The CO2 Conference was initiated in 1995. Steve Melzer was newly appointed by the University of Texas System and University Lands as the Director of the Petroleum Industry Alliance and charged with developing a program for the University of Texas System and the University Lands to support the development of projects with the Oil and Gas Industry in the Permian Basin.
A newly built facility between Midland and Odessa called the Center for Energy and Economic Diversification was completed a few years earlier; but, was badly underutilized. The organization was to be founded and reside there.
The U.S. Department of Energy was simultaneously commissioning a new research initiative to look into the future of maturing U.S. oil basins and create cooperative projects for advanced recovery from existing oil and gas fields. The projects were to be organized by reservoir types, clastic, carbonate, and a few others.
The Federal program was envisioned in part by the strong leadership of Dr. Bill Fisher, the Director of the UT Austin’s Bureau of Economic Geology. The carbonate reservoir class was to be the second program addressed and the Permian Basin (PB) seemed a shoo-in for much of the programmatic funds. That is if the area could get organized.
Steve Melzer’s first hire was recently retired from Exxon, Mr. Loren Stiles. With Mr. Stiles vast experience with water and CO2 flooding, he became a vital mentor of Steve’s and the new organization. Over the next year, the PB was successful in getting well over half of the funding for the carbonate class of reservoirs (~$20MM), and the new mission was off and running.
At the time, the oil price was languishing in the lower teens, capital for new projects was scarce and momentum for Enhanced Oil Recovery (EOR) was waning. “The majors”, companies like Shell, Mobil, Texaco, Hess, and Chevron; were happy with the CO2 projects they had implemented in the 1980s but any new CO2 EOR project planning was extremely hard to find.
Considerably expensive infrastructure had been put in place to serve what was thought to be a growing CO2 EOR need in the industry; but, was seeing underutilization. Shell had implemented much of the infrastructure and decided to make a concerted effort to market their CO2 from McElmo Dome and was leaning on Mr. Charles Fox to do some marketing outreach.
At a Financing and Exploration Production Association breakfast meeting, Mr. Fox gave a presentation regarding CO2 EOR in an appeal to the smaller companies to begin to think about taking on the implementation of new CO2 EOR projects. Steve Melzer approached Mr. Fox after the meeting and reminded Fox that this was an extraordinarily huge step for companies with no experience in CO2 flooding and that if Fox was to be successful, the companies he was targeting had to get exposed to the very confidential experience of the major oil companies that were doing the flooding. The idea of the CO2 Conference was germinated from that meeting.
To be successful, the CO2 Flooding Conference, required the cooperation of the major oil companies. Companies like Shell, Mobil, Texaco, Hess, and Chevron had all of the experience and needed to be part of the conference planning.
So, Messrs. Fox and Melzer began to reach out to each and ask them to help with sponsorship but also to transfer their considerable experience via presentations to the audience.
At this time, not only had the large oil fields thought to be already discovered but most were already under secondary water flooding. So, the industry’s on-shore U.S. focus was considered to be tertiary flooding (EOR). This, of course, was long before the unconventional reservoir and horizontal drilling revolution.
The majors bought into the Conference idea and the first forum was planned at the new CEED facility between Midland and Odessa. Short courses on various subjects related to CO2 EOR were planned and became part of the new conference.
Over the course of twenty years from the 1980s to the mid-1990s, the Permian Basin had become the dominant region where CO2 EOR techniques were being applied. Other regions and countries had tried with some success, but the Permian Basin was where most interested parties’ curiosity was directed and where they wanted to see the technologies in practice.
So, with the cooperation of the industry experts of the time and their willingness to speak about their project case histories and best practices, the format of the conference was created. The talks were not about research ideas, but lessons learned and the wealth of practical experience in making a project an economic success. Best practices presentations are often not thought to be ‘sexy’ enough for papers in the various professional societies and associations and rarely pass peer review requirements. The conference concept thereby filled an important niche and the attendees began to see the real value of attending. When new ideas were tried and deemed successful in the field, the conference would seek out those stories and make them part of the agenda. Being located in Midland and within the predominant region of CO2 EOR deployment proved a great advantage. The conference planners could hear about the new ideas and would seek out the speakers to address them.
There are many facets of CO2 EOR technology. CO2 sourcing, transportation, injection, production and plant processing are all key elements and companies used various approaches in all of those components within a flood. The conference was able to bring out those differences into a public forum for exposure. As implied earlier, a professional would have access to conventional literature, but it would be almost totally inadequate for designing and operating a CO2 flood. Mistakes in new project were common without access to the experts and networking with experienced companies that the Conference offered. That is another key role the Conference provides; getting the folks with the experience in the room to meet and network with each other.
In those early years, the conference was a one- or 1½-day event held at CEED but the demand started to grow and required a larger facility and expansion to 2 days then to three full days became necessary.
The second decade saw a need for adding a day devoted to the subject of CO2 capture and storage. The conference organizers understood that CO2 retention in the reservoir (aka storage) during EOR was an unavoidable by-product of the injection. In the year 2000, Mr. Melzer presented the storage story and idea to David Beecy, a visionary professional at the US DOE, and a new component to the conference was born.
In 2002, the organizers added the subject of carbon management as the world began to realize that CO2 capture prior to industrial processing plant venting was to become a worldwide goal. The Conference emphasized that the best way to store CO2 was to make money (i.e., sell oil), while storing CO2. The Carbon Management Workshop became a component of the conference in 2002 making the duration of the event three days now. Mr. Mike Moore was recruited to organize the agenda, recruit the speakers and moderate the day. The entire downtown Midland Convention Center was needed now to handle the three day’s worth of audiences.
Exposing the audiences to actual examples of the technologies at work via a visit to the field became yet another component of the Conference. Folks were now coming from all parts of the County and world and were starving to see how this was done in the field. Midland, once again, proved an advantages location due to its close proximity of 40 or more CO2 floods. Now, individual flood operating companies could defer requests from individuals and organization wanting to visit their field by suggesting they come to the conference and attend the annual field trip which was now part of the four-day agenda.
Mr. Melzer and Dr. Trentham of the University of Texas of the Permian Basin were key organizers of the conference. During the speaker recruitment phases of each year, they would get exposed to the latest developments occurring in the industry. One of these involved extending the EOR flooding intervals below the producing oil/water contacts. The reigning concept at the time was that there is a transitional zone below the Main Pay Zones (MPZs). Those intervals might contain sufficient oil saturation so that they could be economically flooded just like the water flooded MPZs had been flooded above the producing oil/water contacts. But there was a disconnect. Some of these intervals exceeded 300’ in thickness and the idea of capillary and surface tensional forces allowing any more than a few tens of feet of transitional oil saturations was difficult, if not impossible, to comprehend. Mr. Melzer took this quandary to Mr. Beecy at the US DOE in 2005 and together they commissioned a report to address this subject from both a geological and engineering perspective. With the aid of access to depth extended data from Shell, Hess, and Occidental (deepened) projects, a report was generated suggesting a new model for these zones. The concept was that a paleo trap of oil was originally much larger (thicker) than at the time of field discovery. Mother nature had water flooded the interval and from the San Andres formation sampling and lab data acquired by the majors, had left behind about the same level of oil saturation that man creates when they water flood a field. The report was published in 2006 and presented the idea that there were three types of the naturally water flooded intervals. The one present in the San Andres formation of the Permian Basin was extraordinarily thick and was laterally water flooded due to Tertiary tectonics and uplift in the western reaches of the Permian Basin. The fascinating aspect of this naturally swept interval, now dubbed a residual oil zone or (ROZ), was that it was often present below producing oil fields but could also be between fields and of immense size.
At about the same time in 2006, a Federal bill established a 10-year research organization called the Research Partnership to Secure Energy for America (RPSEA). Messrs. Melzer and Trentham took the ROZ idea to their director, Mr. Mike Ming, and he encouraged research to confirm the plausibility of this ROZ mechanism. A 3-year project modeled the natural water sweep in an area of the Permian Basin where little commercial interest was present, and the report was published in 2012. This confirmation project led to a second research effort to map the San Andres formation ROZs in several counties of the Basin. With the help of Mr. Vello Kuuskraa and his team at Advanced Resources International, the “fairways” of the ROZ were mapped. This report was published in 2015.
Again, at about the same time, the horizontal well momentum was growing and a horizontal well to examine what was believed at the time to be a low permeability carbonate reservoir equivalent to the shales was commissioned in the ROZ fairway region of the ROZ on the border between Lea County, NM and Yoakum County, TX. The well was hydro fractured and produced over 2000 barrels of water a day producing no oil. The operator, Manzano Oil, decided to continue to produce the well for just over 30 days before it started producing oil. The water production continued well beyond the “load recovery” and did not start producing oil until the reservoir pressures dropped to around 1200 psi from original pressures of 1900 psi. The well ended up peaking at ~250 barrels of oil per day and started a horizontal San Andres play that many refer to as the San Andres ROZ play. There are 600 wells producing about 40,000 barrels of crude oil per day at the time of this article.
With the “romance” of the unconventional (so-called ‘shale’) wells, the current interest level in CO2 finds itself in about the same status as when the first CO2 Conference was conceived. Interest in any type of flooding, CO2 included, has waned. Companies are looking to drill new horizontal wells for their oil and not inject CO2 to produce more from existing fields.
But what is coincidentally occurring is that the worldwide movement to reduce greenhouse gases and CO2 emissions is gaining momentum. Companies of all types around the world are being asked what they are doing to reduce their footprint of emissions. One could even argue it is beginning to affect stock prices today.
In early 2018, and in typical U.S. fashion of a “carrot” and not a “stick”, a new U.S. bill was passed to incentivize emission reductions and allow a project to qualify for a significant Federal tax credit for capturing and storing CO2. Since CO2 EOR is the largest volume opportunity for storage and perhaps the least risky and inexpensive way to do it, some impetus is returning to the CO2 flooding industry. Much is not yet known about how that will play out over time, but considerable work is underway on how best to capture and store industrially emitted CO2. For example, projects planning the capture of CO2 emissions from the ethanol, cement, natural gas, hydrogen, electricity generation, and LNG plants are underway. The internal revenue service will soon publish their rules on how to and who can qualify for the tax credits. If the rules are not too restrictive or onerous, the CO2 storage and EOR industries may see unprecedented activity. If that plays out, the Conference and its critical role in assuring safe and secure CO2 storage while producing oil could begin a whole new phase and see considerable growth.