2005 Results and Overview

1. 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

2. Gulf Coast Carbon Center (GCCC) Mission: A global leadership position in economic implementation of large scale greenhouse gas sequestration. GCCC Staff at Bureau of Economic GeologyIan 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 Sponsors

3. 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

4. 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)

5. Source- Sink inventory: US Distribution of CO2 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 www.gulfcoastcarbon.org

6. Message to Legislatures Energy supply benefits from applying CO2 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 CO2 sequestration industry

7. Ozone non attainment Selected oil field that could benefit from EOR Existing CO2 pipeline Frio Brine Pilot Sources (dot size =release) Refineries and chemical plants Electric power plants Future CO2 pipeline Saline Formations Focus on the Gulf Coast

9. Pipelines and Areas of Interest Courtesy of AirLiquide

10. Economic Framework for Gulf Coast CO2 Source-Sink Integration • Numerous sources including immediately available CO2 from refineries and chemical plants and large amounts of CO2 available from power plants at the time that technologies mature. • Numerous oil and gas fields in decline provide market for CO2 • Determine price of CO2 under various configurations of sources, pipelines, and technology breakthroughs, and incentives. • Identify early opportunities for successful implementation

11. Oil & Gas Reservoirs(Texas)

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

13. 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

14. Oil fields - benefit from EOR Net sand in brine formation Source-Sink OpportunitiesExplored in GIS Oil and gas fields, play outlines Refineries, chemical plants Existing CO2 pipeline Coal-fired power plants Gas and oil -fired power plants

15. Recovery Efficiency of Sandstone Reservoirs from Enhanced Oil Recovery Projects 7 S u b m a r i n e f a n 6 B a r r i e r / s t r a n d p l a i n 5 F l u v i a l / d e l t a i c 4 Frequency 3 2 1 0 0 6 1 2 1 8 2 4 3 0 3 6 4 2 Q A c 4 2 3 7 c Recovery efficiency (percent)

16. West Texas CO2 Market • Company- KinderMorgan • # reservoirs – app. 70 • Additions usage- • 1,500 miles of major pipelines • Approximately 7.3 TCF or 380 MM tones used

17. Mississippi CO2 Market

18. Simplified Model Using Dimensionless Groups for Rapid Assessment of CO2 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

19. Texas CO2 EOR Resource Target at 15 % Recovery Gulf Coast residual oil target by play Total = 5.7 billion STB

20. Additional Production from CO2 EOR

21. Role of Pilots in Evolution of CO2 Industry Extensive EOR and UIC experience

22. Pilots SACROC/ Claytonville Denbury Frio Stacked Storage

23. 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

24. 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 CO2 EOR

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

26. 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

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

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

30. 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

31. Potential Sources Near Prospects

32. Stacked Storage Monitoring Elements Ecosystem monitoring: Chemical and biologic change Ground water monitoring for geochemical change Injection horizon: pressure, temperature, oil and CO2 saturation during and post- injection, instrumented slant hole Characterization of deeper horizon in preparation for eventual disposal

33. Research Elements • Demonstration in high emissions area with high injectivity • Use of CO2 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

34. Technology Gaps – Stacked Storage Field Test Objectives • 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

35. 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 • 1985 2 phase project implemented • 145 MMSCF/day CO2 used for EOR, 64 MMSCF/day sold commercially

36. 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

37. 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

38. Substitute underground injection for air release Escape to groundwater, surface water, or air via long flowpath Earthquake Escape of CO2 or brine to groundwater, surface water or air through flaws in the seal Failure of well cement or casing resulting in leakage Risk Assessment

39. Impacts of Unexpected Result of Injection Impact on atmosphere Health and safety Environment

40. Gulf Coast Carbon Center www.gulfcoastcarbon.org