Tuesday 14 June 2005

CARBON STORAGE UNDER NORTH SEA FEASIBLE BUT HUGELY CHALLENGING ON COST AND OTHER FACTORS, SAYS OIL AND GAS INDUSTRY BODY

Responding to today's publication of the Department of Trade and Industry's "Strategy for Developing Carbon Abatement Technologies for Fossil Fuel Use", the UK Offshore Operators Association (UKOOA), the industry body representing oil and gas producers in the North Sea, said that a number of its members have studied the feasibility of capturing or sequestering carbon dioxide emissions from onshore sources, such as power stations, and storing it in depleted oil and gas fields.  However, they have found that there are considerable technical, regulatory and cost barriers still to be addressed, with economic and fiscal implications.

Sequestration is already practised in the United States on land, though it requires fiscal incentives to be attractive. Offshore in Norway in the Sleipner gas field, CO2 is removed from the produced natural gas stream on the platform, to improve the natural gas quality, and is re-injected for permanent storage.  Removal and reinjection of the CO2 was an integral part of the field's overall development planning and economics, and the offshore production facilities were specifically designed for the purpose.  In addition, reinjection at Sleipner is into a saline aquifer and not into the gas reservoir.  BP has also begun a similar project in the Algerian desert.

Capturing CO2 from an onshore location and transporting it offshore for reinjection through existing oil and gas pipelines and installations is an entirely different and much more costly matter.  In the North Sea it would require significant investment in new infrastructure both on and offshore, including substantial retrofitting of the offshore installations, where there are weight and space limitations.  

A further hurdle is the legality of transferring carbon dioxide, officially designated a "waste" product, from one location to another for disposal offshore, which is not allowed under current international law (OSPAR and the London Convention).  This is being re-examined by these authorities.

Injecting carbon dioxide into fields could help recover more oil from maturing reservoirs, as in the USA.  However, not all oil fields are suitable candidates for this technique.  The process of "enhanced oil recovery" (or EOR) is already practised in various forms in the North Sea, so using carbon dioxide for EOR, where practicable, will only bring marginal benefit to the recovery of oil reserves. 

The UK North Sea is now mature with many fields approaching the end of their commercial lives.   The opportunity for carbon sequestration and storage is clearly available, with or without EOR, subject to resolving the various technical, legal and economic/fiscal issues.  This will take some years, but given the necessary time, resources and commitment by all the parties involved, it should be possible to develop workable solutions. 

Ends

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NOTE TO EDITORS

1. The UK Offshore Operators Association (UKOOA) is the representative organisation for oil and gas companies licensed by the UK government to explore for and produce hydrocarbons offshore around the British Isles.  It has 33 members.