Abby L. Harvey
GHG Monitor
5/29/2015
Given the large role that enhanced oil recovery is expected to play in the commercialization of carbon capture and storage, it is vital that U.S energy policy treat the process on par with non-EOR storage of carbon, Sasha Mackler, Vice President of Summit Carbon Capture for Summit Power Group, said this week at an event hosted by the United States Energy Association. Because of the high cost of CCS technology, the ability to build a business case around EOR is essential for many projects, including Summit’s Texas Clean Energy Project, a 400MW coal integrated gasification combined cycle facility that will incorporate carbon capture and storage currently under development near Odessa, Texas. The project, when completed, will capture 90 percent of its carbon dioxide emissions, which will be used for enhanced oil recovery in the West Texas Permian Basin. “We’re going to try to take advantage of the value of selling CO2 to try to buy down the cost of capture as far as we can,” Mackler said. “In the long run, I think that if we are successful on that front, then CCS will be much more widely available to be used in pure storage over the medium- and long-term.”
Mackler said the recent Environmental Protection Agency clarification regarding Class II injection wells is an example of policy treating EOR correctly. The EPA has stated that CO2 injected in Class II wells, which are used for EOR, is considered permanently stored. “What EPA did is make it clear that CO2 can be demonstrated and permitted as stored in a Class II well. … EPA had separately developed a Class VI well, which was a storage well,” Mackler said, explaining the Class VI wells are intended only for pure storage and would not apply to an EOR operation. “What EPA said, I think really reinforces and supports the business model of CCUS. … They basically made it clear that geological storage of CO2 occurs in their view as part of an EOR operation.”
On the other end of the policy spectrum, Mackler said, is the proposed tax credits for CO2 storage and for EOR included in the Administration’s Fiscal Year 2016 budget request. The request calls for a new refundable sequestration tax credit totaling $50 per metric ton of CO2 for non-utilization storage and $10 per metric ton for utilization-based storage such as EOR. The credit would be indexed for inflation and would be allowed for a maximum of 20 years of production. “I think the EOR value should come up,” Mackler said. “Number one, because I think if we want it to be used, we probably need more than $10 a ton, and secondly, because we know that CO2 is stored in an EOR project. This great distinction in value I think maybe should be rethought a bit.”
