Oil & gas production while reducing a large amount of CO2 emitted into the atmosphere utilizing CCUS technology

ENEOS Holdings, Inc.

Conceptual Figure of CO2-EOR

L) W.A. Parish Power Plant | R) West Ranch Oil Field

Outline

JX Nippon Oil & Gas Exploration Corporation (“JX Nippon”), a core upstream company of the ENEOS Group, has realized projects in Vietnam and Abu Dhabi to reduce combustion waste of associated gas in the oil fields with the intention of reducing greenhouse gas emissions.
We are now a step further and are promoting the Petra Nova CCUS Project to commercialize “Carbon Dioxide Capture, Utilization and Storage” (CCUS) technology applied to crude oil production in the United States. We will continue to make our efforts to achieve both a reduction in CO2 emissions and a stable supply of energy resources.

Description

CCUS stands for "Carbon dioxide Capture, Utilization and Storage". With CCUS, CO2 emitted from power plants and other sources is separated from other gases and captured while being effectively used, after which it is injected into and stored deep underground.
The ENEOS Group is striving to achieve both “a reduction of greenhouse gas emissions” and “a business continuity by increasing crude oil production” utilizing CO2 by means of CO2-EOR （EOR：Enhanced Oil Recovery）technology, on which JX Nippon places a priority, in order to achieve both a reduction in environmental impact and a stable supply of energy resources.

With primary and secondary recovery methods of crude oil production, a lot of crude oil remains in oil reservoirs without being produced, but injected CO2 into the oil reservoirs in a supercritical state at a high temperature / pressure as a tertiary recovery method acts on the residual crude oil to form a mixed state called miscible. As a result, this improves the fluidity of the residual crude oil, and the flow of the crude oil through the reservoirs leads to EOR, accordingly.

The ENEOS Group, based on the past business experiences, implemented the final investment decision in 2014 to launch a commercialization of the Petra Nova CCUS Project (The Project), together with NRG Energy Inc. (“NRG”), in Texas, the United States, utilizing CO2 in exhausted gas out of a coal power plant. The Project is a pioneering, epoch-making and one of the world's largest CCUS projects promoted by the private sector on a commercial basis, which achieves at the same time a decrease of a large amount of CO2 that is emitted into the air from the coal power plant and a dramatic increase of crude oil production in a matured oil field by injecting the captured CO2.

Specifically, approximately 5,000 metric tons of CO2 per day are captured by one of the world’s largest facilities constructed at the W. A. Parish Power Plant located in the south west of Houston, Texas, which is one of the largest power plants in the US. The captured CO2 is sent down through a pipeline and injected into the West Ranch oil field, which is around 130 kilometers from the power plant.

The CO2 capture facility at the Petra Nova CCUS Project started its operation at the end of 2016, and more than 3.6 million tons in total of CO2 have been captured to date. The captured 5,000 metric tons of CO2 per day are equivalent to the emissions out of 600,000 passenger cars. The system is expected to be operational for about 30 years, and we will continue to capture CO2 emitted from the power plant.

The West Ranch oil field, where we are implementing enhanced oil recovery / storage operation, was discovered in 1938 and is one of the largest onshore oil fields in the United States. It has produced about 400 million barrels of crude oil cumulatively with approximately 700 wells the 2000s.

At its peak in the 1970s, this field had produced more than 40,000BD, but had declined to 300BD by the time of the launch of the Project. At present, by the operation of CO2-EOR, the production volume has recovered to about 6,000BD, meaning that the production has increased by about 20 times, and the cumulative oil production since the beginning of operation at the end of 2016 has exceeded 4 million barrels. This project can be considered to have achieved significant results as a CCUS project.

At the West Ranch oil field, various types of CO2 monitoring (surface, soil, groundwater, upper reservoir, etc.) are conducted to verify that the CO2 is stored as planned, in order to make sure that CO2 will be stored safely, efficiently and permanently in the underground storage in the oil field.

There are few commercial cases of CO2 Capture, and Storage (CCS), and no legislation for monitoring or technical standards has been established. Therefore, we formulated a monitoring plan in collaboration with the University of Texas, a world authority on environmental geology, and succeeded in the actual demonstration of three years. This result is expected to be used in the evaluation and execution of future CCUS and CO2-EOR projects. Based on these actual achievements, we will continue to inject CO2 and continue the EOR until around 2030 in the West Ranch oil field.

It should be noted that this oil field is owned by Petra Nova Parish Holdings LLC, a 50-50 joint venture between JX Nippon and NRG, and Hilcorp Energy Company, a major independent oil company, each holding a 50% of interest. The required fund for the Project has been raised not only by equity contributions of sponsors, but also by a grant of US $195 million by the US Department of Energy based on Clean Coal Power Initiative to promote the development of environmentally friendly coal utilization technologies, as well as loans by means of project finance arranged by Japan Bank for International Cooperation and Mizuho Bank Ltd (JBIC). The loans provided by Mizuho Bank are covered by insurance from Nippon Export and Investment Insurance (NEXI).

In October 2018, the ENEOS Group and JOGMEC jointly signed a memorandum of understanding with PT Pertamina (Persero) (“Pertamina”), an Indonesian state-owned oil and gas company, on joint studies and joint project studies covering all upstream businesses, including the utilization of CO2-EOR technology. Utilizing the knowledge and technology of the ENEOS Group and JOGMEC, we will pursue opportunities for joint business with Pertamina through studies setting a specific target on commercialization of the oil and gas assets owned by Pertamina or its affiliates.

CCUS has long been regarded as a key countermeasure against global warming, but it is an unsolved challenge to determine who will bear the enormous costs and how. JX Nippon’s efforts to prioritize CO2-EOR as a key technology is a challenge to demonstrate our answer for such difficult problems which is how we absorb the cost by utilizing the recovered CO2 effectively.

Although the Project is in a difficult situation due to the impact of the recent decreasing oil prices, we are continuing our efforts to simultaneously achieving both “reducing greenhouse gas emissions” and “continuing oil & gas business by increasing oil production” by implementing on-site stable operation of the carbon capture system, maximizing the effects of EOR, and further reducing the costs, etc.

The Group will keep taking on the challenge of contributing to the development of the society and the creation of a vibrant future by delivering energy to our customers while addressing issues such as reducing environmental impact and global warming.

Partner(s)

NRG Energy, Inc.
US Department of Energy
Hilcorp Energy Company
Japan Bank for International Cooperation
Nippon Export and Investment Insurance
Mizuho Bank, Ltd
The University of Texas, Bureau of Economic Geology
Japan Oil, Gas and Metals National Corporation (JOGMEC)
PT Pertamina