RESERVED CO₂EOR Accounting JK

Publication Overview

The report attempts to review issues associated with greenhouse gas emissions accounting where anthropogenic carbon dioxide is captured and used for enhanced oil recovery (CO₂-EOR) in conjunction with long-term geological storage of CO₂. Whilst this suggests a fairly narrow scope of research, it in fact opens up several lines of complex enquiry, requiring a strong understanding of global oil production, trade, supply and demand. This is a topic to which countless hours of debate and consideration are made on an ongoing basis, generally without any clear consensus in respect of matters such as ‘peak oil’, ‘carbon lock-in’ and fossil fuel ‘demand destruction’. It is also a topic that is highly political, with oil being at the heart of economic activity and life-style behaviour. As such, the analysis presented herein has required some simplifying assumptions in order to provide limits to the discussions presented. This has been carried out to the best of the authors’ capacity, commensurate with the time and resources available for the study. The report does not claim to provide a definitive view on how to resolve issues of greenhouse gas emissions accounting for CO₂- EOR, but rather provides a source of ideas on how to establish a framework for considering the issues at hand, and food for thought in respect of further discussion and debate.

Publication Summary

Firstly, the characteristics of oil supply from the country hosting the CO₂-EOR activity needs to be analysed. This is used to determine the range of jurisdictions using the incrementally produced oil, and the emissions leakage risk for each country, classified in terms of low, medium and high risk. · Secondly, the volume of oil received by each jurisdiction in each risk category should be calculated. The relative percentage of produced oil delivered to each risk category should be established. This provides the basis for pro-rating and allocating production from a CO₂-EOR activity to each leakage risk category (i.e. low, medium, high). · Thirdly, for jurisdictions at either low or medium risk of emissions leakage, the delta between the site-level emissions associated with the CO₂-EOR project and the emission from crude oil extraction for either: (i) the marginal supply, or (ii) the average market supply, is calculated. This should be calculated for each jurisdiction in order to establish a weighted average crude oil extraction emissions intensity. The choice of approach depends on whether it is possible to identify the marginal supply for a given jurisdiction or not. The difference between the two provides an estimate of emissions leakage from CO₂-EOR, which may be negative where more emissions intensive supply sources are substituted. For countries with a medium risk of emissions leakage, the result should be multiplied by 0.5 to reflect the uncertainty regarding whether substitution of supply is occurring i.e. only half of any emission reduction benefit is attributable. · Fourthly, mid- and downstream emissions associated with refining and end-use of crude oil and products should be calculated for jurisdictions at medium and high risk of emissions. In the case of countries at a high risk of emissions leakage, this provides the basis for quantifying the risk. For countries with a medium risk of emissions leakage, the result should be multiplied by 0.5 to reflect the uncertainty regarding whether addition to supply is occurring. · For countries at medium risk of emissions leakage, a combined approach to quantifying emissions leakage risk is proposed, consisting 50% of any benefits of substituting more emissions intensive oil supplies and 50% of the risk of unmitigated increases in mid- and downstream emissions;