Nissa Darbonne, executive editor-at-large, Hart Energy: Thank you for joining us. I'm Nissa Darbonne, Hart Energy's executive editor-at-large. I'm visiting with Michael Dunkel. Michael is energy, water and carbon adviser with Tetra Tech. He just concluded speaking at the Carbon & ESG Strategies Conference and one of the subjects that was discussed involved the reservoirs that'll be chosen for carbon burial, for CO2 burial.
Michael, I believe that you had said depending on the nature of the reservoir, you were a little skeptical, I think of old reservoirs in particular.
Michael Dunkel, water management and energy advisor, Tetra Tech: Yes. I think that in my mind there's a sharp contrast between drilling a Class VI CCS well somewhere where there's not a lot of wells around, maybe none, that you're going to model a plume that's never even going to get very close to any historic wells, versus say, a 40-year-old reservoir in Permian that has maybe tens of cut points, tens of old wells in it, it's been on production all these years and now somebody's been given an incentive to put a bunch of CO2 in there. I'm a little skeptical that actually in the side of the regulators, they need to make sure that that's safe. It seems like we're going above and beyond with the new Class VI well, CCS, but to do that old water flood, now we're going to put a bunch of CO2 in there. I think things could go wrong a lot easier in that scenario.
ND: At the same time, conversation at the conference here, one of the subjects that came up was this worry about potentially burying CO2 where there's less data and for example, in old oil and gas holes, there's data from this, but then there's that risk that you just described versus something pristine, something that is lesser known.
MD: So drilling a well in Iraq is less data. I mean, there haven't been very many wells drilled in Iraq. I'm picking this on purpose.
ND: Wait, why Iraq? We're not burying it in Iraq.
MD: I know, because there are thousands and thousands of wells here. And so we know the geology. So in this application, we are saying, “hey, look, there are three major shale seals here. It's not going to leak.” So then you just need to drill a well that has good integrity and it's going to stay there, versus then the enhanced oil recovery [EOR] scenario. But now the other scenario is, you got all these old wells in there, and so I think in the United States, there's a lot of data on the geology. We know where the shale plays [are]. There've been enough wells to say we generally know the geology in almost every state in the Union, even the ones that haven't had historic oil and gas. So I'm hopeful that there's enough knowledge that we can confidently say that we know the geology well enough that the gas is going to stay down there or the liquid CO2 in this case.
ND: So where should we be putting Class VI wells?
MD: Well, I'm pretty optimistic about that actually. I mean, there are probably places where there's not good geology, and for the folks that aren't petroleum engineers and geologists… so basement rock, basement rock has little or no permeability, so you can't put anything in it hardly.
ND: Like Ellenburger [formation in the Permian Basin]?
MD: Yes, and the shale plays are almost basement rock in that they don't have enough permeability to let the oil migrate anywhere, and that's why the oil's still stuck in the rock. So it seems that those reservoirs are not targets, but almost every other typical, targeted reservoir that has porosity and permeability that the oil and gas industry would've aimed at over the decades—those are all targets and they're spread out in almost all the states. There are a few that aren't going to have them. You're going to have a hard time in the mountains of Colorado finding a good reservoir for CCS probably. But a lot of places, I think if you're close to a source, then the economics begin to line up because probably there's things that are relatively nearby, not everywhere, but a lot of places I think.
ND: We might have to cut this, but I must ask. You are talking about shale and virtual practical impermeability of shale, but there is some permeability, therefore it's called source rock. I mean in time that does migrate, which is why we've tapped kind of the easier rock adjacent to it.
MD: Well, shale has some, I mean we're getting into the nuances of permeability and porosity, but in Midland County, Texas, the reason that you can drill a well in almost anywhere there, and there is oil in the shale almost everywhere, because the rock is so impermeable, it can't migrate too high. And in a traditional conventional reservoir—the Permian—this oil all came from somewhere. But because the rock has enough permeability, it migrates to the traps. And so, what we're looking for are… the same reservoirs that we would've looked for oil and gas in the past, that have good permeability and porosity. They're not going to pressure up as much because of the pore space, you've got more pore space, so you can put the CO2 in there. Whereas… I mean, I think their industry is looking at the shale plays, but to me, as a traditionally trained reservoir engineer, the problem with shale plays is that that CO2 is going to tend to cycle right through the fractures and it's going to come out the other side, the other well. And so I'm not too optimistic about those.
ND: I do understand that there are some 45Q credits for EOR that it's maybe 75% the value of the greater value type credit, well, activity use. So if we do increase its—CO2’s—application in EOR, there is some money to be made from it.
MD: Oh yeah. And I just think that, I guess what I'm saying, I'm not trying to be too negative here, but we need to be careful. We can't just blanket wave our arms and say, yeah, let's go put CO2 in every reservoir out there because I think that's probably a bad idea. And so if there's a relatively new reservoir with fewer wells, newer wells, those would be great places to go do an EOR using CO2. Absolutely. And I'm sure it'll be done, and I'm sure it'll be done safely. But I guess thinking about Permian and do you want to put a whole lot of CO2 in some old reservoirs out there? Maybe not, with all the cut points in old wells.
ND: It did come up in the conference yesterday that absolutely, certainly these new sequestration projects, amongst all of the things to be absolutely concerned with would be certainly that there not be a single molecule that escape. That that could cast a bad light on everything subsequent. What are your thoughts on that?
MD: I think geologically, we can be pretty confident that these shales that we're drilling underneath three big shale packages and putting it in a reservoir way down here at 8,000 [feet] or 10,000 feet, that's not going to be a problem. I'm pretty focused on the problem [of] if there's going to be leakage, ]it] will be in the well. And so even in a CCS well, I highlighted in the presentation that it needs to be a very technical well, more technical than an oil and gas well because of the corrosive nature of CO2. And so you need to have special alloy steels. You need to probably custom design your cement job to make sure you're ready to handle this corrosiveness because you don't want it leaking up that well. But I agree with that sentiment. We can do this—and it's part of the application, frankly. In your Class VI application, you're proving to them that yes, the geology's good, and yes, we're going to drill a really good solid well, and we're going to monitor it. And so theoretically, I suppose you could have a problem in 50 years and you're going to monitor it and you're going to catch that, and then you're going to have to go fix it.
ND: Thank you, Michael, and thank you for joining us. Learn more about this and a great deal more at hartenergy.com.
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