2005 Results and Overview GCCC Staff at the Bureau of Economic Geology, Jackson School Of Geosciences, The University of Texas at Austin December 14, 2005

Gulf Coast Carbon Center (GCCC) Mission: A global leadership position in economic implementation of large scale greenhouse gas sequestration. Sponsors GCCC Staff at Bureau of Economic Geology Ian Duncan, Bill Ambrose, Susan Hovorka, Mark H. Holtz, Shinchi Sakurai, Joseph Yeh, Khaled Foaud, Jeff Paine, Becky Smyth, Cari Breton Mike Moore, Falcon Environmental; Michelle Foss, Center for Energy Economics

Other GCCC Collaborators DOE-NETL – Frio project Southeast Regional Sequestration Partnership (SECarb); Southwest Regional Sequestration Partnership Environmental research, NGO’s –Environmental Defense, National Resources Defense Council Houston Sierra Club Other research teams –National labs, NETL, LBNL,LLNL, ORNL, PNL; USGS; Institute for Energy, Law & Enterprise; HARC; UT ESI; Louisiana Geological Survey, Australian CO2CRC Mike Moore (Falcon Environmental)– GCCC consultant with power industry

GCCC Activities Source-Sink Inventory Field Demonstrations –Permian historic field impact study –Permian new field evaluation –Gulf Coast stacked storage –Frio Brine Pilot Experiment Risk Assessment Carbon trading workshop Public information Information to Texas Legislature (and other Gulf Coast States)

Source- Sink inventory: US Distribution of CO 2 Sources and Subsurface Sinks CO2 Data from IEA Greenhouse Gas database Thickness of sedimentary cover from USGS Sources of CO2 gridded and summed and thickness Results at

Message to Legislatures Energy supply benefits from applying CO 2 enhanced oil recovery processes in Texas and the Gulf Coast. The Environment benefits from capturing and storing a major greenhouse gas. The Economy benefits from Enhanced oil recovery (EOR) including wellhead value, taxes, and jobs. Net positive carbon credits in Texas and the Gulf Coast owing to large volume storage capacity Jobs created by infrastructure development associated with a CO 2 sequestration industry

Saline Formations Focus on the Gulf Coast Ozone non attainment Sources (dot size =release) Refineries and chemical plants Electric power plants Selected oil field that could benefit from EOR Existing CO 2 pipeline Future CO 2 pipeline Frio Brine Pilot

Pipelines and Areas of Interest Courtesy of AirLiquide

Economic Framework for Gulf Coast CO 2 Source-Sink Integration Numerous sources including immediately available CO 2 from refineries and chemical plants and large amounts of CO 2 available from power plants at the time that technologies mature. Numerous oil and gas fields in decline provide market for CO 2 Determine price of CO 2 under various configurations of sources, pipelines, and technology breakthroughs, and incentives. Identify early opportunities for successful implementation

Oil & Gas Reservoirs (Texas)

DECISION TREE FOR SCREENING CANDIDATE RESERVOIRS Oil-reservoir database Has reservoir been waterflooded? Minimum miscibility pressure (depth, temp., pressure, oil character) Does reservoir have water- drive mechanism? No Rejected No Rejected No Rejected No Yes Unknown Yes No Candidate reservoirs Candidate for secondary recovery Reservoir depth > 6000 ft Cumulative production > 1 MMSTB Yes

Oil Reservoir Candidate Screening Oil reservoir database developed for Texas –Total of 3,266 reservoirs Applied screening criteria for 3 counties  Brazoria, Galveston, and Orange Counties  Candidate reservoirs lie in 5 geologic plays Piercement Salt-Dome Frio Deep-Seated Salt Domes Frio (Buna) Barrier/Strandplain SS Frio Barrier/Strandplain SS Hackberry Submarine-Fan SS 44 initial candidate reservoirs

Net sand in brine formation Oil and gas fields, play outlines Refineries, chemical plants Coal-fired power plants Gas and oil -fired power plants Source-Sink Opportunities Explored in GIS Existing CO 2 pipeline Oil fields - benefit from EOR

Recovery Efficiency of Sandstone Reservoirs from Enhanced Oil Recovery Projects Frequency Recovery efficiency (percent) Submarine fan Barrier/strandplain Fluvial/deltaic QAc4237c

West Texas CO 2 Market Company- KinderMorgan # reservoirs – app. 70 Additions usage- 1,500 miles of major pipelines Approximately 7.3 TCF or 380 MM tones used

Mississippi CO 2 Market

Simplified Model Using Dimensionless Groups for Rapid Assessment of CO 2 Flooding and Storage in Gulf Coast Reservoirs Model can be applied to candidate Gulf Coast reservoirs in BEG database – limited data on many reservoirs Potential for use by small and big operators alike to quickly identify best reservoirs Derek Wood, Larry Lake

Texas CO 2 EOR Resource Target at 15 % Recovery Gulf Coast residual oil target by play Total = 5.7 billion STB

Additional Production from CO 2 EOR

Role of Pilots in Evolution of CO 2 Industry Extensive EOR and UIC experience

Pilots SACROC/ Claytonville Stacked Storage Denbury Frio

SACROC/ Claytonville Co-operative with New Mexico Tech and Kinder Morgan SACROC – 30 years injection for EOR – Best practices – expansion to North area –Environmental impact on Groundwater Claytonville –Characterization for expansion into new production

Extensive Data In West Texas EOR Show VRML of Fulterton Charaterization of heterogenety, remaining mobile oil optimizing engineering for secondary and tertiary recovery West Texas most mature providence over 1 billion STB produced by CO 2 EOR

Model for Stacked Storage in the Gulf Coast Linked enhanced oil and gas production to offset development cost and speed implementation Very large volume storage in stacked brine formations beneath reservoir footprints Near-term and long-term sources and sinks linked in a regional pipeline network Validation of adequacy of permitting and monitoring protocols

Prospective Source-Sink Matches for Stacked Storage Source – numerous Texas City refineries, Praxair hydrogen plant Sinks – two reservoirs; Smith Energy, Hunt Petroleum, capacity 4 million tons in stacked structural closures, excellent data 5-8 mile pipeline Coastal lowland, stacked sinks Frio Pilot

Amoco Pipeline Access to Gillock Field Gillock field Gathering hub To Texas City

Franks Production Characteristics OOIP- 16 million STB Cumulative production- 8 million STB Target EOR volume (15 % of OOIP)- 2.4 million STB Drive Mechanism- water drive

Franks Reservoir Geologic Characteristics Play- Frio Deep-seated Salt Domes Average Dip-Less then 2 degrees Reservoir Depth (ft)- 8,900 ft Net pay thickness- 11 ft Number of additional reservoirs- 3 oil

Potential Sources Near Prospects

Ecosystem monitoring: Chemical and biologic change Ground water monitoring for geochemical change Injection horizon: pressure, temperature, oil and CO 2 saturation during and post- injection, instrumented slant hole Characterization of deeper horizon in preparation for eventual disposal Stacked Storage Monitoring Elements

Research Elements Demonstration in high emissions area with high injectivity Use of CO 2 for EOR – economic demonstration Assessment of impacts in of injection in high water table – wetland setting Monitoring across a fault and though reservoir to measure CO2 movement, oil bank formation, pressure evolution, and fluid migration. Development of dual use of subsurface for EOR and for disposal

Explore options for monitoring permanence at full implementation – define the gold standard for MMV Data to support risk assessment –Stress conditions during large injection –Displacement of brine –Impacts at surface – deformation and tilt Improved economic modeling – measure recovery efficiency for current technologies Gulf Coast case specific reservoir Dual permit for EOR + disposal Technology Gaps – Stacked Storage Field Test Objectives

Denbury as a Corporate Model Added CO2 flood proved reserves of 35.3 MMBOE (12/31/03) –West Mallalieu field (2001) $ 4 million investment 10.4 MMBOE proved reserves “$2.60/bbl cost” –McComb Field (2002) $ 2.3 million investment 8.4 MM BOE proved reserves “$3.57/bbl cost” Little Creek, Ms 17% recovery –1974 pilot – phase project implemented 145 MMSCF/day CO2 used for EOR, 64 MMSCF/day sold commercially

CO2 EOR Processes Tested on the Gulf Coast Water-alternating gas (WAG) –Example Quarantine Bay, Chevron 1991 –Results 16.9% recovery of OOIP, 188 Mstb recovered –Design CO2 slug size 18.9 % of original HCPV, Miscible –CO2 utilization 2.57 Mcf/stb recovered Gravity stable flood –Example Weeks Island, Shell ( Johnston, 1988) –Results 64% of starting oil volume, 261 Mstb –Design 24 % pore-volume CO2 w/ 6 % CH4 –CO2 utilization 7.9 Mcf/stb with recycle

CO2 EOR Processes Tested on the Gulf Coast Huff ‘n’ Puff –Example 28 Texas projects (Haskin &Alston, 1989), 106 LA and Kentucky wells (Thomas &Monger, 1991) –Results 3,233 to 29,830 stb/well –Design 2-3 week soak times 8 MMscf CO2 injected –CO2 Utilization 0.71 – 2.73 Mscf/stb, Average 1.3 Mscf/stb

Risk Assessment Earthquake Escape to groundwater, surface water, or air via long flowpath Substitute underground injection for air release Escape of CO 2 or brine to groundwater, surface water or air through flaws in the seal Failure of well cement or casing resulting in leakage

Impacts of Unexpected Result of Injection RiskShort term (during injection process) Long term (after closure) Seismisity Failure of well engineering Leakage over a short path Leakage over a long path Health and safetyEnvironment Impact on atmosphere

Gulf Coast Carbon Center