An Updated Status of CO2 Flooding and Emerging Options for the Future

Presented at the 2nd Annual Wyoming CO2 Conference Casper, Wyoming

May 29, 2008

Steve Melzer

2Melzer COnsulting

2

OUTLINE OF TALK• The Changing Times in Energy• CO2 , CO2 Everywhere• Carbon Capture and Storage (aka

Sequestration)• Updated Status of CO2 EOR• The New “Lens”• Revenue Stream from Sequestration?• Policies Aligned to Meet both Energy and

Environmental Needs

3

Thank yous are given to the SPE Permian Basin Section and the CO2 Conference sponsors & committee persons for their long time support of the CO2 Flooding Conference, the source of much of this information.

Credits

4

A TRUE ENERGY CRISIS (THIS TIME AROUND)

• Emergence of China and India• Peak Oil• Decreasing Coal Plant Permits /

Emission Restraints• Food to Fuel• Our Policy ‘Love Affair’ with Renewables

Where will we get adequate transportation fuels and electricity?

Accelerating the Problem

the “Solution?”

5

CONCLUSION: CONTINUING USE OF HYDROCARBONS

• In Spite of Society’s Affair, There Can be no Divorce from Fossil Fuels

• But Business Clearly Now Recognizes the Day of Business as Usual is Gone (Cleaner Energy including Capture of CO2 Emissions is Here)

• Size of WW CO2 Capture Challenge is Immense (>10 gt per year {500 bcfpd})

6

HOW TO AVOID EMISSIONS? WHAT ARE THE U.S. MARKETS FOR CO2

• Existing– CO2 EOR (2.2 bcfpd)– Merchant CO2

• Hydrofracturing services (60 mmcfpd)• Food Grade (550 mmcfpd)

– Food, beverage, waste water treatment

Smaller & Ultimately

Vented

Predominately Stored

• Potential–Enhanced Coal Bed Methane–Enhanced Gas Recovery

Shortages of CO2 Exist Today – Probably could use 50% more right away! - & a Bunch More in the Future!

7

IF: WITH CO2 CAPTURE THEN: NEW SOURCES OF CO2 FOR EOR (1)

EXISTING SOURCES (BUT NOT CAPTURED)

• EXISTING BUT NON-UTILIZED INDUSTRIAL CO2 SOURCES– NATURAL GAS BYPRODUCT CO2– HYDROGEN PLANTS– ETHANOL– CEMENT– EXISTING FOSSIL FUEL POWER PLANTS– PETROLEUM COKE GASIFIERS– OTHERS

8

IF: WITH CO2 CAPTURE THEN: NEW SOURCES OF CO2 FOR EOR (2)

COMING SOURCES

• NEWLY DEVELOPING INDUSTRIAL SOURCES– ELECTRIC POWER PLANTS

• RETROFITS FOR CAPTURE• NEW POST COMBUSTION CAPTURE (e.g., TENASKA –

SWEETWATER, Tx)• COAL GASIFICATION (FUTUREGEN-LIKE (e.g., Duke @

Edwardsport)– SYNGAS AND POLYGEN GASIFICATION (e.g., DKRW in

Wy, Eastman in GC)– OIL SHALE AND IN-SITU GASIFICATION– OTHERS

Industrial CO2 Sources

I N C R E A S I N G

P U R I T Y

Natural Gas By-product CO2

Ethanol

Coke Gasification Fertilizer (Ammonia)

Steam Methane Reforming

Cement & Landfills

Power Plants

TransportationIGCC

(FUTUREGEN)

“GREEN” REFINERIES

“THE CO2 SOURCE FRUIT TREE”

10

Options for CO2 Usage/Disposal

EOR

GOBECBM

EGR

‘Value Added’

A = Salt Caverns B = Mines C = Aquifers D = Depleted Reservoirs E = Hard Rock Caverns

Types of Gas Storage

Non- commercial ‘utilization of pore space’

Regulatory driven

CO2 Emission Capture

BUT PIPELINE INFRASTRUCTURE IS NEEDED PERMIAN BASIN CO2 FLOOD AND PIPELINE MAP

12

An Updated Look at CO2 EOR Today

13

14

GROWTH OF PERMIAN BASIN & WORLDWIDE CO2 PROJECTS

1984 - 2008

0

20

40

60

80

100

120

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

YEAR

NO. O

F PR

OJE

CTS

WW Projects PB Projects

Melzer Consulting - 5/08* Ref: O&GJ Biennial EOR Editions & UTPB

BACKGROUND (OF CO2 EOR PROJECT GROWTH*)

15

BACKGROUND (OF CO2 EOR PRODUCTION GROWTH*)

WW & PERMIAN BASIN CO2 EOR PRODUCTION1986 - 2008

0

50

100

150

200

250

30019

86

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

YEAR

CO

2 EO

R P

RO

DU

CTI

ON

- kb

opd

Permian Basin Worldwide

* Ref: O&GJ Biennial EOR Editions & UTPBP t I d t Alli

Melzer Consulting - 5/08

16

New Developments in Mississippi

RECENT GROWTH OF MISSISSIPPI CO2 PROJECTS & PRODUCTION

1992 - 2008

0

5

10

15

2019

92

1994

1996

1998

2000

2002

2004

2006

2008

YEAR

EOR

Pro

duct

ion

- Kbb

ls/d

ay

EOR Production bbls/day - Rt Scale

Denbury Operates 12 Floods now

HOW BIG IS THE CO2 BUSINESS?

NOV 2005

* Source: Oil & Gas Journal (Mar ’08) and CO2 Flooding Conference (2007)

Annual Production Rev Figures**

U.S. $8.0 billion*

PB $5.3 billion*

* @ $80/bbl

** Does not take into account the NGLs produced from the recycle volumes

18

HOW BIG CAN THE CO2 BUSINESS BECOME?

• IF WE VIEW THROUGH THE OLD “LENS”– OIL PRICES AVERAGING $12-25/BBL– CO2 SOURCE AND TRANSPORTATION

INFRASTRUCTURE EXPENSIVE AND LIMITED– NOT MANY MORE RESERVOIRS PASS MUSTER

• THE NEW “LENS”– OIL PRICES ABOVE $80/BBL– CO2 CAPTURE UBIQUITOUS– REVENUE STREAMS FOR BOTH OIL PRODUCTION AND

STORAGE– MANY, MANY MORE RESERVOIRS ARE PROFITABLE

• SO LET’S BEGIN TO LOOK AT CO2 FLOODING DIFFERENTLY

19

Important New Paradigm

The major objection to CO2 by oil producers is long pay out times not necessarily total reserves or NPV

initial oil responselarge capital exposure

But what if reservoir storage space is valuable and injector is paid to store?

20

THIS IS WHERE WE’VE BEEN

SO WHERE MIGHT THINGS BE GOING?

21

IF IT IS A NEW DAY, WHAT KIND OF CO2 PROJECTS COME TO MIND?

• Vertical (gravity-dominated) floods (Historically too slow to respond)

– Reefs (a la HCMFs)– Steeply dipping

• Depleted Reservoirs/Soaking(Significant well re-entries/reworking required)

– Repressuring with CO2

22

VERTICAL FLOODING

• With Adequate Vertical Permeability, Gravity Floods Offer Some Advantages– Straightforward Mass Balance Accounting for CO2

Storage– High Oil Recoveries– Recycle is Minimized

• But Disadvantage is Delayed Response (Gravity Dominated) – Perhaps, in the Future, Compensated for by Additional Revenue Stream (e.g., Emission Credits)

23

REMEMBERING THE CANADIAN EXPERIENCE (THE RECAP OF HCMF)

• Vertical Hydrocarbon Miscible Floods have had strong performance to date in URF =70 to 80%

• Vertical floods have performed better than horizontal floods

24

REPRESSURING WITH CO2 Viscosity vs. Saturation Pressure

Ref: “Generalized Correlations for Predicting Solubility, Swelling and Viscosity Behavior of CO2 - Crude Oil Systems,” SPE 917, Oct ‘64

Nice Decrease in Oil Viscosity with Increased CO2 in Solution

25

REPRESSURING WITH CO2 Oil Swelling vs. CO2 Mole Fraction in Oil

38% Swelling

Ref: “Generalized Correlations for Predicting Solubility, Swelling and Viscosity Behavior of CO2 - Crude Oil Systems,” SPE 917, Oct ‘64

26

Conclusions• The mobility of medium viscosity oils are

aided greatly (viscosity and swelling) by the addition of CO2

• Repressuring with CO2 should be worth a close examination for improved recovery if/when CO2 becomes ubiquitous; especially if formation storage is compensated.

• Dramatically Increasing Oil Production while Providing CO2 Storage in Proven Traps is Quite Feasible

27

Final Section Policies Aligned to Meet both Energy and

Environmental Needs

But, as a Cautionary Note, Governmental Policies can Mess this up

28

CO2 Storage Conceptual Analogues

• CO2 EOR (124,000 tons/per day of “new”CO2 , = 2.16 bcfpd ~ 1.1 mmbpd)

• Natural Gas Storage (450 State Permitted NG Injection Sites)

• Strategic Petroleum Reserve (688 mmbo in Storage as of 10/6/06*) – Current storage capacity - 727 mmbo

*http://www2.spr.doe.gov/DIR/SilverStream/Pages/pgDailyInvent oryReportViewDOE_new.html

Conclusion: Industry is Doing This!

29

CO2 STORAGEIn which reservoir should I inject?Oil & Gas

• Known

Seismic

Core

Produced

Pressure

• Minimizes risk

Deep Saline

• Unknowns

• Long term liability increased

““ItIt’’s better to have the devil that you know s better to have the devil that you know than the one you donthan the one you don’’t.t.””

30

Disjoint between Government and Industry

If CO2 capture and geological storage is to play a significant role in mitigating global emissions, then the quantity of CO2 placed in geological storage will need to approach 10 Gt/yr worldwide or roughly 300 times the current rate of CO2 injection for EOR.

D. Keith and M. Wilson, Nov. 2002

My number:10 GT/yr = 520 bcfpd (~250 x current rate of new CO2 utilization in the U.S.)

31

Focused on:• Long term • Geological storage• Regulatory Requirements• Research

Focus for Industry:• Shorter term and dramatic

deployment of new technologies• Exploration

Resource plays: cost/payout • Optimal Utilization of Assets

Experienced PersonnelSubsurface knowledge

Government vs. Petroleum Industry

32

THE ‘DISJOINT’

• Industry Has Lots of Talent to do CCS but,– Is Exploration Focused – Returns aren’t there for Injection/

Production Projects to Compete with the Resource Plays

• Most O/G Interests are Quite Happy with Business as Usual

33

THE COMING CARBON REGULATED WORLD THE FOUR COMPETING STANDARDS

“QUALIFYING” CO2 EMISSION REDUCTIONS ALLOW EFFICIENCIES, FUEL CONVERSIONS TO “RENEWABLES,” PLUS AGRICULTURAL AND FOREST SEQUESTRATION WITH

1. NO GEOLOGICAL SEQUESTRATION2. GEOLOGICAL BUT NO CO2 EOR3. GEOLOGICAL INCLUDING CO2 EOR WITH

‘ADDITIONALITY’4. GEOLOGICAL INCLUDING CO2 EOR WITH OR

WITHOUT ‘ADDITIONALITY’

34

THE COMING CARBON REGULATED WORLD STANDARD #1 – “KYOTO-LIKE”

EFFICIENCIES

FUEL CONVERSIONS

RENEWABLES

AGRI SEQUESTRATION

TERRESTRIAL SEQ

GEOLOGICAL SEQUESTRATION

THE

‘WAL

L’

QUALIFIABLE

EMISSION REDUCTIONS

UNQUALIFIABLE

EMISSION REDUCTIONS

35

Environmentalists call on MOP 2 to reject CDM sequestration projects

News Release - 9/06Climate Action Network Europe (CAN Europe) has called on the second Meeting of the Parties (MOP 2) to the Kyoto Protocol to reject the inclusion of carbon capture and storage (CCS) under the clean development mechanism umbrella.

In a public letter sent out last week to the heads of delegations, CAN Europe, which represents over European 100 non-governmental organisations, said the technology “has not yet been shown to be environmentally safe and sound,” which is a requirement for the inclusion of the technology under the Marrakech Accords.

“Issues such as permanence, liability, responsibility and insurance against leakage need to be addressed in an adequate framework,” the letter said.

The second MOP is to take place in Nairobi next month and is expected to make a decision on whether to include the controversial measure, which involves capturing CO2 from an emitting installations and storing it in geological formations, under the CDM. If included, CCS has the potential to capture millions of tonnes of CO2 that would otherwise enter the atmosphere.

However, environmentalists have expressed concerns about the long-term reliability of the process, citing lack of clarity over long-term monitoring and liability rules.

The letter also forecasted that the inclusion of sequestration would divert funds from long-term sustainable projects such as renewables and energy efficiency, and that CCS does not meet additionality criteria.

36

EFFICIENCIES

FUEL CONVERSIONS

RENEWABLES

AGRI SEQUESTRATION

TERRESTRIAL SEQ

GEOLOGICAL SEQ

THE COMING CARBON REGULATED WORLD STANDARD #2 – “GEOLOGICAL BUT w/COMMERCIAL EXCLUSON”

THE

‘WAL

L’

QUALIFIABLE

EMISSION REDUCTIONS

UNQUALIFIABLE

EMISSION REDUCTIONS

CO2 ENHANCED OIL RECOVERY

IN UNPROVEN TRAPS, CONSIDERABLE RESEARCH REQ’D

37

THE COMING CARBON REGULATED WORLD STANDARD #3 – “IMMEDIACY OF ACTION”

THE

‘WAL

L’

QUALIFIABLE

EMISSION REDUCTIONS

UNQUALIFIABLE

EMISSION REDUCTIONS

CO2 ENHANCED OIL RECOVERY

Without “Additionality”

EFFICIENCIES

FUEL CONVERSIONS

RENEWABLES

AGRI SEQUESTRATION

TERRESTRIAL SEQ

GEOLOGICAL SEQ INCLUDING

SOME EOR (additionality)

38

THE COMING CARBON MANAGED WORLD STANDARD #4 – “INFRASTRUCTURE BUILDOUTS”

THE

‘WAL

L’

QUALIFIABLE

EMISSION REDUCTIONS

UNQUALIFIABLE

EMISSION REDUCTIONS

INCENTIVE ‘GAMING’ EFFICIENCIES

FUEL CONVERSIONS

RENEWABLES

AGRI SEQUESTRATION

TERRESTRIAL SEQ

GEOLOGICAL SEQ INCLUDING

EOR (w/ or w/o additionality)

39

CO2 Storage Future Under Standards 3 or 4

• Potentially Huge CO2 Volumes (>1 mm tons/day by 2016)• Grows from Known Subsurface Traps (Stage 1) then (Potentially) into

Non-Hydrocarbon Bearing & Saline Aquifer Formations (Stage 2) - but probably not until 2016 or later

• Injected as a Commodity (Stage 1) then as a Waste Stream (Stage 2)• Stage 2 Requires Significant PR and a large number of Demo Projects

to Convince the Public (if it is a Waste Stream)• Potentially Regulated by the Federal Government (EPA)• Existing State Organizations Currently Regulating Underground

Injection (SOGRAs) are Regulating CO2 EOR only – would continue during Stage 1

STAGE 1 STAGE 2

2006 2010 20202015

40

SUBSURFACE RIGHTS

• ANALOGUES ARE:– CO2 EOR (Mineral Rights)

Unitization is Key Model, Both Voluntary and Statutory

– Storage (Surface Rights, in most States)Acquisition and Eminent Domain Models

• STATE-by-STATE VARIABLE LAW

41

THE CASE FOR CO2 EOR JUMPSTARTING CCS

I. Expansion of the Existing and Experienced Industry

II. Established Subsurface Conditions: Proven Traps and Seals

III. Potential for Value-Added Products with Commercial Subsidizing of CCS

IV. Co-Use and Expansion of Existing CO2 Infrastructure

V. Well Explored Local and Regional Geologic Settings

VI. Embedded Compensation to Mineral/Surface Owners

VII. The Superposition of Oil Production and CCS Provides a Solution to the Most Difficult of Propositions: Convincing Site Owners of the Need for Waste Injection on Their Property

42

CO2 INJECTION FINANCIAL ‘ENGINES’ (ECONOMICS)

• CO2 INFRASTRUCTURE CAPITAL COSTS ARE VERY LARGE– SOURCES– PIPELINES– FIELD CAPITAL

• PERMITTING COSTS HAVE NOT BEEN ONEROUS• OPERATING COSTS HAVE NOT BEEN ONEROUS

– BUT SURVEILLANCE IS MORE COSTLY (EQUIVALENT IN CONCEPT TO MONITORING AND VERIFICATION)

• HISTORICALLY ‘PURCHASED’ CO2 COSTS IN THE RANGE OF $10-20/TON

• RECYCLED CO2 COST IN THE RANGE OF $5-10/TON

Stay tuned for Brian’s Talk tomorrowMore about this tomorrow

Wyoming Trying to Keep this

under control

Now these have doubled

Doubled?

43

SO LET’S GROW THE CO2 MARKET !

44

Thanks – Time for Questions?

CreditsThank yous are given to the SPE Permian

Basin Section and the CO2 Conference sponsors & committee persons for their long time support of the CO2 Flooding Conference, the source of much of this information

Credits are also given to Mr. Richard Baker of Epic Consulting, Calgary, Canada for some of the ideas and slides provided in this talk

45

BACKUP SLIDES

ANTICIPATED PHASES OF CCS

PERMITTING POST- CLOSURE

CLOSUREINJECTION

STATE (SOGRAs)

EPA (Ground Water)STATES

Categorization of Sites to Consider the Following:Geological Attributes of Site, Seals, Adequate Unit Size, Bonding (Operator’s Record/History), etc.

Industry Operations

REGULATORY OVERSIGHT

Will Determine Level of Monitoring Required

47

PUBLIC HEALTH & SAFETY REGULATORY OVERSIGHT

• NO LOSS OF LIFE ACCIDENT DUE TO CO2 EXPOSURE • BASIC FRAMEWORK FOR REGULATION OF CO2 STORAGE HAS BEEN

DEVELOPED WITHIN STATES THAT DO EOR &/or GAS STORAGE– State Oil & Gas Regulatory Agencies (SOGRAs) for CO2 ops– DOT’s Office of Pipeline Safety for LD CO2 transport to lease boundary

• SOGRAs METHODOLOGY INCLUDES MEASURES (UNITIZATION) FOR AGGLOMERATION OF NECESSARY RIGHTS (MINERAL, SURFACE)

• STATES WILL DEVELOP STANDARDS FOR STORAGE PROJECT LICENSING

• NEEDS NEW OVERLAYS FOR:– Emplacement Monitoring Requirements and Duration – Long Term Responsibility and Liability Provisions– Statutory Assistance for Aggregating Surface and/or Mineral Rights

IOGCC has addressed

The Annual CO2 Flooding Conference

• Held Each December in Midland, Texas – Home Base to 53 CO2 Floods

• Concentrates on Actual Case Histories• Includes a Field Visit (this year to Oxy’s Denver Unit)• Includes a Short Course (this year on “CO2 Sourcing for EOR”)• Includes an EOR Carbon Management Workshop

(This year in Houston)

• Great CO2 Networking Opportunity with Project Folks

Visit: www.spe-pb.org or call 432-552-2430

http://www.spe-pb.org/

49

Final Thoughts• Looking forward in time:

– Oil is more valuable than in the past– Permanent CO2 Storage in reservoirs is so

desirable that it brings a revenue stream

• Filing a depleted oil reservoir back up with CO2 becomes an attractive option in certain reservoirs (CO2 Soaking in either a gravity dominated or horizontal configuration)

• Depleted Medium viscosity oil reservoirs should be particularly interesting

50

THE FUTUREGEN CONCEPT also referred to as “Clean Coal” or “Integrated Gasification Combined Cycle”

AIR SEPARATIONAIR

N2

O2

H2 OG A S I F I E R

COAL

MARKETABLE ASH/SLAG

BYPRODUCT

GAS CLEANING AND STEAM

GENERATION TO H2

H2 O

SULFUR RECOVERY

MARKETABLE SULFUR

BYPRODUCT

CO2 SEPARATION

H2 -RICH STEAM

AIR

H2 SEPARATION

STEAM TURBINE

H2 PRODUCT SALES

(TRANSPORTATION, REFINERIES)

MARKETABLE CO2 FOR

ENHANCED OIL RECOVERY

CO2 DISPOSAL (DEEP SALINE

AQUIFERS)

ELECTRICITY SALES

or

51

PERMIAN BASIN (TX) CO2 EOR AND INFILL “WEDGE” ** PRIMARY, SECONDARY AND TERTIARY (EOR & INFILL WEDGE) HISTORY

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

1940 1950 1960 1970 1980 1990 2000 2010 2020

Year

Prod

uctio

n (M

BO

PD)

0

5,000

10,000

15,000

20,000

25,000

30,000

Wel

ls C

ompl

eted

per

Yea

r

Wells Completed per YearHistorical Production (actual)EOR & Infill Wedge (estimated)Hubbert Curve (Primary & WF)Hubbert Curve (EOR & Infill)Hubbert Curve (combined recovery)

EOR & InfillWedge

(2.5 B bbls)

CombinedRecovery

(34.5 B bbls)

Primary & WFDevelopment

(32 B bbls)

* Courtesy of Oxy Permian (9/05)

52

PERMIAN BASIN OIL PRODUCTION PRIMARY, SECONDARY, TERTIARY AND “UNCONVENTIONAL OIL”

PROJECTIONS

* Courtesy of Oxy Permian (9/05) ** “Unconventional Oil Projections” Melzer Consulting 2005

“Unconventional Oil” Projections**

*

53

Top Five Things to Remember for CO2 EOR Economics

1. Oil price and CO2 price & availability2. Oil price and CO2 price & availability3. Oil price and CO2 price & availability4. Start up costs are very field dependent 5. Generally good waterfloods make

good CO2 miscible floodsBut we’ll come back to this point later: do we have to have waterflooded a reservoir to have a good CO2 project?

54

THE PERMIAN BASIN (SAN ANDRES) EXPERIENCE RULES OF THUMB: CO2 MISCIBLE INJECTION

• PERCENT OF OOIP8 TO 18 (12)

• RATIO – TERTIARY / (P + S)20 TO 35 (25)

• SWEEP EFFICIENCY25 TO 50 (35)

• RATIO – Et / E(P+S)50 TO 60 (50)

55

WHAT ARE THE MOST IMPORTANT METRICS FOR EXPANDING CO2 EOR?

– Initial oil response (response time/peak oil rate);• Current oil saturations • Injection rates• Permeability• Reservoir heterogeneity

– CO2 price & availability

– Existing Infrastructure

– Wellbore integrity

56

BACK TO SECONDARY CO2 FLOODING

IN THE PAST, VERY FEW SECONDARY CO2 FLOODS HAVE BEEN IMPLEMENTED

• “Good waterfloods make good CO2 floods”– Quantified Heterogeneity, i.e., – Sweep Efficiency is Proven

• CO2 flood funding commitments have historically been very large & have made economics challenging– But do higher oil prices, possible second revenue stream

(storage), and cheaper CO2 change that paradigm?

57

SWEEP EFFICIENCY (1)

WF Swept Area

58

SWEEP EFFICIENCY (2)

CO2 Swept Area

WF Swept Area

An Updated Status of CO2 Flooding and Emerging Options for the Future��Presented at the 2nd Annual Wyoming CO2 Conference�Casper, Wyoming��May 29, 2008��Steve Melzer OUTLINE OF TALKCreditsA TRUE ENERGY CRISIS �(THIS TIME AROUND)CONCLUSION:�CONTINUING USE OF HYDROCARBONSHOW TO AVOID EMISSIONS?�WHAT ARE THE U.S. MARKETS FOR CO2IF: WITH CO2 CAPTURE��THEN: NEW SOURCES OF CO2 FOR EOR (1)IF: WITH CO2 CAPTURE��THEN: NEW SOURCES OF CO2 FOR EOR (2)Industrial CO2 SourcesOptions for CO2 Usage/DisposalBUT PIPELINE INFRASTRUCTURE IS NEEDED PERMIAN BASIN CO2 FLOOD AND PIPELINE MAPAn Updated Look at CO2 EOR TodaySlide Number 13BACKGROUND� (OF CO2 EOR PROJECT GROWTH*)BACKGROUND� (OF CO2 EOR PRODUCTION GROWTH*)New Developments in MississippiHOW BIG IS THE CO2 BUSINESS?HOW BIG CAN THE CO2 BUSINESS BECOME?Important New ParadigmTHIS IS WHERE WE’VE BEEN���SO WHERE MIGHT THINGS BE GOING?IF IT IS A NEW DAY, WHAT KIND OF CO2 PROJECTS COME TO MIND?VERTICAL FLOODINGREMEMBERING THE CANADIAN EXPERIENCE (THE RECAP OF HCMF)REPRESSURING WITH CO2�Viscosity vs. Saturation PressureREPRESSURING WITH CO2�Oil Swelling vs. CO2 Mole Fraction in OilConclusionsFinal Section�Policies Aligned to Meet both Energy and Environmental NeedsCO2 Storage�Conceptual AnaloguesCO2 STORAGEDisjoint between Government and IndustrySlide Number 31THE ‘DISJOINT’THE COMING CARBON REGULATED WORLD�THE FOUR COMPETING STANDARDSTHE COMING CARBON REGULATED WORLD�STANDARD #1 – “KYOTO-LIKE”Environmentalists call on MOP 2 to�reject CDM sequestration projects�News Release - 9/06THE COMING CARBON REGULATED WORLD�STANDARD #2 – “GEOLOGICAL BUT w/COMMERCIAL EXCLUSON”THE COMING CARBON REGULATED WORLD�STANDARD #3 – “IMMEDIACY OF ACTION”Slide Number 38CO2 Storage�Future Under Standards 3 or 4SUBSURFACE RIGHTSTHE CASE FOR CO2 EOR JUMPSTARTING CCSCO2 INJECTION FINANCIAL ‘ENGINES’ (ECONOMICS)SO LET’S GROW THE CO2 MARKET !Thanks – Time for Questions?BACKUP SLIDESANTICIPATED PHASES OF CCSPUBLIC HEALTH & SAFETY REGULATORY OVERSIGHTSlide Number 48Final ThoughtsTHE FUTUREGEN CONCEPT�also referred to as “Clean Coal” or “Integrated Gasification Combined Cycle”�PERMIAN BASIN (TX) CO2 EOR AND INFILL “WEDGE” **�PRIMARY, SECONDARY AND TERTIARY (EOR & INFILL WEDGE) HISTORYPERMIAN BASIN OIL PRODUCTION� PRIMARY, SECONDARY, TERTIARY AND “UNCONVENTIONAL OIL” PROJECTIONSTop Five Things to Remember for CO2 EOR EconomicsTHE PERMIAN BASIN (SAN ANDRES) EXPERIENCE �RULES OF THUMB: CO2 MISCIBLE INJECTIONWHAT ARE THE MOST IMPORTANT METRICS FOR EXPANDING CO2 EOR?BACK TO SECONDARY CO2 FLOODINGSWEEP EFFICIENCY (1)Slide Number 58