A new analysis by Wood Mackenzie suggests that subsidizing captured CO2 for enhanced oil recovery (CCS-EOR) at the same level as captured CO2 for dedicated sequestration (CCS-Storage) could lower global emissions and support the energy transition more effectively.
Peter Findlay, Director of CCUS Economics at Wood Mackenzie, acknowledges that CCS-EOR has faced criticism for potentially exacerbating climate change by increasing hydrocarbon production.
Nevertheless, even under aggressive decarbonization scenarios, new oil supply is necessary, he argues.
Findlay contends that CCS-EOR is not more likely to increase global oil demand than other sources of oil supply, such as producing, discovered, or yet-to-be discovered fields.
Wood Mackenzie’s analysis indicates that the world will need 30 million barrels per day of oil supply by 2050, even in a ‘Net Zero by 2050’ scenario.
Their three-part report series, “Enhanced oil recovery with captured CO2”, finds that CCS-EOR could displace nearly all the volumes it produces without materially affecting global oil demand and emissions.
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In many cases CCS-EOR can deliver lower net emissions due to its relatively low incremental emissions and lighter oil production, although CCS-Storage may have a lower net impact on global emissions in some instances.
“It all depends on the project, the geology, and the oil and carbon markets,” Findlay explains.
The reports highlight that current lower subsidies for CCS-EOR compared to CCS-Storage and Carbon Capture and Utilization (CCU) ultimately lead to less global CO2 capture and decarbonization.
According to Findlay, undersubsidizing CCS-EOR indirectly subsidizes other, often higher-emitting, oil sources outside national jurisdictions, weakening energy security and strategic advantages.
For producers aiming to maximize shareholder returns, decarbonize portfolios, and maintain supply amid geopolitical tensions, CCS-EOR offers a pragmatic energy transition solution with a potentially lower carbon footprint than traditional operations.
Wood Mackenzie’s analysis shows, however, that CCS-EOR becomes viable only when the CO2 used comes from anthropogenic sources, such as industrial point sources or Direct Air Capture (DAC).
Read more: Wood Mackenzie Warns That The Pathways Alliance Carbon Capture Project Faces Uncertainty
