Recently, a proposal of the Obama energy plan outlined incentives for injecting captured industrial carbon dioxide emissions into oil reservoirs in order to improve recovery.
These incentives, taking the form of tax credits like those introduced in 1980 in The Crude Oil Windfall Profits Tax Act of the same year, are designed to increase domestic production of non-conventional natural gas and crude oil.
In the original incentive of 1980, under Title II of the abovementioned Act, tax credits applied to the production and sale of natural gas produced from geopressurized brine, Devonian shale, coal seams or tight formations, all of which are considered unconventional gas. Put simply, this means it’s more expensive and difficult to extract than conventional gas.
By introducing this Act, the U.S increased unconventional gas recovery from less than 100 billion cubic feet per year prior to 1980, to 3 trillion cubic feet per year by 1990.
Under the current proposal, captured carbon dioxide emissions would be injected into depleting oil reservoirs in order to improve recovery. By implementing this strategy, pressure is increased and the actual crude oil more easily moves to the producing wellbore, meaning more oil comes out at a faster rate, under higher pressure.
With the political issue of carbon storage and capture running hot at the moment, it seems like a great idea to use this captured carbon, injecting it into depleting wells thus producing more oil. Kills two birds with the one stone, as they say.
Only six or so weeks ago, however, it was revealed that Mexico’s Cantarell supergiant field experienced a depletion rate of 33% in just one year. Such an astonishing rate of depletion naturally took everyone by surprised. Now take a guess at what is being blamed for Cantarell’s quicker than normal depletion rate? You guessed it! They’ve been using carbon dioxide injection and horizontal drilling for years.
I remember watching Colin Campbell last year on a DVD explain that the better we get at extracting oil from the ground, the faster we’ll deplete the reservoirs. It made sense then and Cantarell is the proof of the pudding now.
Considering Mexico is a very important supplier of crude oil to the U.S and the negative impacts the Cantarell depletion rate will have on future supply, why would the U.S domestically encourage the same kind of recovery methods that caused a 33% depletion rate in just one year?
Am I missing something here? Does the logic I’m presenting make sense to anyone else? Mr Obama, it sounds to me like you desperately need new energy advisers in a hurry because your current flock are off with the pixies.
The current financial environment and the price of crude have seen new projects in the energy pipeline put on hold and general investment in the industry come to a grinding halt. By implementing tax incentives now, involving carbon dioxide injection, we will see a short term increase in supply and flow that will make the current situation look miniscule, followed by vicious global supply shocks, if other countries were to follow suit.
What we need is the longest possible time to sort out this rapidly approaching liquid fuel crisis we call peak oil. By giving a green light to carbon dioxide injection by way of financial incentive, we walk a path to known destruction. We have a precedent in Cantarell. The last thing we need right now is a short cut.
Michael
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