Analysis GTL Gas-to-liquids HECA Hydrogen Energy California IGCC Integrated gasification combined cycle MBbld Million barrels per day Mcf Thousand cubic feet MMcfd Million cubic feet per day MMmt Million metric tons NETL National Energy Technology NRG NRG Energy OGJ Oil & Gas Journal PCS PCS Nitrogen, Inc. SACROC Scurry Area Canyon Reef Operators Committee TCEP Texas Clean Energy Project UCG Underground coal gasification U.S. United StatesNear-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

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## Executive Summary
Utilization of natural and industrial CO 2 by the enhanced oil rec overy industry has grown steadily since the early 1970s . In fact, the landmark CO 2 flood at the Scurry Area Canyon Reef Operators Committee (SACROC) unit was launched in 1972 utilizing CO 2 captured from a series of natural gas processing plants in the Val Verde Basin of West Texas. Prior to its capture and utilization, this by-product CO 2 had been released into the atmosphere. The discovery of large natural sources of CO 2 in Colorado (McElmo Dome, Doe Canyon, and Sheep Mountain) plus New Mexico (Bravo Dome) and its transportation to the Permian Basin enabled oil production from CO 2 -EOR to steadily grow in West Te xas. Subsequent discovery of natural CO 2 supplies at Jackson Dome, Mississi ppi, and the capture of vented CO 2 at the massive LaBarge natural gas processing facility in western Wyoming provided the foundation for new CO 2 -EOR projects along the Gulf Coast and in the Rockies. Today, a total of 113 CO 2 -EOR projects inject 3.1 billion cu bic feet per day (Bcfd) (60 million metric tons (MMmt) per year) of natural and industrial CO 2 for enhanced oil recovery, in numerous areas of the United States (U.S.) (Exhi bit ES-1). The associated crude oil production in 2012 was 282,000 barrels per day. Growth of oil production from CO 2 -EOR has been constrained in the past few years due to limita tions in accessible, affordable supplies of CO 2 . In our view, the combination of: 1) significant new volumes of CO 2 captured from industrial sources; 2) the recent completion of new CO 2 pipelines; and 3) the availability of additional natural sources of CO 2 will enable CO 2 -EOR based oil production to grow significantly during the rest of this decade.

Exhibit ES-1 Current CO 2 -EOR operations and CO 2 sources (2012)Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

2  Captured CO 2 supply from gas processing and ot her industrial sources grows from 16% of total supply in 2012 to 47% in 2020. Current (year 2012) utilization of gas processing and other industrial CO 2 by EOR is 0.4 Bcfd (8 MMmt per year). This volume is expected to reach 3.0 Bcfd ( 58 MMmt) by 2020 (Exhibit ES-2). Much of the increased capture and utilization of CO 2 between today and year 2020 will be from industrial plants along the Gulf Coast. Overall CO 2 utilization by CO 2 -EOR (including natural gas processing and other industrial CO 2 sources) is projected to more than double by year 2020, from 3.0 Bcfd (58 MMmt) today to 6.4 Bcfd (124 MMmt) (Exhibit ES-2). The forecast for CO 2 supply does not include an estimate of future announcements that are not yet in the public domain. Also, the CO 2 supply estimates for announced industrial sources are reduced from the stated capacity to account for th e risk of schedule slip or cancellation.

Exhibit ES-2 Utilization and storage of natural and anthropogenic CO 2 with EOR

 Major new CO 2 pipelines are in place, capable of delivering expanded volumes of CO 2 for utilization by EOR. In the past several years, i ndustry has installed and placed into operation several new CO 2 pipelines. These include the Green CO 2 Pipeline along the Gulf Coast, the Greencore CO 2 Pipeline in the Rockies, the Coffeyville to Burbank CO 2 Pipeline in the Mid-Continent, and the Eastern Shelf CO 2 Pipeline in West Texas. Recently, Kinder Morgan announced a new, 213-mile, 16-inch diameter pipeline to transport carbon dioxide (CO 2 ) from the company’s St. Johns source field in Apache County, Arizona, to the Kinder Morgan-ope rated Cortez Pipeline in Torrance County, New Mexico (1). Moderate distance laterals from these large-scale pipelines will enable more oil fields favorable for CO 2 -EOR to be linked with supplies of CO 2 in future years.Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

3  With access to additional volumes of CO 2 , industry has announced the start of numerous new CO 2 enhanced oil recovery projects. Industry has announced the start of a series of new, large-scale CO 2 -EOR projects in mature domes tic oil fields. Along with expansion of existing CO 2 floods, new CO 2 -EOR projects expected online by 2020 include: Conroe, Thompson, Webster and West Ranch along the Gulf Coast; Bell Creek, Grieve, and Poplar Dome in the Rockies; and Burbank and Northeast Hardesty in the Mid-Continent. Numerous other CO 2 floods are scheduled to start after 2020, including Hartzog Draw in the Rockies and the numerous oil fields on the Cedar Creek Anticline in North Dakota. Based on the increased volumes of CO 2 supplies, the completion of major CO 2 pipelines, and the announced new, large-scale CO 2 -EOR floods, we anticipate that CO 2 -EOR production will grow significantly, reaching 615,000 barrels per day from at least 124 active CO 2 floods by year 2020 (Exhibit ES-3). While the Permian Basin remains the largest CO 2 -EOR oil producer, much of the growth occurs in the Gulf Coast, th e Rockies, and the Mid-Continent. The CO 2 -EOR industry is on pace to store a billion metric tons of CO 2 from gas processing and industrial sources during the next 20 years.
Exhibit ES-3 Projected CO 2 -EOR operations and CO 2 sources (2020)Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

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## 1 Purpose of the Report The Oil & Gas Journal’s (OGJ) biannual enhan ced oil recovery (EOR) survey is the “gold standard” for information on enhanced oil recovery operations in the Unite d States (U.S.) (1) The information in the survey is collected at an EOR project level, providing very detailed, highly valuable data on the nature, location, rese rvoir settings and oil production from EOR for each of the major EOR technologies—CO 2 -EOR, chemical EOR, and thermal EOR. The survey contains data for years 1986 through 2014. The OGJ survey, while providing a most valuable snapshot of the status of EOR does not provide a “look forward.” This re port, “Near-Term Projections of CO 2 Utilization by Enhanced Oil Recovery,” builds on the O il & Gas Journal’s biannual EOR su rvey to provide such a “look forward” of the future potential for one of these EOR technologies—CO 2 enhanced oil recovery. The report tabulates industry and other informati on on the various existing and future sources of CO 2 supplies to be utilized for EOR as well as the industry announced CO 2 -EOR projects in mature domestic oil fields. The great bulk of the information in this repor t is based on a project- by-project matching of defined CO 2 supplies, CO 2 utilization, and CO 2 -EOR based oil production. In cases where the announced volumes of available CO 2 supplies exceed the demand for CO 2 by announced CO 2 - EOR projects, we provide estimates for additiona l near-term oil production that could become available from expansion of existing CO 2 floods or the initiation of yet to be announced CO 2 floods. Two publications, “A Note on Sources of CO 2 Supply for Enhanced-Oil-Recovery Operations” (2) and “Wyoming CO 2 Status and Developments,” (3) contri buted significantly to the research for this study. 

## 2 Status of CO 2 

## Enhanced Oil Recovery Oil production from CO 2 -EOR in onshore, lower-48 oil rese rvoirs will provide 282,000 barrels per day of incremental oil production in 2012. The volume of oil production from CO 2 -EOR has grown steadily for the past thir ty years (Exhibit 2-1).Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

6 Exhibit 2-1 Annual CO 2 -EOR production

Our study of the status of CO 2 -EOR started with information provi ded in the latest OGJ biennial survey of enhanced oil recovery, published in April, 2012. Our study then independently reviewed the CO 2 -EOR oil production on a field-by-fi eld basis for years 2012 and 2013 to develop independent tabulations of CO 2 -EOR oil production for 113 active CO 2 -EOR projects. Our review, while showing modestly different values for certain oi l fields, resulted in aggregate CO 2 -EOR oil production values consistent wi th those reported in the OGJ survey. Exhibit 2-2 provides a composite over view of the current status of CO 2 supplies and CO 2 -EOR activity in the U.S., as of year 2012:

 State-by-state locations for the currently active 113 CO 2 -EOR projects. Much of the CO 2 -EOR activity is in West Texas (64 proj ects), followed by Mississippi (16 projects) and Wyoming (9 projects).

 Location of the existing CO 2 supplies sources (natural, gas processing, and industrial). Much of the CO 2 is from naturally occurring CO 2 fields in Colorado, New Mexico, and Mississippi.

 Robust infrastructure of existing and projected CO 2 pipelines, totaling more than 3,000 miles, linking CO 2 supply sources with oil fields.Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

7 Exhibit 2-2 Current CO 2 -EOR operations and CO 2 sources (2012)



## 3 Outlook for CO 2 

## Enhanced Oil Recovery The Energy Information Administration’s (EIA) early release of Annua l Energy Outlook (AEO) 2014 projects that oil production from CO 2 -EOR remains flat at 280,000 barrels per day through 2014, rising slowly to 360,000 barrels pe r day by year 2020. After year 2020, CO 2 -EOR based oil production is projected to climb to 580, 000 barrels per day by 2030 and further to 740,000 barrels per day by year 2040.(4) Given the significant additional volumes of available CO 2 supplies and the numerous new announced CO 2 -EOR projects, our study i ndicates the potentia l for significantly higher volumes of oil production and CO 2 utilization from CO 2 -EOR, as summarized below and further discussed in Section 5. Our analysis shows that incremental oil production from CO 2 -EOR operations is expected to increase significantly from 282,000 barrels pe r day in 2012 to 615,000 barrels per day in 2020, as shown in Exhibit 3-1 and il lustrated in Exhibit 3-2.Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

8 Exhibit 3-1 Near-term projection of CO 2 -EOR oil production by region

Region CO 2 -EOR Oil Production (MBbld) 2012 2015 2020
Permian Basin 186 241 301
Gulf Coast 43 73 153 Rockies 36 55 103 Mid-Continent 17 37 58
Total Production 282 405 615

Exhibit 3-2 Projected CO 2 -EOR operations and CO 2 sources (2020)Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

9 

## 4 Study Methodology
4.1 CO 2 

### Supplies for EOR The first step of our study was to review the curr ent status and outlook for both natural as well as industrial sources of CO 2 . Currently, the majority of CO 2 supplied for EOR is from natural sources, notably from the McElmo Dome and Bravo Dome natural CO 2 fields, that supply the Permian Basin and portions of the Mid-Continen t and Rockies, and from Jackson Dome, that supplies CO 2 for EOR operations along the Gulf Coast. Natural sources of CO 2 for EOR are expected to increase between now and 2020:

 Total CO 2 supply from McElmo Dome, Bravo Dome, Doe Canyon, Sheep Mountain and Jackson Dome is expected to increase from 2.6 billion cubic feet per day (Bcfd) in 2012 to 3.0 Bcfd in 2020.

 A new natural source of CO 2 , St. Johns Dome in New Mexico, is expected to come online by 2016. It will supply 0.5 Bcfd of CO 2 for EOR in the Permian Basin in 2020. However, future development of CO 2 -EOR will need to rely heavily on CO 2 captured from industrial sources. Importantly, sale and utilization of CO 2 provides a benefit to industrial gas processing and power generation that would otherwise likely vent their CO 2 emissions to the atmosphere.

 Significant expansions in CO 2 captured from gas processing plants, such as at Lost Cabin, La Barge, and Riley Ridge in the Rockies (345 MMcfd) and the Century Phase II plant (170 MMcfd) in West Texas.

 Increased capture of CO 2 from nitrogen, hydrogen, fertiliz er, and other industrial plants in the Mid-Continent and the Gulf Coast.

 Projected industrial CO 2 sources from Sasol’s gas-to-liq uids (GTL) plant in Louisiana, Leucadia’s coal gasification plant in Mi ssissippi, and DKRW Advanced Fuels, LLC’s (DKRW) Phase I coal-to-liquids (CTL) plant in the Rockies. Based on the above sources plus other future sources of captured CO 2 , we estimate that utilization of CO 2 for EOR from natural gas processing and other industrial sources will reach 3.0 Bcfd (58 million metric tons (MMmt)/yr) by 2020. Probability-Adjusted CO 2 Supplies. The near-term forecast conservatively estimates the volumes of CO 2 sourced from natural gas processing and ot her industrial facilitie s scheduled to come online between 2012 and 2020. Each new potential source of CO 2 was assigned a project status and a probability of delivery of CO 2 to the market by the year 2020.

 Planning/Feasibility (75%) – Permitted projects in the final stages of financing and CO 2 off-take negotiations, including projects id entified in published business plans.

 Design/Pre-feasibility (50%) – Projects currently undergoing de sign and feasibility studies that have not received full project permitting.

 Identify (25%) – Conceptual projects identified as possible sources of CO 2 should design, permitting, and feasibility studies prove to be favorable.Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

10 Exhibit 4-1 outlines the CO 2 sources included in our study that are currently in the Planning/Feasibility, De sign/Pre-feasibility, a nd Identify stages.
Exhibit 4-1 Probability-adjusted industrial CO 2 supplies due online by 2020

Project Status Probability of Coming Online by 2020 Region Project

Planning/Feasibility 75% Permian Basin Summit TCEP

Rockies DKRW Phase I
MidContinent Burbank Expansion

Gulf Coast Mississippi Gasification
Sasol GTL
Design/ Pre-Feasibility 50% Rockies Linc Energy UCG Quintana South Heart IGCC

Identify 25% Gulf Coast Indiana Gasification Kentucky NewGas



### 4.1.1 Regional CO 2 

### Supplies
Permian Basin. The current sources of CO 2 supply for the Permian Basin include McElmo Dome, Doe Canyon, and Sheep Mountain in Colo rado, Bravo Dome in New Mexico, and the Century and Val Verde gas plants in Texas. T ogether, these sources provided 1.7 Bcfd in 2012 for EOR to fields in the Permian Basin. Expansion of natural CO 2 supply from McElmo Dome and Doe Canyon is expected in 2014 and 2015, respectively. A new source of natural CO 2 from St. Johns Dome in New Mexico is expected partially online by 2016 and fully online by 2017. CO 2 from expansion of the Century gas processing plant and from the Texas Clean En ergy Project (TCEP) become available for the Permian Basin in 2015 to 2016. Overall CO 2 supply for EOR is expected to increase to 2.7 Bcfd by 2017 and stay at the level through 2020. Gulf Coast. The current (year 2012) CO 2 supply for EOR of 0.9 Bcfd for the Gulf Coast is natural CO 2 from Jackson Dome in Mississippi. Two new industrial sources of CO 2 —the Air Products hydrogen, and the PCS nitrogen plants in Louisiana—came online in 2013 and will reach their full supply potential of 50 and 25 MMcfd, respectively, by 2014. Aside from a modest increase in supply from Jackson Dome, the bulk of the incremental CO 2 supply for EOR in the Gulf Coast is expected to be from industrial sources. A number of chemical plants in Louisiana are scheduled to capture and supply CO 2 to the region, including the Lake Charles gasification plant, the Mississi ppi gasification plant, and a planned Sasol GTL plant in Louisiana plus new ammonia and chemical plants yet to be publically named. Two newNear-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

11 power plants, Mississippi Power’s and NRG En ergy’s (NRG) power plan ts will capture and supply CO 2 for EOR in 2015 and 2017, respectively. Total CO 2 supply for EOR is expected to increase to 2.6 Bcfd by 2020. Rockies . The majority of CO 2 currently supplied to the Rockies comes from the Shute Creek/LaBarge gas plant. A small volume of natural CO 2 supply from McElmo Dome is supplied to the CO 2 floods at the Greater Aneth oil field. Total supply of CO 2 for EOR in the Rockies was 245 MMcfd in 2012. In addition to expansion of CO 2 capture at Shute Creek/LaBarge and Lost Cabin gas processing plants, four additional sources of CO 2 are scheduled to come online including: the Riley Ridge gas processing plant; the DKRW Me dicine Bow fuel plant; the Li nc Energy gasification plant; and the Quintana South Heart integrated gasi fication combined cycle (IGCC) plant. These expansions and new sources of CO 2 are projected to increase CO 2 supply for Rockies EOR to 750 MMcfd by 2020. Mid-Continent. The great bulk of the CO 2 supply in the Mid-Continent comes from industrial sources of CO 2 , including the Koch nitrogen plant, th e Agrium fertilizer plant, the CVR Energy, Inc.’s (CVR) Coffeyville nitrogen plant, and the Conestoga Arkalon and Bonanza nitrogen plants. Additional supplies of natural CO 2 , 35 MMcfd, are supplied to the Postle field in Oklahoma from Bravo Dome. Total CO 2 supply for Mid-Continent EOR was 85 MMcfd in 2012. Several new sources of CO 2 are expected for the Mid-Continent. The Lilly Lateral pipeline will extend Bravo Dome CO 2 supply to the Northeast Hardesty EOR project. Increased supplies of CO 2 from the CVR Coffeyville and Koch Nitrog en plants would support expansion of CO 2 -EOR at Burbank and surrounding oil fields. Total CO 2 supply for EOR in the Mid-Continent is expected to increase nearly 300 MMcfd by 2020. 

### 4.2 CO 2 

### Utilization by EOR The utilization rate of purchased CO 2 volumes per barrel of incremental oil varies both by region and by operator. Regional CO 2 utilization ratios were used to model purchased CO 2 volumes when published CO 2 volumes were unavailable. CO 2 utilization ratios were determined from St ate Oil and Gas Commission data, from data provided by individual CO 2 flood operators, and by CO 2 -EOR modeling data (PROPHET2 CO 2 - EOR flood simulations). Different ratios were used based on the development phase of each CO 2 -EOR operation. Utilization rati os for “Initial,” “Developing,” and “Mature” project phases are listed by region in Exhibit 4-2.

Exhibit 4-2 CO 2 utilization ratios by phase
CO 2 Utilization (Mcf/Bbl) Initial Developing Mature

Permian Basin - 12.0 9.1 Gulf Coast 25.0 20.0 15.0 Rockies 19.0 9.0 5.0 Mid-Continent 12.5 7.0 6.0Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

12 

### 4.3 CO 2 

### -EOR Oil Production
4.3.1 Baseline CO 2 

### -EOR Oil Production Baseline CO 2 -EOR oil production data for all CO 2 -EOR projects were obtained from the most current sources of information available:

 Operator Data. Companies like Denbury, Devon a nd Chaparral provide detailed information on their current CO 2 -EOR based oil production.

 State Data. State oil and gas commission data, pa rticularly in the Permian Basin and Rockies, was collected for oil fields for which enhanced oil production data was not available from operators.

 Oil & Gas Journal Data. When CO 2 -EOR oil production data was not available from operators or from state data , the study used the informa tion in OGJ EOR Survey, which provides detailed data on enhanced oil pr oduction by oil field and by oil reservoir.

 Net-To-Gross Adjustment

. For the most part, the o il production data supplied by operators is net oil produc tion (gross production less roya lties and outside working interests). Gross enhanced o il production totals were dete rmined by using state data on total oil field/reservoir production. For CO 2 -EOR projects without available net-to-gross production information, an 80% net-to-gross ratio was used. 

### 4.3.2 Near-Term CO 2 

### -EOR Oil Production The estimates of future CO 2 -EOR oil production, to year 202 0, were based on a variety of
sources:

 Existing CO 2 Floods. The starting point for estimating future oil production was the set of 113 currently operating CO 2 -EOR projects. The study projected future CO 2 -EOR oil production for each of these 113 existing CO 2 floods taking into account the following information:

− Operator projections for future oil produc tion were available for most of the CO 2 - EOR projects in the Gulf Coast, Mid-Continent and the Rockies.

− For the Permian Basin, the study used a combination of operator projections and project by project historical trend data to estimate future oil production from CO 2 - EOR for each existing CO 2 flood.

 Planned CO 2 -EOR Floods

. CO 2 -EOR operators often provide data on new CO 2 -EOR start date, peak production year, and expected ultimate recovery on a project by project basis. This information was used to establish CO 2 -EOR based oil production for the eleven new CO 2 -EOR projects incl uded in the study.

 Potential CO 2 -EOR Floods. In cases where the available CO 2 supply exceeded the CO 2 demand for existing and planned CO 2 -EOR floods, the study estimated the volume of future oil production from CO 2 -EOR using regional CO 2 utilization factors (thousand cubic feet (Mcf) of CO 2 per barrel of oil production).Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

13 

### 4.4 Regional CO 2 

### -EOR Production
Permian Basin. Gross oil production data for CO 2 -EOR operations in the Permian Basin were obtained from the Texas Railroad Commission da tabase, which tracks oil and gas production data. Enhanced oil production due to CO 2 -EOR was obtained from company data or from the Oil & Gas Journal EOR Survey to develop an enha nced to gross production ratio. Enhanced oil production was then projected based on recent hist orical production trends for both total and enhanced oil production. Gulf Coast. Production estimates for each of th e 20 current and 3 planned Denbury CO 2 -EOR projects were developed based on project start date, peak oil year, peak oil rate, and total expected recovery provided by operators. CO 2 utilization ratios, consis tent with Gulf Coast CO 2 , floods were applied to the estimates of oil production to cal culate purchased CO 2 utilization. Projection for one non-Denbury flood in the Gulf Co ast was generated using internal Advanced Resources International, Inc. (ARI) data sources. Rockies. CO 2 -EOR oil production in the Rockies wa s based on both operator and state production data. Oil production from mature CO 2 floods was assumed to c ontinue their historical decline. Oil production from newer CO 2 floods was estimated based on expected peak production followed by gradual decline. CO 2 utilization rates were based on current known CO 2 injection rates projected into the future. Mid-Continent. Estimates of CO 2 -EOR oil production for the Mi d-Continent were based on operator information, supplemented by information in the Oil & Gas Journal 2012 EOR Survey. Anticipated CO 2 utilization was available for the nine Chaparral Energy CO 2 floods. CO 2 utilization for the remain ing four mid-continent CO 2 floods was estimated using regional CO 2 utilization ratios. 

## 5 Results and Discussion Our recent analysis, as set forth in more detail below, indicates that the combination of: 1) significant new volumes of CO 2 captured from industrial sources ; 2) the recent completion of new CO 2 pipelines; and 3) the availability of additional natural sources of CO 2 will enable CO 2 - EOR production to grow steadily between now and year 2020. The main findings of our study, discussed in-depth in this section of the report, are as follows: 1. We anticipate nearly seven-fold grow th in capture and utilization of CO 2 from gas processing and other industrial sources , chemical facilitie s and power plants. Current (year 2012) utilization of industrial CO 2 by EOR is 0.4 Bcfd (8 MMmt per year). This volume is expected to reach 3.0 Bcfd (58 MMmt) by 2020 (E xhibit 5-1). Much of the increased capture and utilization of industrial CO 2 between today and year 2020 will be from the numerous announced industrial and other plan ts along the Gulf Coast. Overall CO 2 utilization by CO 2 -EOR (including natural CO 2 , natural gas processing and other industrial sources) is projected to more than double by year 2020, from 3.1 Bcfd (60 MMmt) today to 6.4 Bcfd (124 MMmt) (Exhibit 5-2 and Exhibit 5-3).Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

14 Exhibit 5-1 Utilization of natural and industrial CO 2 with EOR

Exhibit 5-2 Utilization of natural and industrial CO 2 for EOR by regionNear-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

15 Exhibit 5-3 Projected near-term CO 2 utilization by region and source

Region Supply Source Daily CO 2 Supply (MMcfd) 2012 2013 2014 2015 2016 2017 2018 2019 2020

Permian Basin Natural 1,565 1,605 1,820 1,850 2,050 2,300 2,300 2,300 2,300 Natural Gas Processing 165 165 175 335 335 335 335 335 335 Industrial Sources - - - - 94 94 94 94 94 Total 1,730 1,770 1,995 2,185 2,479 2,729 2,729 2,729 2,729

Gulf Coast Natural 935 935 960 990 1,020 1,025 1,055 1,045 995 Natural Gas Processing - 10 50 50 50 50 155 260 260 Industrial Sources 5 75 315 480 580 1,046 1,186 1,386 Total 935 950 1,085 1,355 1,550 1,655 2,256 2,491 2,641

Rockies Natural 30 50 50 50 50 50 50 50 50 Natural Gas Processing 215 250 265 390 390 390 390 520 520 Industrial Sources - - - - - 108 183 183 183
Total 245 300 315 440 440 548 623 753 753

MidContinent Natural 35 35 35 70 70 70 70 70 70 Natural Gas Processing - - - - - - - - - Industrial Sources 50 73 115 225 225 225 225 225 225
Total 85 108 150 295 295 295 295 295 295

Total Supply Natural 2,565 2,625 2,865 2,960 3,190 3,445 3,475 3,465 3,415 Natural Gas Processing 380 425 490 775 775 775 880 1,115 1,115 Industrial Sources 50 78 190 540 799 1,006 1,548 1,688 1,888 Total 2,995 3,128 3,545 4,275 4,764 5,226 5,903 6,268 6,418

2. We anticipate that CO 2 -EOR production will grow significantly, reaching 405,000 barrels per day by 2015 and 615,000 barrels per day by year 2020. While CO 2 -EOR oil production in all four regions examined by this st udy is expected to increase, the Permian Basin and the Gulf Coast are projected to lead th e way, each with over 100,000 barrels per day of increased CO 2 -EOR oil production (Exhib it 5-4 and Exhibit 5-5).

 Permian Basin. Continued production from current projects and expansion of smaller floods to field-wide CO 2 floods is expected to increase enhanced production from 186,000 barrels per day in 2012 to 301,000 barrels per day by 2020.

 Gulf Coast. Increasing production from 20 current Gulf Coast CO 2 floods combined with the start-up of new CO 2 floods in East Texas (Webster, Conroe, and Thompson) isNear-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

16 expected to increase production from 43, 000 barrels per day in 2012 to 153,000 barrels per day by 2020.

 Rockies. The addition of the Bell Creek and Grieve CO 2 floods, along with expanded CO 2 supplies, is expected to increase enhanced production in the Rockies from 36,000 barrels per day in 2012 to 103,000 barrels per day in 2020.

 Mid-Continent

. The addition of the Northeast Hardesty CO 2 flood and significant expansion of the Burbank project is expected to increase enhanced production in the MidContinent from 17,000 barrels per day in 2012 to 58,000 barrels per day by 2020.
Exhibit 5-4 Projected CO 2 -EOR production by regionNear-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

17 Exhibit 5-5 Projected near-term CO 2 -EOR oil production

Region Project Type CO 2 -EOR Oil Production (MBbld)
2012 2015 2020

Permian Basin Current 186 204 199 Expansion - 37 102
Total 186 241 301

Gulf Coast Current 43 56 62 Planned - 2 48 Potential - 15 43 Total 43 73 153

Rockies Current 36 42 39 Planned - 2 10 Potential - 12 55 Total 36 55 103

Mid-Continent Current 17 20 25 Planned - 12 26 Potential - 4 6 Total 17 37 58

Total Production Current 282 321 325 Planned - 15 84 Potential* - 68 206 Total 282 405 615 * Includes Permian Basin "Expansion" Projects
3. Major new CO 2 pipelines are in place, capable of delivering expanded volumes of CO 2 for utilization by EOR. In the past several years, indu stry has installed and placed into operation several new CO 2 pipelines. These include the Green CO 2 Pipeline along the Gulf Coast, the Greencore CO 2 Pipeline in the Rockies, the Coffeyville to Burbank CO 2 Pipeline in the Mid-Continent, and the Eastern Shelf CO 2 Pipeline in West Texas. Recently, Kinder Morgan announced a new, 213-mile, 16-inch diameter pipeline to transport carbon dioxide (CO 2 ) from the company’s St. Johns source field in Apache County, Arizona, to the Kinder Morgan-operated Cortez Pipeline in Torrance County, New Mexico. (1) While current CO 2 pipeline infrastructure will need to expand to meet antic ipated demand, we expect that moderate distance laterals and extensions of large-scale pipelines will enable more oil fields that are favorable for CO 2 -EOR to be linked with supplies of CO 2 . Exhibit 5-6 lists the major active CO 2 transport pipelines that supply most of the CO 2 -EOR projects in the U.S.Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

18 Exhibit 5-6 Major U.S. CO 2 pipelines in 2012 (5)

Region Pipeline Operator State Est. Capacity (MMcfd) Diameter (in) Length (mi)

Permian Basin Bravo Oxy Permian NM/TX 362 20 218 Canyon Reef Kinder Morgan TX 223 16 139 Center Line Kinder Morgan TX 223 16 113 Central Basin Kinder Morgan TX 223 16 143 Cortez Kinder Morgan TX 1,220 30 550 Eastern Shelf Kinder Morgan TX 100 10 91 Este ExxonMobil TX 135/176 12/14 84 Sheep Mountain Oxy Permian TX 590 24 407 W. TX Trinity Trinity CO 2 TX/NM 83 12 60 Wellman PetroSource TX 67 6 26

Gulf Coast Choctaw Denbury MS/LA 362 20 183 Delta Denbury MS/LA 590 24 108 Free State Denbury MS 362 20 86 Green Denbury LA 932 24 274 Sonat Denbury MS 166 18 50

Rockies Greencore Denbury MT/WY 725 20 232 Powder River Basin Anadarko WY 223 16 125 Shute Creek ExxonMobil WY 1,220 24 28

MidContinent Coffeyville Chaparral Energy OK 67 6 23 Transpetco Transpetco TX/OK 83 8 110

4. With access to additional volumes of CO 2 , industry has announced the start of numerous new CO 2 enhanced oil recovery projects. Industry has announced the start a series of new, large-scale CO 2 -EOR projects in mature domestic o il fields. Along with expansion of existing CO 2 floods, new CO 2 -EOR projects expected online by 2020 include: Conroe, Thompson, Webster, and West Ranch along the Gulf Coast; Bell Creek, Grieve, and Poplar Dome in the Rockies; and Burbank and Nort heast Hardesty in the Mid-Continent. In addition to the new CO 2- EOR projects coming online by 2020, numerous other CO 2 floods are scheduled to star t after 2020:

 Denbury has announced that the Hartzog Draw field will be operational after 2020 and will provide an ultimate incremental rec overy of about 25 million barrels of oil.

 Denbury has also announced that several fiel ds within the Cedar Creek Anticline in Montana and South Dakota will be operationa l after 2020, with an ultimate incremental recovery of about 275 million barrels of oil.Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

19  Operators in the Permian Basin are currently identifying a number of oil fields amenable to EOR, which have yet to be announced.

 Should the Hydrogen Energy California (HEC A) IGCC plant come online between 2018 and 2020, upwards of 150 million cubic feet per day of CO 2 would become available for EOR operations. The majority of this CO 2 would be utilized at a new EOR flood in the large Elk Hills oil field in Kern County, CA. 5. This near-term projection provides a conservative estimate of additional CO 2 supplies and CO 2 -EOR based oil production. Looking ahead to 2020, we see a much more robust CO 2 enhanced oil recovery industry, with major new sources of industrial CO 2 being captured and utilized for EOR. No doubt some of the currently planned industrial sources of CO 2 will not materialize. However, these will be more than replaced by numerous new fertilizer, chemical, ethanol, and other indus trial plants with high purity CO 2 emissions looking to sell their captured CO 2 to the CO 2 -EOR industry for oil production and CO 2 storage. New discoveries of subsurface CO 2 reservoirs could also increase CO 2 supply. (7) Exhibit 5-7 lists 14 new natural gas pr ocessing and industrial sources of CO 2 announced since 2010. Of these new projects, fi ve are already supplying CO 2 to EOR operations (PCS Nitrogen, Inc., Conestoga Bonanza, Conestoga Arkalon, LaBarge expansion, and Val Verde expansion) and the remaining nine are due online between 2016 and 2020.
Exhibit 5-7 New natural gas processing and industrial CO 2 sources announced between 2010 and 2013
Region Project Name Company State Status Year Online

Gulf Coast PCS Nitrogen PCS Nitrogen LA Online 2013 Ammonia Plant Denbury LA Expected 2016 NRG Power Plant NRG E nergy TX Expected 2017 Sasol GTL Sasol LA Expected 2018 Kentucky NewGas ConocoPhillips/Peabody KY Expected 2018 Chemical Plant Denbury LA Expected 2020

Rockies DKRW Phase 1 Medicine Bow WY Expected 2016 Riley Ridge Denbury WY Expected 2017 Linc Energy UCG Linc Energy WY Expected 2017 Quintana South Heart Great Northern Power ND Expected 2017 LaBarge Expansion Exxon WY Online 2012

Mid-Continent Conestoga Arkalon Conestoga KS Online 2011 Conestoga Bonanza Conestoga KS Online 2013 Permian Basin Val Verde Gas Plant Expansion Blue Source TX Online 2012

Exhibit 5-8 outlines the volumes of CO 2 from these 14 sources by region that are likely to become available by 2020. This 1,180 million cubic feet per day supports nearly 90,000 barrelsNear-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

20 per day of new CO 2 -EOR oil production based on the average CO 2 utilization ratio for each region.

Exhibit 5-8 CO 2 sources announced between 2010 and 2013 and associated oil production by region

Region New CO 2 Supplies (MMcfd) Projected New EOR (MBbld)
Gulf Coast 850 48,570 Rockies 310 38,750 Mid-Continent 10 1,540 Permian Basin 10 1,110 Total 1,180 89,970

Using history as the guideline, it is likely th at additional yet-unknown natural gas processing and chemical plants will be installed in the U.S. ove r the next six years. This renders the baseline near-term projection of CO 2 supplies available for EOR as a relatively conservative estimate. Using currently available and announced CO 2 supplies, the Baseline Case is for an estimated 615,000 barrels of oil per day from EOR by 2020 (Exhibit 5-9).
Exhibit 5-9 Baseline vs. upside projection of CO 2 -EOR production by 2020

Study Case Comparison Oil Production by 2020 (Bbld)

Baseline CO 2 -EOR Case 615,000

6. Along with the production of incr eased volumes of domestic oil, the CO 2 -EOR industry is on pace to store a billion metric tons of CO 2 from gas processing and industrial sources during the next 20 years. These CO 2 storage volumes are only from the active, announced and projected CO 2 -EOR projects in place by year 2020. Including CO 2 -EOR projects scheduled or projected to start after y ear 2020, significantly higher volumes of CO 2 from natural gas processing and industrial sources woul d be utilized for and stored with CO 2 -EOR during this 20-year time period. We estimate that nearly 10 million metric tons of CO 2 from natural gas pr ocessing and industrial sources was stored in undergr ound formations in 2013 using to CO 2 -EOR. This total will increase to 25 million metric tons in 2 015 and to 58 million metric tons in 2020. The Baseline CO 2 Storage Case, assuming a constant storag e rate of 58 million metric tons per year going forward, indicates that over 1 billion metric tons of CO 2 will be stored using CO 2 - EOR in the next 20 years (Exhibit 5-10). If the CO 2 utilization rate were to continue on its current trend of increasi ng by 7 million metric tons per year, the Upside CO 2 Case storage wouldNear-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

21 be equal to 1.7 billion metric tons of CO 2 from natural gas proces sing, and other industrial sources stored with CO 2 -EOR over the next 20 years.

Exhibit 5-10 Projection of 1 billion metric tons of CO 2 stored from current natural gas processing and industrial sources



## 1.7 billion mt CO 2



## 1 billion mt CO 2Near-Term Projections of CO 2 Utilization for Enhanced Oil Recovery

22 

## 6 References

1. Business Wire. Kinder Morgan to Invest Approxi mately $1 Billion to Expand Vast CO 2 Network. Business Wire. [Online] March 26, 2014.http://www.businesswire.com/news/home/20140326005342/en/Kinder-Morgan-InvestApproximately-1-Billion-Expand.

2. Koottungal, Leena. 2012 Worldwide EOR Survey. Oil & Gas Journal. April 2, 2012.

3. DiPietro, P., Balash, P. & M. Wallace. A Note on Sources of CO 2 Supply for Enhanced-OilRecovery Operations. SPE Economics & Management. April 2012.

4. Murrell, Glen. Wyoming CO 2 Status and Developments. University of Wyoming : 7th Annual Wyoming CO 2 Conference, July 11, 2013.

5. U.S. Energy Information Administration (EIA). Annual Energy Outlook (AEO) 2014 Early release. December 16, 2013. DOE/EIA-0383ER.

6. Global CCS Institute. The Global Status of CCS: 2013, Appendix E: Existing CO 2 Transport Infrastructure. 2013.

7. National Energy Technology Laboratory (NETL). Subsurface Sources of CO 2 in the United States, Volume II: Exploration of CO 2 Systems. [Online] March 2014. http://netl.doe.gov/research/energy-analysis /publications/details? pub=1dbb77ae-fb49-486c-8a31- abdd4d904e0f.www.netl.doe.gov Pittsburgh, PA • Morgantown, WV • Albany, OR • Sugar Land, TX • Anchorage, AK (800) 553-7681 

## Phil DiPietro joseph.dipietro@netl.doe.gov Bob Wallace robert.wallace@contr.netl.doe.gov