Could CO2 Enhanced Oil Recovery Kick-Start the UK Carbon Storage Industry?

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What are carbon capture and enhanced oil recovery?

Carbon capture and storage (CCS) involves pumping the CO2 produced at power stations and other industrial sites into underground geological formations in order to reduce the amount of CO2 released into the atmosphere.

Enhanced oil recovery (EOR) is the name for a range of technologies being developed to maximise the amount of oil that can be extracted from the world’s oil fields.


Carbon storage and CO2-EOR: A major opportunity?

Carbon storage and CO2 Enhanced Oil Recovery (CO2-EOR) were some of the key themes at the recent Finding Petroleum event in London.

CO2-EOR is a process whereby carbon dioxide is pumped into an oil reservoir in order to extend its lifespan. This is one of a number of new technologies that promises better yields from oil fields (in the past, oil fields have generally been abandoned once the cost of production starts to outweigh the revenue generated, even though not all the oil has been extracted).

The CO2 needed to make this technology work can now, in theory, be supplied via carbon capture operations at industrial sites.

The downside of CO2-EOR is that carbon dioxide can be released into the atmosphere – that means the efficiency benefits are undermined by the environmental impact of the technology. However, innovations in carbon storage mean that the CO2 can now be sealed in the reservoir once oil recovery has finished.


What incentives are needed?

The increasing use of CO2-EOR could be the perfect stimulus for the UK’s burgeoning carbon storage industry, with the potential for more investment in our offshore oil fields and the development of the infrastructure required to transport CO2. In order to capitalise on these opportunities, however, the government will need to create a favourable environment for investors, experts have warned.

Studies into the viability of a CO2-EOR project in the UK have been taking place for decades, but no pilot project has been undertaken so far. There is a feeling that tax incentives will be needed to help get this technology off the ground. This could take the form of petroleum revenue tax reductions or field allowances to help offset the initial outlay needed to set up such a project.

Ian Phillips, Director of CO2 Infrastructure at Petrofac, said:

“I would like to see a tax incentive, so early adopters could see commercial returns on EOR projects. I believe that once a pipeline is established in the North Sea there will be an avalanche of projects only limited by the supply of CO2.”

It remains to be seen what steps the government will take to help encourage carbon capture, but the EOR industry seems to offer the most realistic opportunity for making carbon capture an economically attractive option to power companies and other industrial operators.

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