CO2 and You

by Jeremy Alford

One of the leading causes of greenhouse gas emissions could bring about the next generation of oil exploration. Just consider the following:

• Louisiana spews more industrial carbon dioxide into the atmosphere than any other state in the nation (roughly 36 million metric tons of CO2). A study released last month by NASA and the U.S. Department of Energy found that the Bayou State surpassed refinery-rich Texas in 2002.

• As Congress crows about foreign energy dependence, various calculations place more than 1 trillion barrels of oil still under ground domestically, leftover from drilling and missed by conventional efforts. Back home, the Louisiana Oil and Gas Association estimates that local oilmen are forced to leave roughly 70 percent of their black gold in the dirt because most operations aren’t that efficient.

On the page, these two nuggets of information don’t have much in common. But thanks to advancements in oil exploration during the past decade, CO2 and increased production are more intertwined than ever.

Lobbyists and lawmakers say there’s going to be a focus in the spring regular session on tertiary recovery projects, or what are more commonly known as enhanced oil recoveries. The process involves the injection of certain gases or chemicals — in Louisiana’s case, carbon dioxide — into a reservoir, at which point it expands and pushes up the oil that was missed by a previous operation.

While a small package of bills is expected, at least one has already been pre-filed. Senate Bill 10 would eliminate the sales and use tax on any carbon dioxide sold for enhanced oil recovery project, just as long as the project has been approved by the state Department of Natural Resources.

Sen. Reggie Dupre, a Terrebonne Parish Democrat and chairman of the Senate Natural Resources Committee, says the state wants to encourage producers to use the emerging gas application, which his bill would do. “This is a way the state can regenerate some of these older sites,” Dupre says. “And it will also put Louisiana ahead of the curve.”

There are very few working examples in the southern United States, and Canada only recently saw its first oilfield established using the technique. Even Texas, Louisiana’s energy-competitor to the west, has yet to adopt a similar law.

Yet there are strides to point out already in Louisiana. For instance, Denbury Onshore LLC is installing a 24-inch pipeline originating from Donaldsonville. It’s a real Louisiana success story when it comes to economic development, but as often happens, it takes a twist. The pipeline will lead to the Hastings Field, just south of Houston, where Texas will reap the benefits of the recovered oil.

Still, there are opportunities back home as well. Denbury has entered into agreements to purchase man-made CO2 from four proposed “coal to liquid” plants, like the planned Faustina Plant near Donaldsonville.

Don Briggs, president of the Louisiana Oil and Gas Association, says he can see a day where operations like this are sprouting up all over the Bayou State. Louisiana plants would actually capture carbon dioxide before it enters the atmosphere and run it directly to an oil site. “That’s the ‘green’ element in all of this,” Briggs says. “Everyone is complaining about CO2 emissions, but this would give companies a reason to capture it before it gets into the environment.”

The Intergovernmental Panel on Climate Change, which was established by the World Meteorological Organization and the United Nations’ Environment Program, has also endorsed the use of CO2 in declining oilfields as a means to reducing greenhouse-based emissions. Nonetheless, questions still remain as to whether the CO2 will stay in the ground and further studies could turn the technology on its head.

For now, though, there’s nothing but green lights. Depending on the price of oil and other market conditions, the U.S. Department of Energy has estimated that enhanced oil recoveries that utilize carbon dioxide could generate an additional 240 billion barrels or more.

This could be the great compromise of 2009 for oilmen and environmentalists. While drilling will not end by next year, more CO2 operations could be open by then — increasing domestic supply, pumping money into the state’s coffers, creating new jobs and cutting Louisiana’s greenhouse gas emissions. All simultaneously.

In the meantime, the conversation with Congress can continue unfettered as to why Americans need alternative fuel as desperately as the Saints need secondary help.