Interview with Mike Raines: Science and Technology Showcase Series

American Association of Petroleum Geologists (AAPG)

CCS (Carbon Capture and Storage) and CCUS (Carbon Capture Use and Storage) are playing an increasingly important role in reducing the amount of carbon dioxide in the atmosphere. Geologists are contributing in several vital ways. Welcome to an interview with Mike Raines, who talks to us today about his experience with carbon capture, use, and storage, and also his view of recent trends and opportunities.

What is your name and your background?

I am Mike Raines, and, since late last year, I am president of MARs Exploration and Energy, LLC, which is a geologic consulting company. I am a native of the Texas Panhandle. I grew up in Pampa and attended college at West Texas State University (now West Texas A&M University) in Canyon, where I earned a BS in Geology after trying a variety of other majors that just didn't quite fit my heart. I moved to graduate school at the University of Oklahoma, where I earned an MS in Geology. (I tease my parents by reminding them that I got out of college early.... early if you are on the 10-year plan, that is!)

The summer before completing my MS, I participated as an intern with Texaco E&P in Midland, Texas. At the end of the internship, Texaco graciously offered me a full-time position. Within a few months I was assigned to my first "real" project in New Mexico. I spent 5 years with Texaco before transitioning to Kinder Morgan CO2 Co., LP, then PetroSource Energy (a small EOR producer), then Whiting Petroleum. Now, I suddenly have 25 years of oil field experience, mostly in CO2 projects of the Permian Basin of West Texas, Northeastern New Mexico, and the Oklahoma Panhandle.

What is CCS and where has it been used?
CO2 Geological Storage (CCS)
An Interview with Mike Raines of MARs Exploration and Energy

CCS stands for "Carbon Capture and Storage." This means taking CO2 out of some chemical process that would normally vent CO2 into the atmosphere (i.e. "capturing" the CO2), and storing it underground. My two favorite examples of CCS projects (but not the only ones, for sure) are the Frio Sand experiments in the Gulf Coast area of Texas, done by the Bureau of Economic Geology (BEG). The BEG is the state geological survey equivalent in Texas, and the Decatur, Illinois demonstration project done under the leadership of the Illinois Geological Survey.

What is CCUS and how does it differ?

CCUS is an acronym for "Carbon Capture, Use, and Storage." The difference, of course, is the "Use" in the middle. That means the CO2 is cycled through a beneficial process before being stored permanently. In this situation, the CO2 is first used as an injectant to improve oil recovery (i.e. it is cycled through an Enhanced Oil Recovery (EOR) project before being stored).

How did you get involved in CCS and CCUS?

I first got involved in Carbon Capture (Use) and Storage in the first few months I joined Texaco. We had a brand new EOR project called the "Central Vacuum Unit" in Lea County, New Mexico. Part of that project involved working with partners on various aspects of the project, including research into methods to monitor CO2 migration underground. One of those partners was a consortium known as the Reservoir Characterization Project (RCP), which was led by Dr. Tom Davis at the Colorado School of Mines. RCP involved many companies from giants like Exxon (before ExxonMobil) to two-man shops, who were technical specialists.

I first heard the term "sequestration" in reference to CO2 during the semi-annual RCP meetings. Some of the partners and interested parties attending RCP included people interested in addressing issues regarding the handling, transport, and potential geologic storage of CO2. These folks (along with many others) were part of the Southwest Regional Sequestration Partnership (SWRSP). SWRSP included participants from the two famous New Mexico National Energy Technology Laboratories: Sandia National Labs and Los Alamos National Labs.

At this point, I was, of course, most interested in how the sequestration research could help EOR projects. As I and a couple of others transitioned from Texaco into Kinder Morgan, those relationships continued on, and we found a way to pay it back: Kinder Morgan worked with the Sandia and Los Alamos Labs to investigate impacts on reservoir seals and cement integrity in areas that had been exposed to long-term CO2 injection. We accomplished this at the SACROC Unit in Scurry County, Texas (the nation's oldest continuous CO2 flood) by taking side-track cores out of existing old wells to sample the caprock above the CO2 horizon, and to sample the casing and cement of an old well. That project put me firmly in the bridge between the two approaches, and I have been trying to keep spanning the gap ever since.

What is the opportunity for each right now? How can it make a difference?

The opportunity for CCUS is really expanding right now. We have the opportunity to take a waste product (CO2) and use it to enhance oil recovery without adding significant infrastructure. The thing holding back more CO2 development, in geologically-appropriate settings, has traditionally been the availability and expense of getting CO2 to the oil field. With the new tax incentives under development for capturing CO2 now, those two barriers could be breaking down, making a large amount of cheap CO2 available for use in the oil field.

Specifically, the area below the existing Main Pay Zones is a huge target. The potential in the contiguous United States is in the Billions of barrels (search for DOE reports by Advance Reservoir International to find more detail). This would include areas of moderate to poor oil saturation (below conventional field limitations) that surround existing oil fields.

The opportunity for CCS is especially large in areas that have large industrial complexes, but few (or no) oil fields. In these areas, tax incentives can be used to capture and condense CO2 (and perhaps pollutants with it) to prevent those pollutants from being released into the atmosphere, while providing long-term storage options for those gases.

What is the outlook for CCUS during the pandemic? After?

The bane of CO2 EOR existence is the high cost of start-up (building pipelines to get the CO2 there, specialized plants to process the CO2, in-field lines to move the CO2 to/from wellheads, compressors to take the clean CO2 and re-inject it, electric infrastructure costs, etc...) and the long lead times to see response (6-9 months is common). That means there is a large investment up front, and long lead times to see returns on your money.

However, the beauty of CO2 EOR projects is the long-term nature of the project means that you can cut a major portion of your cost (like halting the purchase of new CO2 volumes), and your project will maintain its production stream for several months. Especially if you keep recycling your CO2 (as opposed to shutting in producers) and maintain reservoir pressure by adding more injection waters to your mix.

So, as long as the CoVid-19 pandemic is impacting demand for oil, and as long as oil prices remain depressed due to the related oil surplus, I would not anticipate seeing announcements of new EOR projects starting up. Once the price of oil bounces back, I would expect to see existing projects pick back up where they left off and continue their in-field expansions with new CO2 volume purchases.

There is one thing that could make the difference for CCUS projects, even in times of relatively low oil prices. If operators have a good understanding how the new tax incentives will work, and if CO2 generators and CO2 disposers can work together, there is a chance that EOR projects will have enough of an economic boost from sharing those benefits to make such projects attractive to investors.

Once the after-shocks of the pandemic are dampened and oil prices are steadier, I suspect that investors will be ready to continue investing in EOR, so long as CO2 volumes are available from reasonably-priced sources of any kind... natural or anthropogenic.

Are small scale operations possible as well as large one? Where? How?

Small scale EOR operations certainly face more challenges than larger projects that benefit from shared resources and costs across many injection/production patterns. However, in my opinion, there are likely opportunities for smaller projects for those who are creative in their approach. As noted above, major start-up costs are in certain components of the projects. If you can find ways to share costs for various components, you might be able to make your project more viable. One common example of cooperation is having a local EOR operator process gas for their neighbor in exchange for a cut of the NGL's or methane. For ongoing operations, one of the largest expenses is the purchase of new CO2 volumes and electricity costs to run compressors. If you could find a way to shave off expenses in these two areas, a smaller project could become viable.

In the case of future CCS projects, it will all depend on how tax incentive sharing works out. The size of the project is only limited on the low side by what the tax benefits can bear. It would be entirely possible to locate a disposal site very near the CO2 source to eliminate a large portion of the transportation infrastructure, for example. Another option might be to find a way to save on compression costs by having the CO2 delivered to the tailgate of the generator at a higher pressure (a large portion of the cost of CO2 compression is getting from atmospheric pressure to 100 psi).

What are a few technological breakthroughs on the horizon that could be game-changers for CCUS?

I am not aware of any specific breakthroughs in hardware coming down the pike, but if we could find a way to reduce the cost of compression through more efficient mechanical designs, or by reducing the cost of electricity, that would make a huge impact on the economics of on-going projects. As CO2 is cycled through a reservoir, it picks up higher and higher concentrations of methane with each recycle phase because the methane and CO2 molecules are similar in size. As the gas becomes less pure, it loses effectiveness. If we could find a way to improve our membrane technology, we could use less CO2 to get the same amount of oil out of the ground. Likewise, if we could make membranes more modular, we might be able to build smaller facilities and target smaller projects. Finally, if we could process CO2 at a higher ending pressure, we might be able to save a considerable amount of electricity on re-compression.

An interesting idea for a geologic breakthrough is under investigation at North Dakota's Energy and Environmental Research Center (EERC). The EERC is experimenting with EOR applications of CO2 in unconventional reservoirs. Currently "shale" plays are anticipating low ultimate recoveries, sometimes as small as 5% of Original Oil in Place (OOIP). Because OOIP estimates of unconventional reservoirs in the United States are so huge (> 80 Billion Barrels in the "Wolfcamp" zones of the Midland Basin alone, for example), even a small increase in recoverable oil will make a huge impact on future reserves.

When you consider the monitoring technology applications currently under development / refinement for CCS applications, we also see a workable option for monitoring the internal distribution of CO2 in EOR applications. If you can see how the flood fronts are moving in the reservoir, you can change operational parameters to improve sweep efficiency. Enhancing sweep efficiency increases oil recovery per molecule of CO2, which means less CO2 is needed, less compression is required, and less electricity is used.

Please recommend a few articles or other readings.

US Department of Energy Efforts to Support CCUS Research

Safe Geologic Storage of Captured Carbon Dioxide: Two Decades Of DOE’s Carbon Storage R&D Program In Review

Estimates of CO2 Storage Potential

DOE’s Carbon Storage Atlas – Fifth Edition (Atlas V) (Includes associated NATCARB interactive viewer for unconventional reservoirs... i.e. coal, shale, basalt, etc...)

Meeting the Dual Challenge: A Roadmap to At-Scale Deployment of Carbon Capture, Use, and Storage. National Petroleum Council (Overviews of the current state of saline storage and EOR)

CCS Project Design / Geoscience Roles in CCS Site Assessment

Project ECO2S: Characterization of a World Class Carbon Dioxide Storage Complex Riestenberg, David; Koperna, George; Pashin, Jack; McLaughlin, Jonathan; Walsh, P.M.; Myers, Gregory; Kirkland, Brenda; Beckingham, Lauren; Ripepi, Nino; and Esposito, Richard. 14th Greenhouse Gas Control Technologies Conference Melbourne 21-26 October 2018 (GHGT-14).

Current Status of Global CO2-EOR Projects

Oil and Gas Journal - Survey of Global CO2-EOR Operations (pay per view item)

EOR in Unconventional Reservoirs (High Level Overview)

Shale EOR Works, But Will It Make a Difference? Rassenfoss, S. (October 1, 2017), Society of Petroleum Engineers. Journal of Petroleum Technology, v. 69 # 10. doi:10.2118/1017-0034-JPT. (pay per view item)

Historical Bakken Test Data Provide Critical Insights On EOR In Tight Oil Plays Sorensen, J.A., and Hamling, J.A., 2016. The American Oil & Gas Reporter, Vol. 59, No. 2, pp. 55-61, February, 2016.

EOR in Unconventional Reservoirs (Key Technical Aspects)

Improved Oil Recovery IOR Pilot Projects in the Bakken Formation Hoffman, B.T., & Evans, J. G. (May 5, 2016). Society of Petroleum Engineers. doi:10.2118/180270-MS (pay per view item)

Huff-N-Puff Gas Injection Pilot Projects in the Eagle Ford Hoffman, B.T. (2018). Presented at Society of Petroleum Engineers (SPE) Canada Unconventional Resources Conference, Calgary, Alberta, Canada, 13-14 March, 2018. (pay per view item)

Nanopores to Megafractures: Current Challenges and Methods for Shale Gas Reservoir and Hydraulic Fracture Characterization" Clarkson, C.R., Haghshenas, B., Ghanizadeh, A., Qanbari, F., Williams-Kovacs, J.D., Riazi, N., Debuhr, C., and Deglint, H.J. (2016). Journal of Natural Gas Science and Engineering v. 31 (2016) p. 612-657. (pay per view item)

Improving Oil Recovery by Use of Carbon Dioxide in the Bakken Unconventional System: A Laboratory Investigation Jin, L.; Sorensen, J.A.; Hawthorne, S.B.; Smith, S.A.; Pekot, L.J.; Bosshart, N.W.; Burton-Kelly, M.E.; Miller, D.J.; Grabanski, C.B.; Gorecki, C.D.; Steadmen, E.N.; and Harju, J.A. (2017). Reservoir Evaluation & Engineering, v. 0 # 3 (August, 2017) pp. 602-612, SPE-178948-PA (pay per view item)

Residual Oil Zone Permian Basin Example

ROZs: Science and Fairways - An Update Trentham, Robert (2018). Search and Discovery Article #70353. American Association of Petroleum Geologists.

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