Enhanced oil recovery (EOR) that uses carbon dioxide (CO2) is regarded as less carbon-intense than other oil-recovery methods. The process effectively reduces the total-lifecycle emissions of carbon from the oil produced, because carbon that would have escaped into the atmosphere is instead sequestered into the oil geology. This elimination of carbon can be thought to directly offset some of the carbon that would be emitted when the oil is burned.
Yet, not all “registries,” the organizations that establish carbon-credit methodologies, agree that EOR is sufficient to qualify as carbon-reducing, and therefore not sufficient to qualify for a carbon credit.
An exception is the American Carbon Registry (ACR), which has created a specific carbon-credit methodology for EOR. It aims to verify the carbon-reducing aspects of an EOR project, while also assuring the applicant owns the assets involved in the EOR process.
Under ACR’s methodology, a developer may be issued credits for man-made (or “anthropogenic”) CO2 injection into an oil well.
Like most projects that generate carbon credits, the overarching requirement is that the CO2 sequestration must be in surplus to regulations. In other words, it must be above and beyond what is required. The project developer has to show that there is no existing regulation that already requires such CO2 capture, transport, or sequestration.
Jump to “What are Voluntary Carbon Credits?” below
ACR specifies the portions of the CO2 custody chain that must be present: capture, transport, and injection.
Only US- and Canada-based projects meet the specification.
Ownership of the geology is a necessary step. ACR says the “pore space” must have uncontested ownership. Land professionals in oil and gas are likely to understand this concept quite well. The pore space is the often-microscopic gaps in rock that can hold fluids, much like a sponge. The surface-rights owners must also be consulted, and proper Risk Mitigation Covenants (or similar) need to be in place.
ACR does provide examples of the sources of CO2, but apparently only for descriptive purposes and clarity. Any course of anthropogenic CO2 would qualify.
Any type of CO2 transportation works, per ACR. Even barges are acceptable, but AEGIS notes that CO2 does not pile up very well.
There are standards of injection-well quality that must be met, to comply with ACR methodology. These are well type and purpose (our words).
Regarding type, the well to receive the CO2 must be “at least” a Class II well, using US EPA definitions. Canada has similar types, but the US classification sets the requirement.
EPA injection-well classifications run from Class I (one) through VI (six). Class II defines those wells used for oil or gas. The injection material is a “fluid,” but that usually means liquid, and most often, a brine. These Class II are wells commonly used to reinject “produced water” or brines (from oil-and-gas formations) brought to the surface as part of producing oil and/or gas.
For more descriptions of Class II and its siblings in I-VI, go here: https://www.epa.gov/uic/class-ii-oil-and-gas-related-injection-wells
The injection well’s primary purpose can either be:
This is straightforward; is the injection well meant for EOR?
One last note about the generalities of EOR-related credits: There has to be clear ownership. Consider the value chain of the CO2-EOR process. This involves capture of CO2, transportation of it, and sequestration, with numerous intermediate steps. Therefore, it is possible the multiple companies own the CO2 molecule from start to finish. Who has the right to the credit? The transfer must be clear.
For more information about the CCS for EOR credits methodology, see ACR Carbon Capture and Storage Projects (version 1.1).
ACR is working on a Version 2.0 (current is Version 1.1), and there are interesting new applications for carbon credits in petroleum geology.
The registry says it is considering issuing carbon credits to a broader set of applications of carbon sequestration. For example, placing CO2 into depleted reservoirs and saline formations may be allowed. These would be of most interest to oil-and-gas developers with operational expertise in using these types of formations.
ACR seems to be trying to stay ahead of the creativity of this industry and prepare for future applications. Future versions of their CCS standards will address "CO2 utilization, mineralization, and Bio Energy with CCS (BECCS)," per the website.
What are Voluntary Carbon Credits? back to top
Also called Voluntary Carbon Offsets, or just Offsets, these are transferrable certifications of carbon-reducing activity. A certifying organization called a “Registry” establishes methodologies to ensure a project has a net-carbon-reducing effect. For example, planting (and then protecting) a forest would be a project that removes carbon from the atmosphere. That total amount of carbon reduced has an environmental value. That value can be sold, creating revenue for the developer. The buyer of the credit "retires" the credit, thereby consuming it. Retirement applies the credit as an offset to their own carbon emissions.
AEGIS is active in facilitating the buying and selling of these voluntary carbon credits. We also aid developers in deciphering the methodologies that are often unique to each registry.