Abu Dhabi's oil industry looking to harness carbon dioxide to enhance recovery

As greenhouse gas emissions continue to rise and the threat of global warming looms ever larger, the world faces a conundrum: how to reduce the amount of harmful CO being released into the atmosphere in a global economy that continues to rely on fossil fuels for the majority of its energy requirements.

One potential solution is carbon capture and sequestration (CCS) technology, which involves the installation of CO strippers at either the pre- or post-combustion stage of energy generation to remove and sequester the greenhouse gas. The technology can be applied to power plants or large industrial manufacturers – such as for steel, cement and aluminium – and it enables the CO produced by such facilities to be stored elsewhere. Abdulkarim Al Mazmi, BP’s president and general manager in the UAE, told OBG, “Carbon offset is an extremely relevant and growing industry, especially here in Abu Dhabi, where there is a strong political will to implement ways to meet energy demand more sustainably in support of the UAE’s diversification agenda.”

Working Out The Bugs

But where to store CO exactly? Typical candidates range from deep saline aquifer formations to depleted oil and gas fields. The problem, however, is that carbon capture can be prohibitively expensive. In March 2013 the UK government, which has several CCS schemes under trial, released the report “The Costs of Carbon Capture and Storage for UK Industry: A High Level Review,” which places the potential cost for capturing and storing CO emissions at anywhere between £20 and £500 per tonne. Evidently, if some intermediate economic use could be found for the CO produced through carbon capture, then the immediate case for investing in CCS technology would be easier to advocate.

Such an intermediate step is a key element in the first commercial-size CCS scheme in the Middle East, which is currently under development in Abu Dhabi and due to begin operations in 2016. The scheme – which is being developed by Masdar, Abu Dhabi’s renewable energy and clean technology company, and the Abu Dhabi National Oil Company (ADNOC) in a CCS joint venture known as Al Reyadah – will involve the installation of a carbon capture and compression facility at the Emirates Steel plant in Mussafah.

The CCS project will capture an estimated 800,000 tonnes per year of CO from the steel plant, equivalent to 55% of its total CO emissions, according to a January 2014 report from Abu Dhabi-based daily The National. The CO produced by the facility will then be transported via a 50-km pipeline to the Rumaitha field, and then on to Bab, the largest onshore field in Abu Dhabi, where it will be injected in liquefied form as part of enhanced oil recovery (EOR) techniques. The feed stream will be purified from 90% to 98% purity before injection in to the well.

The project, which has an estimated budget of Dh450m ($122.5m), is currently being built by Dubai-based Dodsal Group, which signed a $123m engineering, procurement and construction (EPC) contract in July 2013 to deliver the capture, compression and transportation parts of the system. Abu Dhabi’s ALSA Engineering & Construction will work on the EPC contract for the field operations stage.

Carbon Solutions

The Emirates Steel project follows on from an earlier pilot programme developed by ADNOC, which in 2009 began experimenting with injecting 60 tonnes per day of CO into the Rumaitha field over a two-year period in order to understand the effects on reservoir behaviour. The theory behind using liquefied CO for EOR is that it changes the properties of the oil remaining in fields that have entered the tertiary stage of production (i.e. after water has already been injected to repressurise the formation). Liquefied CO is injected from a secondary well and mixes with the oil, causing it to swell and become lighter and detach more easily from rock formations. Water is then reinjected from the same well to drive the loosened oil toward the production well. Further sweeps may be performed to release any additional oil, and some estimates place the total additional oil which may be recovered through such a process at between 4% and 15% of oil in place in the reservoir.

Additional Options

The Abu Dhabi scheme is one of a number of projects in the region that can be considered as not merely CCS, but carbon capture and utilisation, known as CCUS. For instance, in neighbouring Saudi Arabia the Saudi Arabian Fertiliser Company is investing in equipment at its facilities that can convert 850,000 tonnes of CO per year into 1.1m tonnes of urea, while similar schemes are also going ahead in Kuwait, Qatar and Bahrain. Alongside carbon capture from industry, the Danish shipping and energy conglomerate Maersk signed a memorandum of understanding (MoU) with Masdar in January 2014 to collaborate on carbon capture projects for power generation facilities, according to a January 2014 report from The National.

The MoU would entail Abu Dhabi making use of the Danish company’s, as yet commercially untested, Tri-Gen technology, which would generate water and CO for oilfield injection, as well as producing 200 MW of power per unit. Were Abu Dhabi to build seven such units, it is estimated that an additional 50,000 barrels per day of oil production would ensue.

While filled with potential, CCUS schemes are not without their challenges. Firstly, somebody has to pay to capture, process and transport CO . In parts of Europe, where a cap-and-trade market has developed in carbon emissions, it can be easier to calculate the risk and rewards associated with this process. However, in the Gulf region, pricing a commodity such as CO is a much more difficult prospect.

Indeed, an earlier carbon-injection scheme involving BP, Masdar and ADNOC fell through in 2010 when the government partners failed to come up with a carbon price in time. An attractive price will provide a strong incentive to ensure the CO injected into the well is recovered from the oil that emerges and then recycled back into the process. Still, there is an additional challenge associated with handling such oil: in effect, injecting liquefied CO into crude oil reservoirs for EOR will change the composition of the associated gas with the resulting mix being highly corrosive. Implementing the necessary changes to ensure asset integrity for treatment and transport facilities will thus represent a significant additional cost, according to Peter Verhulst, senior vice-president of operations support at Abu Dhabi Gas Industries.

Achieving Goals

There is then the additional question of what ultimate aim is served by CCS when it leads to increased production of fossil fuels. Abu Dhabi’s current goal is to reach an average 70% recovery rate for its oil reservoirs, and in order to achieve that goal extensive use of EOR techniques will be necessary. While the CO captured through CCS will eventually be stored underground, once reservoirs have reached their maximum depletion rate, what becomes of the CO produced by the crude oil they have displaced remains a moot point. Al Mazmi told OBG, “The usage of EOR technologies, including LoSal technology, Bright Water, CO flooding and many other technology options will all be vital in significantly helping Abu Dhabi achieve its long-term recovery rate objectives.”

Injection Options

Equally moot is the opportunity cost of replacing natural gas injection with CO injection. According to the US Energy Information Administration, in 2012 UAE oil production required an estimated 30% of gross natural gas output to maintain wellhead pressure. Currently, CO is not being used in the UAE to maintain wellhead pressure, but rather as part of EOR to make the oil less viscous.

However, with the UAE’s condensate reservoirs now net consumers of natural gas and the UAE as a whole a net importer of gas, the authorities are understandably looking very carefully at ways to make better use of this resource. Is a tonne of CO potentially cheaper than a tonne of natural gas? And moreover, would it have the same effect in an oil reservoir? The answers are difficult to determine. However, with spot prices for liquefied natural gas (LNG) in Japan at around $8 per million British thermal units, a tonne of LNG has a theoretical market price of $400.

Alternatives

Nor is CO the only option when it comes to gas injection. In 2011 ADNOC formed a joint venture with Germany’s Linde Group called Elixier to build two major air separator plants in Mirfa. The plants now produce 23.7m standard cu feet (scf) per hour of nitrogen gas for injection into onshore gas reservoirs at Habshan, while two by-products, krypton and xenon, are exported to Germany. Not only can N be recovered almost anywhere from atmospheric air, it also requires far less compression than CO , meaning less is needed to maintain pressure in natural gas reservoirs.

Looking ahead, CO is likely to emerge as one option among several in Abu Dhabi’s quest to reach an average 70% recovery rate for its reservoirs. In particular, the CCUS industry would need to advance considerably in order to create sufficient volume to replace natural gas for wellhead pressure maintenance. Marc Durandeau, senior vice-president of research and development at Abu Dhabi’s Petroleum Institute, estimated that it would require 1bn scf per of CO day for a single reservoir.

Major industries, however, are beginning with small steps and Abu Dhabi’s early commitment to CCUS technology may well give the emirate a first-mover advantage within the region. And as ever greater international pressure is brought to bear on reducing CO emissions, CO EOR may well become an increasingly prominent technology in the global oil industry. Salim Shaikh, managing director of Petromar Energy Services, told OBG, “Despite the slowdown, technology surrounding EOR remains a key trend as the government moves toward achieving their long-term objective to improve their current recovery rates.”

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The Report: Abu Dhabi 2016

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