2023 CONFERENCE

December 4-7, 2023

Both a Physical and Networking Conference

STIMULATING CONVERSATIONS
BETWEEN THE FIELD AND OFFICE FOR OVER 27 YEARS

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Summary of the 2023 CO2 Conference, Midland Texas, Dec 4-7th, 2023

If you have never been to our Conference before and read this recap of the 2023 version, I believe you will soon realize that we are a different CO2 conference. We have had our 28 years of history dedicated to taking on the many practical challenges of CO2 flooding and have merged now with the coming and similar challenges of carbon capture and storage. We like to think of ourselves as a boutique conference providing the best forum for highlighting the best practices our industry utilizes in all CO2 applications – from the surface facilities to the wellbores to the subsurface and reservoir issues. The conference does not host exhibitors; we emphasize personnel networking, plenary technical, and business sessions. The agenda gets more technical content as the week continues.

The reason for the location is that many recognize the Permian Basin as the world leader in those field-based CO2 technologies and the tools and practices used. Our annual CO2 field trip is also an option for the attendees that have never visited a CO2 capture or injection site. Another value is in-person attendance the conference offers as a unique networking opportunity with a group of folks versed in all matters of CO2. To reach that networking goal, we will again be a personal attendance conference this year. Midland Texas’ George and Barbara Bush Convention Center downtown will be providing that physical networking option. We also appreciate that we have a loyal international audience with some present virtually. The growing U.S. and worldwide interest in carbon capture and storage has attracted a growing audience to our themes we hosted this year.




FIELD TRIP: The 2023 version of the annual four-day CO2 Conference in Midland kicked off on Monday the 4th of December with its 20th annual field trip. This year the venue was Kinder Morgan’s Goldsmith-Landreth CO2 flood, processing and recycle facilities in northwestern Ector County, 20-miles north of Odessa, Texas. Both injection and production well stops were included along with a “satellite” station that gathers, separates, and measures the volumes of fluids produced from the area wells. The main gas processing/recycle plant was an important part of the visit where the Kinder Morgan field folks described what the visitors were seeing and where the recycled CO2 is dehydrated and compressed to return the CO2 to the field. This particular recycle facility also includes an additional liquids removal plant for capturing a large portion of the liquid natural gases (propane components and above). Pilot Energy Systems personnel designed the plant and carefully described the process for the participants. They told the group that the hydrocarbon-rich CO2 stream produced and processed at the plant consistently recovers an additional 20% of the crude oil volumes that are sold at the field’s LAC unit.

CARBON MANAGEMENT WORKSHOP: On Tuesday, Dec 5th, while COP28 was running on the other side of the world debating the future of fossil fuels, Mike Moore, Workshop Director, introduced the opening keynote presentation of the 21st annual Carbon Management Workshop. It was given by Vello Kuuskraa, President and CEO of Advanced Resources International. His pre-conference intention was to have given the presentation in person but an accident precluded his airline travel so he gave his message virtually. He summarized the plethora of activity in the CO2 space, updating the audience with many projects in various planning stages around the U.S. and abroad. He emphasized the emission reduction value of storage in deep saline reservoirs but also formally introduced the concept of CO2 Enhanced Oil Recovery, also significant in its contribution to emission reductions, and designed to produce a low- or carbon-neutral barrel. The historical approach for CO2 EOR always been to manage CO2 purchases to control costs whereas the new and evolving approach is to store more CO2 in the EOR process than the CO2 emitted by the processing, refining and combusted barrel. When CO2 can be delivered to the EOR site at low prices, a less efficient, carbon neutral barrel is not only feasible but very desirable. He mentioned that several projects are now being designed to achieve that result.

The morning continued with panel presentation by four attorneys with the Hunton, Andrews, Kurth law firm. The group, led by Fred Eames of the Washington office, addressed policy, finance and legal aspects of forming projects to take advantage of CO2 capture and the 45Q tax credits. His other expert panelists outlined key items to consider as the CCS and CCUS projects begin to materialize noting that the expected use of the IRA tax credits is now expected to be well over $600 billion. Chuck McConnell, Executive Director for the University of Houston’s Center for Carbon Management in Energy summarized their recently released study on the massive challenges in new infrastructure required for the emerging CO2 capture and storage business in the Gulf Coastal region. Finally, Ben Wernette of the Southern States Energy Board described the current and former CCS project that SSEB has undertaken. He emphasized many issues related to regulator and community engagement that have emerged as the project plans get formulated and publicized.

After a networking lunch, a panel presentation from three representatives, (Joe Giove, Sarah Forbes, and Tom Sarkus) from the Department of Energy took the stand to highlight the momentum of the many Federal programs and projects coming from the DOE related to CCS. The programs discussed are covering all elements of capture, transportation and storage initiatives and are planned in most parts of the country.

We had Joe Spencer of Baker-Hughes talk about the drilling activities in O/G and still not seeing the uptick in Class VI permitted wells that is expected. He was followed by David Moore of Anew and the growing size of the voluntary credit markets including from CCS/CCUS.

The final panel focused on two other regions of activity, the Midwest and Great Plains. Neeraj Gupta of Batelle in Columbus, Ohio related the project underway in his Midwest region and John Hamling of the Energy and Environmental Research center of North Dakota in their massive region all the way up to Alaska. They received Class VI UIC injection primacy in 2018 and have several projects in advanced planning stages and two already injecting into the Broom Creek formation in western North Dakota.

The Tuesday evening reception closed out the first day of the Carbon Management Workshop. The Wednesday morning session provided a continuation of the Tuesday CCS subjects.

Insurance matters for CCS highlighted the opening panel Wednesday morning. Marsh McLennan’s Michale Roos and James Walsh flew to Midland to address those matters and stressed that the rumors that CCS projects could not be insured was false. Additionally, that costs were coming down and more projects and insurers entered the space. They went on to describe the insurance facilities that were being discussed on the many projects currently in planning.

The next speaker was Joanna Walker from the Louisiana office of TetraTech, Inc., a worldwide environmental and water resource consulting firm. She described the regulatory and public interaction challenges of the many planned projects along the Gulf Coast and the absolute need for more public education and interaction.

We also heard from Patrick McCarthy of Project Canary and the Critical Role of MRV highlighting the amount data and points of surface monitoring required and how best to be effective in maximizing the tax credit from CO2 and their related business, methane, storage.

The next set of presentations began the week’s transition to more technical subjects as Dr. Chantsa Dalkhaa, reservoir engineer at No. Dakota’s EERC described the success of cyclic injection into the Bakken reservoir in North Dakota. She related the 6-10% recovery factors from the horizontal wells were leaving enormous volumes of oil behind and their work in the lab and field related to CO2 injection was showing that CO2 could incrementally recover significant volumes of oil from the depressured tight Bakken rocks. Future, their lab work demonstrated that CO2 was at least as effective as enriched natural gas.

Rob Bruant of B3 Insight closed out the morning with the results of their detailed modeling work of produced water injection in the Permian Basin and Gulf Coastal regions. The lessons being learned with high volume water disposal are considered the best analogues for large volume CO2 disposal. Their modeling of volumetric produced water injection is now being extended to estimating pseudo-static (regional) reservoir pressures and is designed to assist operators in forecasting possible future curtailments of injection and better quantifying drilling risks in localized areas. Their broader analysis of 5-year injection data shows basin-wide average increases in shallow formation pressure of 9% for the Delaware Sub-Basin and 3% for the Midland Sub-Basin. Their work is now being extended into the Texas and Louisiana Gulf Coast region.

WEDNESDAY’S ZOBACK KEYNOTE, STORAGE VS. MINERAL RIGHTS, AND CCS REGULATORY SEMINAR: Dr. Mark Zoback, Stanford Professor Emeritus, was approached during the summer and agreed to give the Wednesday luncheon keynote with an emphasis directed to the subjects of subsurface storage sites. His decade-plus of experience working and teaching has included working with the various State and Federal regulators currently find themselves in as they review the water disposal permits and, now, the many incoming projects and their proposals for carbon capture and CO2 injection. The entire afternoon was to have the subsurface rights owners and regulator subjects addressed so that the 200+ audience could begin to empathize with their difficult position and their need to be thorough during the permit review and approval process. Large volume injection without fluid removal has only one analog, The lessons being learned with massive volumes of water disposal are new and need to become more fully vetted in the CCS and oil/gas communities. Moreover, the incentives for capture rest with surface interests (plants with emissions) leaving one some concern that a subsurface injection site’s suitability may be of secondary status in the coming CCS industry. Dr Zoback’s long history with reservoir geomechanics seemed the perfect fit to lead the session.

Dr. Zoback provided a look at what he believed the industry needed to do to manage risks associated with large-scale CO2 storage. He used the field “experiment” currently underway with large-scale water disposal and what has occurred when injecting into basal sedimentary formations with fracture connections to the crust. It is not all bad news though as Induced earthquakes have occurred and the evidence rolling in is that those earthquakes can be managed by reducing both the depths and volumetrics of injection. He reviewed the experience around the U.S. and Canada with large scale water injection citing the pressure increases into the crust that can be as low as 100-150 psi and still induce earthquakes. He summarized by discussing the five best ways to managed earthquakes risks:

1) avoid injecting large volumes into basal aquifers,
2) avoid injecting near potentially active faults,
3) focus injection formation selection on weak, compliant formations,
4) focus on depleted pressure oil and gas reservoirs, and
5) establish appropriate seismic monitoring systems like are being done in large volume water disposal regions

Considering possible regulatory surprises of curtailed or even suspended injections, Dr. Zoback expressed a worry that some forward thinking CCS folks have begun to realize that the expensive, upfront costs of CO2 capture and transport clearly need early consideration for either multiple sink locations or reservoir options for enduring and secure storage.

The next speaker was Wade Caldwell, an attorney, and former President of the National Association of Royalty Owners. His primary message and interests were in relaying the issues where storage and mineral rights can clash. Protecting a mineral owner’s rights can be challenging where permanent CO2 storage (CCS) could effectively condemn or compete with mineral estate values. He pointed out that CO2 EOR has been historically framed in the ‘extractive terminology/mineral law’ space and dominates in legal circles in spite of the fact that is it well known that CO2 (and water in water flooding) has historically stored injectants while producing oil. He worries that, in the case of dedicated carbon capture and storage (CCS), a project can effectively strand minerals from development. He cautioned the audience to be aware that future changes in state or federal law could become more stringent and prohibit drilling above, through or below the carbon sequestered strata like that has been codified in California. With plumes defined in terms of pressure, that could extend to distances away from the storage facility.

The rest of the Wednesday PM session was dedicated to providing insights and perspectives from the State CCS and CCUS regulators. The first panel was led by Kevin Connors of the ND Energy and Environmental Resource Center and Director of the long standing, 20-year Plains CO2 Reduction Partnership. Representatives from North Dakota (Rich Suggs) and Wyoming (Lily Barkau and Tom Kropatch) recounted their State’s accelerating activity due to their successful assumption of State primacy for Class VI UIC injection wells. Two ND projects are currently injecting anthropogenic CO2 into the mid-depth (5,000’ deep) Broom Creek formation while Wyoming has several applications being reviewed with three likely to be imminently approved. Lilly pointed out that her office has the responsibility for CCS projects while CCUS would fall under Tom’s authority. Rich contrasted that with ND where all of the CCS and CCUS activity rests within the ND Industrial Commission, Department of Natural Resources. Steve Lee from the Louisiana Department of Natural Resources mentioned that they, like ND, would have both Class II and Class VI UIC permits under their organization but are three years into their application for Class VI State primacy. They are concurrently reviewing over 40 Class VI project/well permits together with EPA Region VI (Dallas, TX). He was hopeful that their primacy application would be approved in 2024 but their office has had no recent feedback on the Federal review timeline.

The last panel of the day was moderated by Marcella Burke of the Burke Law Group (Houston). The panelists included Joanna Walker of TetraTech and John Rupp, professor and recently retired from the University of Indiana. Joanna related her experience with the many projects that she and her firm are involved with in Louisiana and Texas and some of the issues they have been facing from both technical and public interaction standpoints. Timelines (and costs) can be expensive as has been evidenced by pubic pushback in Iowa and South Dakota CO2 pipeline projects.

Dr. Rupp addressed the recent experience with the Wabash Valley (Ammonia) CO2 capture project where two temporary Class VI well permits were granted by EPA Region V and the public hearing review of the project met with a variety of emotional presentations by the folks in attendance. The status of the project is currently undergoing further review.

One of key takeaways from the afternoon panels was the need for early (and often) public education. The general public arena consensus in the is that CO2 capture and storage is new and without any large experience despite the several areas of the Country have been doing CO2 transportation and injection at very large scale for almost 50 years. The other view of the session was that the incidental storage during CO2 EOR possesses a long and safe history and the lack of Class II proposed storage projects probably has two driving motives 1) the enhanced tax credit value (extra $25/metric ton) for CCS vs. CCUS and 2) project financing entities’ desire to avoid projects that will produce oil even in a long-term proven process and what will result in a low- or potentially carbon neutral barrel of oil.

THURSDAY CASE HISTORY THEME SESSIONS: Historically, the attending CO2 Conference audience will vary during the week. The first day or two of the week will include a lot of big picture folks, project developers, financial interests, and relatively few field-experienced folks in the worlds of CO2 capture and injection. Wednesday is a transition day and Thursday brings in the CO2 practitioners with the real project and valuable field experience. They always relate their case histories and learnings from their years of experience and network with like-minded engineers and geologists. Many will not have been present early in the week so a tradition has developed where the Tuesday and Wednesday messages are summarized in the first agenda topics on Thursday (those summary slides are available on this site). From that point on in the agenda, the case histories and new learnings fill the menu.

John Allison and Austin Cantwell of Riley Exploration led off with their company’s initiatives for developing one or more clever approaches for economically producing more oil from volume-depleting horizontal wells. The San Andres formation and its 300+’ thick residual oil zone have been a theme of past Conferences and their new work provides a perfect extension to previous work. Many challenges need addressing such as how best to re-pressurize a partially depleted formation while another is overcoming CO2 breakthrough from one well to another (reservoir conformance). Riley related some encouraging signs in their pioneering work that has possible extensions to formations other than their carbonate-dominated San Andres and likely applicable in part to the horizontal well plays around the world as they mature.

Raul Valdez of Kinder Morgan CO2 Company, carried forward the theme of producing more oil from the San Andres formation as he summarized the history of the West Texas giant oilfield, the Yates field, with its 2+ billion barrels of oil in place and huge residual oil zone below the main pay interval. He recapped the history of the double displacing CO2 immiscible process (gas cap {downward} and water leg {upward}) and showed that it has worked exceptionally well over the nearly 100 years of production. Answering the questions of how deep and how long to run the flood was the subject of the day. Sponge core analysis formed much of the basis of the conclusion that the flood should continue for at least another 20 years or so and well downward into the upper ROZ (aka transition zone).

Next up was Dr. Arne Grau of the University of Bergen (Norway) who has been a regular attendee at the conference. His latest effort has been in addressing the challenges of CO2 breakthrough and reservoir conformance mentioned above. The East Seminole San Andres unit has been the demonstration area of his specially formulated foam additive to the injected CO2. The early conclusions are demonstrating very optimistic signs that the sweep efficiency of the flood in the area of the foam application has increased the area production to a level more than sufficient to pay for the foam treatments. The results could well apply to the challenges that reservoir conformance in highly hydro-fractured reservoirs can be managed, at least to a degree.

After lunchtime, Bader Anshasi of Occidental Petroleum reported on their simulation studies attempting to find the optimal well configurations to assure better CO2 containment and avoiding off-lease losses of CO2 and oil. A combination of alignments of vertical wells and well-placed horizontals were simulated looking at optimizing containment.

The next talk was given by Vladimir Vikalo of WhiteCap Resources of Calgary, Alberta. WhiteCap’s vast repertoire of flood experience in the Joffre Viking and Weyburn fields serves a valuable transition into what they believe will be Canadian business development in CCS. To date, Canada has not endorsed associated storage of CO2 in EOR and low- or carbon neutral as a clean energy option so CCS has necessarily been the path Canadian experience has had to take. The Weyburn CO2 flood has successfully applied horizontal well geometries in the flood patterns and, as such, is the only horizontal well CO2 flood in the World.

The final presentation of the day and the Conference was made by Matt Wallace of the Advanced Resources International firm. With some help from his friends and flooding companies, they have compiled the current (end of 2022) status of CO2 flooding in the most CO2 active region of the world (the U.S.) He related the expanding history of CO2 flooding up until 2020 whereupon a decline of injection and production started after the COVID year of 2020 and continues into 2022. The most recent survey is showing that the two-year rate of production decline has slowed in 2022 but that the new CO2 injection was remaining pretty flat. New CO2 supplies were very tight up until 2020 and that all changed beginning in 2020. Most estimates of CO2 pipeline throughput show decreases of 40-50% over pre-COVID levels. However, he noted the growth in anthropogenic CO2 as a component of the total CO2 source production is increasing and may portend a bottoming out of the oil declines as new surface sources of CO2, stimulated by the 45Q tax credit, come into the flooding marketplace.

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The Conference wishes to take this opportunity to thank the Conference sponsors and especially the 2023 Platinum sponsors, Occidental Petroleum and Kinder Morgan, and the Silver level group. A full list of the loyal sponsor group is shown in the graphic below.

The Applied Petroleum Technology Academy, host for this, the 29th annual conference and past conferences, is a non-profit entity that will be providing the net revenues made during the week to the Society of Petroleum Engineers for their scholarship program and to the University of Texas of the Permian Basin for their Engineering, Geology and Business programs and student scholarships. Over the long history of the Conference, APTA has provided financial support in the form of scholarships to over 750 students with total funds exceeding $800,000.


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