CO2-enhanced oil recovery gaining traction in Indonesia

Enhanced oil recovery through the injection of carbon dioxide is a proven technology for rejuvenating production at mature oilfields but can also provide a means of permanently storing carbon dioxide, as much of the injected gas remains incidentally trapped in the field.

Using this technology to mitigate climate change — referred to as CO₂-EOR+ by the Asian Development Bank (ADB) — is attracting increasing interest globally.

The use of CO₂-EOR is rapidly gaining traction, both in the US, where it was first developed, and in other nations.

The practice is taking off as new projects are designed with the dual goal of boosting oil production and storing the CO₂, usually in response to financial incentives.

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Potential win for Indonesia

The ADB says CO₂-EOR+ is a potentially attractive solution for Indonesia that could slow or arrest the decline in oil production while addressing the urgent need to curb the country’s CO₂ emissions that are increasing rapidly, not least because of the reliance on coal for much of its power generation.

“There may be extensive opportunities for enhanced oil recovery (EOR), including using CO₂, given the maturity of many of the country’s oilfields,” notes the ADB, adding that the first such commercial projects in the republic utilised steam flooding.

Under its nationally determined contribution to the United Nations Framework Convention on Climate Change, Indonesia is committed to reducing emissions of CO₂ and other greenhouse gases by 29% below a baseline trend by 2030, and by up to 41% on the condition that international support for finance, technology transfer and capacity building is made available.

A number of studies have already been performed to assess the potential for CO₂-EOR+ in Indonesia and to match sources of CO₂ with oilfields.

The large amount of crude remaining in most of Indonesia’s mature oilfields suggests that there is significant technical potential, though the economic potential is likely to be far smaller, especially at low oil prices, says the ADB.

“The cost of procuring the CO₂ is particularly important to the economic viability of deploying the technology," the organisation says.

"The most promising candidates for CO₂-EOR+ projects are mature fields with declining production that are located in close vicinity to low-cost sources of CO₂, such as natural gas processing plants.”

Draft presidential decree

ADB cautions that such projects in Indonesia would only get off the drawing board after at least one pilot and demonstration has been in successful operation for several years.

The ADB adds that since CO₂-EOR+ is new to Indonesia, it requires the development of a comprehensive legal and regulatory framework.

A draft presidential decree setting out a general framework for CCS was completed in March 2019 — said to be the first of its kind in a developing country — building on existing regulations governing the upstream sector and industrial activities.

The decree's primary objective is to establish a performance-based system of permitting for the storage of CO₂.

It sets out the standards by which CCS projects would be approved with the objective of mitigating associated risks, covering both pilot and full commercial CCS projects.

The decree exempts from certain requirements pilot projects involving the injection of less than 150,000 tonnes of CO₂ and allows the regulator to waive other requirements on a case- by-case basis.

Also, there is also a need to review and recommend specific policies and tax incentives for CO₂-EOR+ in Indonesia, according to the ADB.

“For large-scale commercial projects to take off, a significant financial incentive in the form of a carbon price or tax credit will probably be necessary, especially if oil prices fall,” it claims.

“The development of human capital will also be an important element in achieving the successful demonstration and subsequent large-scale deployment of CO₂-EOR+ technology in Indonesia.”

Current global CCUS capacity stands at around 41 million tonnes per annum. However, more than half of this is in the US and Canada, where opportunities to use CO₂ in the EOR process have historically driven deployment.

Around 65% of current total capture is from natural gas processing, where costs are lowest, notes UK-headquartered consultantcy Wood Mackenzie.

The CCUS development pipeline holds 130 million tpa of capture capacity.