Carbon Dioxide Capture, Storage, and Reinjection: A Brief Look at the Benefits and the Need for a Policy of Proliferation
Contributor, John Ellis
With greenhouse gas emissions increasing and environmental consciousness on the rise, the capture, storage, and reinjection of carbon dioxide is becoming a mainstream enterprise throughout the oil and gas industry. Approximately 90% of the carbon dioxide emitted by fossil-fuel burning installations (such as oil refineries and power plants) can be chemically separated and captured. The carbon dioxide can then be stored underground permanently to prevent it from polluting the atmosphere, or it can be reinjected into a partially depleted oil reservoir, which will reduce the viscosity of the oil and increase the pressure in the reservoir to allow for increased recovery of oil that would otherwise be impossible. Large-scale CO2 capture projects are currently underway in other parts of the world, and the United States government is implementing programs to subsidize the development of cost-effective capture and storage technologies.
To date, the most significant use of this process in Texas occurred in the western portion of the state in early 2000s. Shell Oil and Mobil Oil, together in a joint venture, held leases covering a large area of the Permian Basin in West Texas; they began purchasing large amounts of carbon dioxide stored in Colorado’s McElmo Dome CO2 formation to inject into their West Texas reservoirs for enhanced recovery of oil. Shell and Mobil jointly built and operated a pipeline stretching from Colorado to West Texas, flooded the Permian Basin oil reservoirs with carbon dioxide, and successfully extracted tens of millions of dollars’ worth of oil that would have been unobtainable without CO2 reinjection.
Carbon dioxide reinjection for enhanced recovery typically allows for an extra 30% to 60% more oil to be extracted from a reservoir than could be extracted under normal conditions. As of 2008, over 6,100 CO2 injection wells were active in the United States, making it possible to recover an aggregate 245,000 more barrels of oil every day; that equates to 89,425,000 more barrels of oil every year. The upshot of those statistics is that carbon dioxide can be a valuable commodity to the oil and gas industry instead of a feared pollutant that draws the ire of the Environmental Protection Agency (E.P.A.) and other regulatory bodies. While other states like Louisiana and West Virginia have begun exploring legislation to incentivize CO2 capture, the Texas legislature has yet to take any significant action to establish rights and liabilities that would allow (and encourage) operators to engage in this practice more frequently with a greater level of legal certainty.
As a final point, the United States Supreme Court held in Mass. v. Envtl. Prot. Agency, 549 U.S. 497 (2007) that carbon dioxide qualifies as a greenhouse gas, and that the E.P.A. is obligated to regulate atmospheric carbon dioxide emissions under the federal Clean Air Act. The effect of this ruling is that federal legislation and administrative directives will be introduced in the coming years aiming to limit CO2 emissions by oil and gas operators. As a result, CO2 capture, storage, and reinjection will not only be beneficial, but likely necessary to comply with environmental regulations as well.
It is important that the Texas legislature confront this issue and establish a clear legal framework that encourages oil and gas operators to realize the benefits of CO2 capture, while also helping those operators comply with forthcoming regulations. The State of Texas stands to benefit tremendously.
The above information is provided for informational purposes only, and should not be interpreted or construed as legal advice on any subject matter, and may not represent current legal developments. Any person viewing the above should seek legal advice from a licensed attorney prior to acting or refraining from acting, based upon the information provided above. Mazurek, Alford & Holliday, P.C., expressly disclaims all liability with respect to actions taken or not taken based upon any or all of the contents of the information provided above.