Background to the Study

The use of CO2 captured from anthropogenic greenhouse gas (GHG) emission sources for tertiary oil recovery as a means to extend the production life of mature oilfields – a technique known as CO2 enhanced oil recovery (CO2-EOR) – has been practised since the early 1970s, mainly in North America. Of the originally injected CO2, typically 60% is retained and hence stored on the first pass through the reservoir, the other 40% is back produced and is re-injected for another pass, when more of it is stored. Thus, well above 95% are stored in total (apart from some minor fugitive emissions). In considering the option of carbon capture and storage (CCS) as a climate mitigation technology, the incidental storage of CO2 during CO2-EOR is widely regarded as a co-benefit. Consequently, CO2-EOR is often viewed as an early opportunity to demonstrate CCS, in particular because the additional costs for capturing, transporting and storing CO2 from anthropogenic sources can be at least partially offset through the sale of incrementally produced oil (IPO). A key issue is how to appropriately account for and reward the net climate benefits arising from such operations. Whilst various methods and approaches have been proposed over the years, some challenges still remain, especially in terms of complexity and political implications.

Key Messages

• The incidental storage of CO2 during CO2 enhanced oil recovery (CO2-EOR) is widely regarded as a co-benefit, if you can appropriately account for, and reward, the net climate benefits arising from such operations.

• The motivation for this study was to build on earlier work on the quantification of life cycle emissions from CO2-EOR but which did not include an extensive discussion of the accounting issues including underlying issues and validity of assumptions.

• This study presents a basis for further discussion and improvement, rather than a definitive view on the matter, and thus should not be seen as a proposed methodology for emissions accounting from CO2-EOR.

• The concept of “emissions leakage (EL)” means the potential for net changes in emissions to occur outside the boundaries and operational control of a particular policy and/or activity, but which arise as a consequence of that policy and/or activity. The potential for EL can increase where no greenhouse gas (GHG) policies and measures are in place to reduce, restrict, or at least account for mid/downstream emissions.

• Emissions can arise along the whole value chain of CO2-EOR, including from the use of incrementally produced oil (IPO).

• EL can occur where IPO adds to the overall supply of oil, rather than substituting parts of the existing supply. A net emissions reduction (“negative EL”) can occur where IPO substitutes more emissions intensive supply.

• Stringent/strict GHG emission control schemes will decrease the risk of EL. An analysis using a simplified approach revealed that a significant amount of global oil flows might be at high risk of EL.

• Downstream emissions from end-use are the greatest source of life cycle GHG emissions for gasoline/petroleum, and thus could cause high EL, but are out of direct control of the EOR operation.

• There are significant challenges and uncertainties associated with the development of a methodology to quantify EL from CO2-EOR. For example, the question whether substitution of or addition to oil supply occurs would require a deep analysis of oil markets and demand and supply price elasticity.

• Due to the complexities involved in global trade of oil and refined products, a whole-chain, i.e. cradle-to-grave, assessment of CO2-EOR is generally challenging. It might be necessary and/or more effective to address site-level and mid- and downstream emissions separately. However, diving deeper into this area is not a task IEAGHG would undertake in the immediate future.