Carbon dioxide-enhanced oil recovery in Australia – techno-economic evaluation, carbon dioxide source/sink networks and current policy landscape

Introduction

In 2020, the Australian Government released its Technology Investment Roadmap: First Low Emissions Technology Statement (Department of Industry, Science, Energy & Resources (DISER) 2020) which identified carbon capture and storage (CCS) as one of five priority technologies in meeting net-zero emissions by 2050. The Roadmap outlines how technology, rather than taxation, is a key principle for Australia’s emissions reductions strategy.

CO₂-enhanced oil recovery (EOR), a form of CO₂ ‘utilisation’ is the practice of injecting CO₂ into an oil-bearing reservoir. This results in the permanent storage of significant volumes of CO₂ in the subsurface as well as enabling the CO₂ to mix with any oil that it contacts, which can result in increasing the recoverable oil from mature fields. Although CO₂-EOR has been implemented successfully for decades, particularly in the United States, it has not gained traction in Australia to date.

In conventional CO₂-EOR applications, the aim is to maximise oil production using minimal CO₂. However, alternative reservoir management practices focussing on permanently storing higher ratios of CO₂ per barrel of oil produced have previously been discussed in literature (Tenthorey et al. 2021). A net-negative emissions position may be achieved when the CO₂ stored per barrel of oil produced is greater than the full lifecycle emissions of the combusted oil. Further, additional domestic oil production via CO₂-EOR can also reduce the need to pursue higher intensity oil imports and more environmentally challenging settings for new oil reserves.

Bagheri et al. (2022) previously developed an oil field database for Queensland and South Australia, and subsequently quantified technically viable oil recovery and CO₂ storage through implementation of CO₂-EOR using Advanced Resources International’s (ARI) CO₂ Prophet software (Attanasi 2017).

This paper (1) quantifies the potential for storing CO₂ and producing lower carbon intensity oil from mature, onshore Australian oil fields located in the Cooper/Eromanga and Surat/Bowen Basins through a techno-economic assessment, (2) quantifies the sensitivity of these parameters to incentivisation, (3) identifies plausible sources of CO₂, and (4) addresses global policies for CO₂-EOR.

Methodology

Results

Techno-economics

The results of the techno-economic modelling demonstrated that 35 Mt of CO₂ can be permanently stored, and 106 million barrels (MMBO) can be produced under modelled economic conditions that most closely represent Australia’s current policy and economic settings (Fig. 1)¹. The direct impact of implementing economic CO₂-EOR in the identified regions alone would extend the life of the currently producing oil fields, thereby maximising the utilisation of existing project assets, adding significant amounts to the national fuel reserve, while reducing emissions and the cost of new investments.

Fig. 1. 

Resource impact of applying the techno-economic model for different scenarios.

However, under an ‘incentivised, low purchased CO₂ price’² scenario – potentially achieved through government subsidy or the allocation of theoretical ACCUs – the CO₂ storage and additional economic oil recovery increased from 40 to 75 Mt of CO₂ and 106 to 179 MMBO, respectively. In some cases, net-negative carbon dioxide emissions can be achieved.

Industrial sources of CO₂

In the Australian states and territories included in the study (QLD, SA, NSW, NT), the largest emission sources presented are black coal-fired power stations, with nine facilities generating over 5 Mt of CO₂-e Scope 1 emissions per annum; power generation sector emissions are dominated by the states of QLD and NSW.

There are also significant CO₂ sources that could be captured from other major industries, including cement and steel. Thus, there is an opportunity to establish CO₂ source clusters around the large industrial centres, helping to reduce capital and operating expenditures for transportation to CO₂-EOR hubs, in which case over 75% of the potential capturable industrial CO₂ source volumes are in the regions of Newcastle/Hunter Valley, Gladstone and Darling Downs/Tarong (Fig. 2).

Fig. 2. 

Potentially capturable CO₂ sources by industry, Map (QLD, SA, NSW, NT). Regions with identified annual potentially capturable CO₂ sources greater than 0.2 million metric tons are presented and exclude Moomba. Data is primarily sourced from company sustainability reports and Safeguard facility data.

Summary and conclusion

In this study, a CO₂-EOR cost model was developed to quantify the potential for storing CO₂ and producing lower carbon intensity oil from mature, onshore Australian oil fields located in the Cooper/Eromanga and Surat/Bowen Basins. The modelling demonstrates that 35 Mt of CO₂ can be permanently stored, and 106 MMBO can be produced under modelled economic conditions that most closely represent Australia’s current policy and economic settings. Under current Australian policy, CO₂-EOR activities are not currently eligible for ACCUs. By applying a hypothetical ‘carbon incentive’, an additional 40 Mt of CO₂ can be stored and 73 MMBO could be recovered and therefore added to the national fuel reserve. Alternative national policies have been outlined and highlight the significant incentives available for implementing CO₂-EOR in the USA.

Industrial CO₂ sources were also identified, highlighting that there is currently a significant supply of CO₂ to support the deployment of CO₂-EOR. However, the reduction of power generation from coal-fired sources in New South Wales will materially change the geographic balance and magnitude of CO₂ sources in Australia. Hence, the pace of this transition will be an influential factor in any future development of CO₂ source/sink connecting infrastructure in Australia.

CO₂-EOR also has the potential to unlock additional utilisation and large-scale, lower-cost, geological CO₂ storage opportunities. By concentrating industrial CO₂ sources and developing infrastructure in areas with other sizable CO₂ storage reservoirs, CO₂-EOR has the potential to accelerate the uptake of CCS in Australia, create new industries and businesses, and assist the country in meeting its net-zero commitments.

As a long-term consideration, EOR with CCS can give Australia a strategic advantage in the global energy market by reducing its dependence on foreign oil and improving its domestic energy production. Furthermore, by reducing its dependence on foreign oil, Australia can better align its energy needs with its national interests and reduce its vulnerability to global energy supply disruptions.

Data availability

The data cannot be shared due to privacy reasons.

Conflicts of interest

The authors confirm that there are no conflicts of interest.

Declaration of funding

Phase 2 of the CO₂-EOR study was funded by NERA with contributions from LETA through ANLEC R&D and various industry members.