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Enhanced oil recovery and the carbon markets - an emerging profitability pathway for US producers?

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24 June 2022

Enhanced oil recovery and the carbon markets - an emerging profitability pathway for US producers?

Report summary

Enhanced Oil Recovery (EOR) is considered a CO2 storage technology in the United States, but there are pros and cons for allowing EOR projects to generate offsets in the voluntary carbon market. The additional revenue generated from selling carbon offsets can enable companies to develop more ambitious technologies. But EOR projects don’t necessarily store more emissions than they release through the additional oil and gas production – at least, if full lifecycle emissions is considered. Scrutiny of the voluntary carbon market and the climate accountability of companies is increasing in the US. We believe that only the most rigorous carbon capture and storage methodologies will be deemed high quality enough to generate carbon offsets – and many EOR projects may not live up to these requirements.

Table of contents

    • EOR: storing carbon while producing hydrocarbons
    • EOR projects can advance capturing technology, but may generate more emissions than they store
    • EOR projects as a generator of carbon offsets: new action ahead?
    • Making DACC EOR profitable requires multiple sources of revenue
    • The carbon markets need removal credits – but EOR is not a safe bet

Tables and charts

This report includes 7 images and tables including:

  • Some examples of nature-based and technological carbon sequestration solutions
  • 45Q tax credit for CO2 stored during EOR operations
  • With full lifecycle emissions, it is not evident that EOR projects can generate net zero oil – let alone carbon offsets
  • Pros and cons of providing carbon offsets for EOR operations
  • Carbon offsets for EOR projects issued by ACR
  • Example of breakeven oil price needed for DACC EOR

What's included

This report contains:

  • Document

    Enhanced oil recovery and the carbon markets - an emerging profitability pathway for US producers?

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