A team at Occidental Petroleum is gearing up to expand the company’s EOR prowess in shale oil with a project in the Delaware Basin, building on its experience in similar applications in conventional reservoirs.
“They’ll be putting that on within the next probably year to two years,” Occidental CEO Vicki Hollub told analysts Aug. 8 during the company’s latest earnings call. “We have modeled it enough. We’ve done four pilots. … The pilots were better than the model, so we’ve recalibrated, so we know that it will work. It’s just a matter of getting the incremental CO2.”
Producers in unconventional plays, including the prolific Permian Basin, continue to battle rapid decline rates. Though decline rates of shale oil wells vary depending on factors such as permeability, pressure depletion and surface area, first-year declines are typically high in unconventional plays and create the need for more new wells to be drilled to maintain or increase production.
Companies like Occidental have increasingly turned to EOR to maximize oil recovery from existing fields as the search for new oil fields becomes more challenging and demand rises. The EOR recovery method can utilize injections of chemicals such as surfactants or polymers, heat, gas or even microbes to squeeze more oil out of reservoirs.
Occidental relies on CO2 for its conventional EOR operations. The company has been experimenting with CO2 floods in the Permian, running pilot tests to evaluate tertiary recovery from unconventional fields. CO2 flooding is traditionally used and proven in conventional reservoirs; applying it to unconventional fields is considered experimental but efforts are underway to figure out how to successfully navigate challenges such as low permeability and complex pore structures to enable CO2 to successfully push up oil.
“The conventional CO2 floods are taking almost as much CO2 as we can get right now or reasonably for the life of the floods,” Hollub told an analyst asking about the economics of shale EOR given the enhanced 45Q tax credit incentive. “So, it’s going to take a little while for us to make the shale CO2 happen, but it is going to be economical.”
She added Occidental has also tested some reservoirs in North Oman and “CO2 enhanced oil recovery did well there too.”
The company looks to utilize CO2 trapped via direct air capture (DAC) for EOR. Hollub pointed out that Net Power’s technology also produces pure CO2 that can be used in EOR. Net Power, which is backed by Oxy Low Carbon Ventures, generates electricity by combusting natural gas with pure oxygen.
“We’d like to apply that in Oman as well as in the Permian,” she said.
Hollub also reiterated that Oxy believes proven CO2 EOR technology could recover an additional 50 Bbbl to 70 Bbbl of oil in the U.S., potentially expanding the nation’s “energy independence” by 10 years while CO2 removed from the atmosphere via DAC can address emissions.
“Oxy is uniquely positioned to deliver both through our leadership in DAC technology, sequestration and EOR operation,” she said. “We have over 50 years of experience in carbon management and nearly 3 billion barrels of Permian EOR conventional resources along with extensive CO2 infrastructure in the Permian. In addition, we have our expanded U.S. unconventional runway and our well positioned sequestration hubs.”
The company will also soon have what is expected to be the world’s largest DAC facility. Stratos in on track to start capturing CO2 this year.
“In just two years since groundbreaking, Stratos has achieved a significant milestone with Trains 1 and 2 now moving over to operations,” Hollub said. “We’ve commenced wet commissioning with water circulation and are on track to start capturing CO2 this year.”
The project, which is being developed in phases by Oxy’s 1PointFive subdidiary on a 65-acre site in Texas’ Ector County, aims to initially capture 250,000 tonnes of CO2 per annum as it ramps up throughout 2025. The facility is designed to capture and store twice as much.
Most of the volumes through 2030 from Stratos have been contracted, Hollub said, amid “an increasing appetite for durable carbon removal technologies.”
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