How Indonesia Can Reduce Its Carbon Footprint through Enhanced Oil Recovery

Carbon dioxide-enhanced oil recovery or CO₂‑EOR has been used on a commercial scale since 1972 in the United States and it is also used in other countries. However, the use of the technology to mitigate climate change is relatively new.

During normal CO₂-EOR operations, some of the CO₂ injected is incidentally trapped in the oil field. Ways to ensure CO₂ storage as well as oil extraction are attracting interest around the world as a type of carbon capture, utilization, and storage (CCUS) technology called CO₂-EOR+.

As a climate mitigation measure, CO₂‑EOR+ requires the CO₂ to come from an anthropogenic source (resulting from human activities), such as a power station or a natural gas processing plant (natural gas extracted from reservoirs can contain significant amounts of CO₂). Additional steps also need to be undertaken before, during, and following CO₂ injection, including additional measurement, reporting, and verification.

Regulatory requirements and fiscal incentives, such as a carbon tax or price for the CO₂ stored, can incentivize oil field operators to adopt the additional measures to serve as a climate mitigation project.  Projects that take off are usually in response to financial incentives.

There are currently 14 large-scale CO₂‑EOR+ projects with the dual goal of boosting oil production and storing CO_2.  Ten are in North America, of which eight are in the US; the largest is in Brazil. Their total injection capacity is around 35 million metric tons (MMT) per year.

Figure 1: Illustration of Carbon Dioxide-Enhanced Oil Recovery

CO₂ = Carbon Dioxide
Source: Global CCS Institute.  CCS Image Library - Carbon Capture and Storage Images.  https://www.globalccsinstitute.com/resources/ccs-image-library/ (accessed 14 October 2019).

CO₂‑EOR+ could make an important contribution to efforts in Indonesia and elsewhere to curb CO₂ emissions from fossil-fuel power plants or industrial processes over the long term. It is seen as a stepping-stone to pure carbon capture and storage, which is widely regarded as a potentially important means of reducing emissions, alongside a shift in energy use to less carbon-intensive sources, improvements in CO₂ efficiency, and energy conservation.

The large amount of oil remaining in most of Indonesia’s mature oil fields suggests that there is significant technical potential for CO₂‑EOR, though the economic potential is likely to be far smaller, especially at low oil prices. The cost of procuring the CO₂ is particularly important to the economic viability of deploying the technology. The most promising candidates for projects are mature fields with declining production that are located close to low-cost sources of CO₂, such as natural gas processing plants.

Potential sources of CO₂ in Indonesia are oil and gas processing plants, and industrial processes that involve the conversion of hydrocarbons. Power plants and petrochemical plants, including fertilizer factories, could also capture and supply CO₂.

The processing of natural gas is likely to be the cheapest source of high-purity CO₂ now and in the future. Before the natural gas can be distributed and consumed, the CO₂ has to be removed along with other impurities. This removes a great deal of the CO₂ capture cost that would be incurred at a power plant or other source before transporting it to the oil field for injection. The availability of CO₂ from gas processing is likely to grow in Indonesia as several of the gas fields that are expected to come on stream in the coming years have particularly high CO₂ content.

The critical first step is to launch an initial pilot project. Commercial projects will only follow if at least one pilot and demonstration project has been operating successfully for several years. The learning and experiences from pilot and demonstration projects will be of enormous value in helping operators design commercial projects and helping policy makers draw up an effective legal and regulatory framework.

Pertamina, the state oil and gas company, is exploring a pilot project at the Sukowati oil field located in East Java, and ADB provided technical assistance to analyze the potential for delivering on dual goals of CO₂ storage and oil extraction. The pilot project consists of four production wells and a CO₂ injection well. If the pilot proves to be successful, a commercial-scale project is envisaged, involving the use of all 35 existing production wells and drilling new CO₂ and water injection wells. The CO₂ needed for the pilot project would be sourced from the Sukowati field itself; the gas associated with the oil currently produced from the field contains about 40% CO₂.

Using CO₂‑EOR in climate mitigation is a new activity in Indonesia. It requires a comprehensive legal and regulatory framework.

A draft presidential decree setting out a general framework for carbon capture and storage was completed in March 2019, building on existing regulations governing the upstream sector and industrial activities. The primary objective of the decree is to establish a performance-based system of permitting for the storage of CO₂. It sets out the standards by which projects shall be permitted with the objective of mitigating associated risks, covering both pilot and full commercial projects. The decree exempts pilot projects involving the injection of less than 150,000 tons of CO₂ from certain requirements and allows the regulator to waive other requirements on a case-by-case basis.

The development of a more comprehensive framework at a later stage is expected to benefit from the lessons learned from the pilot projects.

There is also a need to review and recommend specific policies and tax incentives for CO₂‑EOR+ projects with climate mitigation objectives. For large-scale commercial projects to take off, a significant financial incentive in the form of a carbon price or tax credit will probably be necessary, especially if oil prices fall. The development of human capital will also be an important element in achieving the successful demonstration and subsequent large-scale deployment of this technology in Indonesia.

Asian Development Bank. Indonesia: Pilot Carbon Capture and Storage Activity in the Natural Gas Processing Sector (TA 9189-INO).

ADB. 2019. Dioxide-Enhanced Oil Recovery in Indonesia: An Assessment of its Role in a Carbon Capture and Storage Pathway. Manila.