Another win-win for Louisiana with carbon storing
While the national and international debate on climate change and reduction of green-house gases continues, Louisiana has surged ahead of most other states in its effort to capture and store carbon from utility power plants and industrial sites and to put the by-product to good use.
The process is called CO2 sequestration and simply means that carbon previously emitted from generating units and other operations is “captured,” compressed, put into pipelines, and stored in geologic formations beneath the earth. This man-made or anthropogenic CO2 joins naturally-occurring CO2 as a resource for enhanced oil recovery.
Enhanced crude oil recovery began in the early 1970s, and a large network of pipelines currently supplies CO2 to over 10,000 wells in Texas. The carbon dioxide acts like a solvent or detergent as it is injected into oil bearing formations, “washing” the oil from the strata and allowing it to be brought to the surface. Since there is not enough natural CO2 to serve the many oilfield sites, there is high interest in maximizing the capture of man-made carbon dioxide.
It is estimated that there are 400 billion barrels of “stranded” oil in the U.S., which is about two-thirds of the original oil in place. Of that 400 billion barrels, between 40 percent and 47 percent is economically recoverable, depending on the price of oil. Of the 158 “stranded” oilfields along the Gulf Coast, 128 of them are right here in Louisiana.
Many of these Louisiana oilfields are south of Interstate 10, including 12 offshore fields in Louisiana state waters and 87 in the federal offshore. This is the same area where Louisiana's rig count is at an historic low. Were it not for drilling in the Haynesville Shale in northwest Louisiana, which buoys the state's rig count, there would be hardly any activity in Louisiana.
The risk of drilling a new well in south Louisiana is extremely high with a high percentage of failure; thus, it's only logical to use this new enhanced oil recovery in fields that previously produced and were given up as depleted.
A new 320-mile CO2 pipeline is being built from Donaldsonville to an area south of Houston. Current construction of the 24-inch line can be seen as one travels west on U.S. 190 from Baton Rouge.
Called “the Green Pipeline,” it is designed to transport up to 800 million standard cubic feet per day of both natural and man-made carbon dioxide for use in enhanced oil recovery in southeast Texas. As commercial operations add additional volumes of gas to the pipeline, drilling companies capturing “stranded” oil will be able to inject into more and more fields, thereby producing more oil.
Since approximately 200 miles of the line are in south Louisiana, it is likely that drillers in our state would also benefit from using enhanced oil recovery technology.
The Louisiana Legislature has recently passed several very progressive measures which will encourage both the capture and use of CO2 in the state. One new law sets up a regulatory scheme for the Commissioner of Conservation to regulate the CO2 storage facilities. Another expanded the exemption from severance tax for oil produced using this method. Yet another law exempts the man-made CO2 from sales tax when it is sold for enhanced oil recovery.
While future legislation is likely needed to boost drilling activity in south Louisiana, particularly the high-cost, deep-well drilling, a short-term solution is obviously to use captured CO2 here in the state to cleanse the oil from the rocks below. What a win-win: to cleanse the air above and to also cleanse the rocks below!
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