Q2 thoughts

"I don’t believe tight oil is a candidate for CO2 based EOR - very low permeability. You can’t inject in one well and produce from another. It would have to be some kind of “huff and puff” process similar to certain steam flooding EOR. I doubt it could be profitable compared with just exploiting your reserves. "

During the early part of my 40 year career, and probably yours, it was well accepted dogma that oil could not be produced from shale due to low perm. We were wrong. I suspect CO2 EOR (perhaps in some modified form) will work in shales (low perm reservoirs).

You don’t believe CO2 EOR will work for shale but Vicki Hollub does:

2019 Q2 Earnings Call

“As I mentioned earlier, our Low Carbon business strategy will play a key part in reducing our enhanced oil recovery cost in our conventional reservoirs, which will increase our inventory of conventional CO2 EOR projects (reserve additions). In addition, it will help to make CO2 projects in our unconventional resources possible, and profitable. Our conventional and unconventional CO2 projects will lower our carbon footprint and will enable us to help other companies lower theirs as well. It’s important to note too that our Low Carbon business is also aggressively working with all of our operations to reduce all greenhouse gases, not just CO2.”

Justification for Ecopetrol JV on Midland Basin acreage as opposed to divestiture is future CO2 EOR potential (JV horizons all unconventional/shale reservoirs):

""Will Atkinson – UBS – Analyst

Good afternoon. I was wondering if we could touch on the rationale for a joint venture, rather than a complete divestiture, especially given the depth of your inventory across the Delaware.

Vicki Hollub – President and Chief Executive Officer

Yes. The reason for a joint venture, is we like the acreage in the Midland Basin, it’s quality acreage, quality assets, and we think over time. Again, we haven’t built it into our near-term model and we didn’t include it in the --in how we evaluated this acquisition. But the upside over time is to use our enhanced oil recovery to get more of the reserves and resources out of the wells. So we are preserving our opportunity to get significant upside in the Midland Basin, through the application of CO2 enhanced oil recovery ultimately, and we think the more that we have of this, the more upside that we have over time and that we believe will give us an edge into the future on being able to get more out of existing wells rather than having to go drill new wells Thank you.


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“It would have to be some kind of “huff and puff” process similar to certain steam flooding EOR. I doubt it could be profitable compared with just exploiting your reserves.”

Agreed it will likely be a “huff and puff” process. When I was still working I seem to recall a JPT paper describing an actual CO2 EOR pilot that OXY had done in shale. Can’t seem to find a reference. Will keep looking. If it was successful, could see how OXY might keep their cards close to their vest.

Vicki makes the point in the 2019 conference call that captured “free” CO2 would greatly enhance the economics for both conventional and unconventional EOR.