A new report, released this morning, suggests that by linking oil recovery in the North Sea to low-carbon electricity can bring significant benefits to the UK economy.
A comprehensive new analysis by a Joint Industry Project has been made of injecting carbon dioxide (CO2) derived from low-carbon electricity production and industry to enhance oil recovery from existing North Sea fields (CO2-EOR).
The report shows that a synergy between CO2-EOR and Capture and Storage (CCS) could be the driver for developing both technologies in the UK Continental Shelf. Part of the CO2 that would otherwise go directly to dedicated storage in CCS projects could be used to drive CO2-EOR, bringing significant benefits to the wider UK economy – including extending the producing life of the North Sea, reducing imports of oil, maintaining employment, developing new capability to drive exports, and additional direct and indirect taxation revenues.
This approach could also provide the most cost-effective way to accelerate an energy transition between 2018 and 2030 to meet UK Committee on Climate Change decarbonisation pathways, say the authors.
Professor Stuart Haszeldine, SCCS Director at the University of Edinburgh, said, “North Sea oil and gas are facing an existential cost challenge, and at the same time the UK is struggling to fund its electricity decarbonisation clean-up. The beauty of this new analysis is that it shows how to help develop big projects in the power industry, while also supporting a transition of the abilities and profits from offshore hydrocarbons into new, sustainable jobs.”
The project analysis suggests that this CO2-EOR route achieves two desirable UK objectives:
A business demand is created, which drives the sequential construction of CO2 capture projects – reducing the costs associated with CO2 supply and enabling cheaper low-carbon electricity. CCS by this route, with secure CO2 storage already proven, would develop more rapidly and protect the onshore UK economy and industry from increasing carbon prices.
Through accelerated CCS deployment more CO2 is abated, more quickly, than by any other route, and this includes emissions from the additional oil produced. Public subsidy towards the cost of a low-carbon transition would be greatly reduced, and CO2-EOR may even be profitable across the whole economy. Investment in CO2-EOR has a national return of up to 7.2x, which is much larger than rival energy opportunities.
However, the report points to a lack of clear supportive legislation and fiscal regimes for CO2-EOR in the UK. New supportive regimes are needed for CO2-EOR projects, similar to existing brown field or development allowances, and these must make investing in CO2-EOR in the UK competitive with the alternative global investment opportunities.