Could Expensive Oil Rescue Carbon Capture?

What a difference a few years makes. Not long ago, power plants with carbon capture and sequestration (CCS) seemed to be the key to a low carbon future.

Today, with no large-scale pilot plants operating, no appetite for big government subsidies, and no price on carbon in the offing, CCS barely registers in most low-carbon energy conversations.

I’ve recently been wondering, though, whether high oil prices might change that. The United States produces about a quarter-million barrels of oil each day by injecting carbon dioxide underground to enhance oil recovery. The scale of this endeavor, known as CO2-EOR, is limited primarily by CO2 availability, most of which comes from natural sources. That’s why estimates of the potential impact of various cap-and-trade bills often projected big gains in U.S. oil production: by penalizing greenhouse gas emissions, they would have incentivized CCS, and in doing that, helped boost oil.

But here’s the thing: at some oil price, it should be worth capturing CO2 from power operations purely so that it can be used to extract oil.

I’ve been meaning for a while to try and put some numbers to this hunch. I hadn’t followed through, but this past Monday, I visited an interesting company whose business strategy is based substantially on this bet. That’s enough motivation for me to drill down a bit more.

CFR