How to Leverage E&P Expertise for the New Energy Economy
04.10.2023 By Ricardo Perez - NEWS

April 10, 2023 [Journal of Petroleum Technology] – The technology and knowledge base of the E&P sector is poised to play a major role in the newer, lower-carbon energy economy.


The term “new energy economy” broadly refers to the transition to a low-carbon future for sustaining human development while reducing CO2 emissions.

Such a shift is considered to be the third energy transition of the modern era, after the shift from biomass to coal as the primary source of energy in the early 1900s, followed by oil overtaking coal’s dominant position in the 1960s–1970s.

This trend towards decarbonization (i.e., diversification from carbon-intensive fossil fuels to sustainable greener energy feedstocks and carriers) is motivated by the understanding that emissions need to be reduced to moderate the potential impacts of global temperature rise on future climatic changes.

Strategies common to proposed decarbonization pathways include:

1) Improving energy efficiency (i.e., slower increase in energy demand compared to GDP/population increase).
Increasing energy supply from renewable sources (i.e., wind, solar, geothermal, nuclear) coupled with hydrogen underground storage (HUS) as a way of storing surplus electrical energy.

2) Switching to low-carbon energy carriers (i.e., hydrogen) for end‑use applications in transportation, buildings, and industry.
Removing carbon emissions, via carbon capture, utilization, and storage (CCUS), from fossil-fuel-fired power plants and hard-to-abate industrial sources.

3) The key takeaway for readers is how the two subsurface-oriented decarbonization strategies—CCUS and HUS—are relevant for application/adaptation of expertise from the exploration and production (E&P) sector of the oil and gas industry. Their rise will be built upon decades of experience with CO2-EOR, gas injection, produced-water disposal, and underground natural gas storage (NGS).

Carbon Capture, Utilization and Storage (CCUS)

CCUS involves capturing CO2 from a fossil-fuel-fired power plant or industrial facility and processing it to a practically pure form, transporting it to a nearby geologic storage site using pipelines, and injecting it into saline aquifers for long-term sequestration or depleted oil/gas fields for enhanced oil recovery (EOR) and associated storage.

Research and field demonstration projects over the past few decades have demonstrated that CCUS is a viable technology for curtailing atmospheric CO2 emissions buildup.

Some of the key elements of CCUS projects and their overlap with corresponding E&P expertise are summarized below.

Storage resource assessment. This step involves an estimation, especially during the pre-injection appraisal and permitting phases, of the quantity of CO2 that can be stored in the target formation. It is important to distinguish between (a) volumetrics-type approaches appropriate for deep saline aquifers which can be regionally extensive and hence, akin to infinite-acting reservoirs, and (b) voidage-replacement type approaches appropriate for depleted oil/gas fields which are essentially closed reservoirs.

Also, SPE has recently developed the CO2 Storage Resources Management System (SRMS), analogous to the Petroleum Resources Management System (PRMS), to provide an accepted and recognized system for quantifying, categorizing, and classifying storage resources.

Reservoir characterization. The goal is to understand the spatial extent, boundaries, flow barriers, and rock/fluid properties of the target storage formation. In addition, geotechnical properties of the caprock and overlying seals, location of underground sources of drinking water (USDW), and presence of conductive fractures and faults that could act as leakage pathways or trigger injection-induced seismicity are also important for CCUS projects.

The challenge of data sparsity is generally a concern for saline aquifers, as projects will typically have data only from one dedicated site‑characterization well and perhaps a handful of legacy wells (from oil and gas exploration and/or subsurface waste injection).

Pressure propagation and CO2 plume modeling. As with E&P projects, static and dynamic reservoir modeling are fundamental to operational management of CCUS projects. The metrics of interest are (a) pressure buildup in the injection well, caprock, and storage formation, (b) CO2 plume migration extent, and (c) delineation of the Area of Review, i.e., a region surrounding the injection well where USDW may be endangered because of injection-induced excess pressure buildup.

Conventional geologic modeling and simulation workflows/tools from the oil and gas industry have been adapted and applied for CCUS projects, along with simplified approaches such as sharp-interface models and fractional-flow models, which may be more appropriate for project developers and/or regulators. However, the impact of data sparsity is an important constraint, especially for history matching of models to observational data collected from a limited number of monitoring wells.

Monitoring of reservoir performance. Regulatory guidance for geologic sequestration wells generally stipulates more involved monitoring of system evolution and storage integrity compared to E&P injection wells. Required detailed surveillance involves geophysical surveys, geochemical sampling, geomechanical measurements, and dynamic pressure and temperature sensing in the storage reservoir and caprock. Also, detailed documentation of monitoring, verification, and accounting is needed for receiving tax credits or trading carbon permits.

Hydrogen Underground Storage (HUS)

The hydrogen value chain, which includes (a) production of green hydrogen from renewable sources or blue hydrogen from fossil-fuel-based sources in conjunction with CCUS, (b) storage in physical containers or underground geologic formations, and (c) end use in industry, transportation, and energy sectors. HUS is particularly attractive for managing the intermittency of renewable power generation and is similar in concept and execution to active underground NGS storage projects in aquifers, depleted oil/gas fields, and salt caverns.

Some of the key elements of HUS projects and their overlap with corresponding E&P expertise are summarized below.

Reservoir characterization/development. The characterization needs for saline aquifers is the same as was discussed earlier, whereas depleted oil/gas fields will have a pre-established database for reservoir characterization. The construction of salt caverns via brine circulation for HUS would be similar to that for NGS, albeit with the needs for better geomechanical characterization and modeling of salt creep, cavern integrity, and fluid leakage.

Well deliverability. The productivity of a hydrogen well can be evaluated using standard NGS well-deliverability equations that include both Darcy and non-Darcy flow components—adjusted for hydrogen properties. Similarly, the common equations for wellbore pressure and temperature changes during injection/production need to be adapted for hydrogen-specific conditions. HUS projects can also benefit from the application of standard workflows from inflow performance and nodal analysis for integrating surface, wellbore, and subsurface elements.

Dynamics of fluid withdrawal. Dynamic modeling of HUS can build on NGS and CCUS tools and experience, but complications caused by high mobility of hydrogen (i.e., gravity segregation, viscous fingering) need to be addressed in simulation design and operational planning. Another challenge is the modeling and management of water up-coning (from aquifers) and hydrocarbon recovery (from depleted oil/gas fields) during hydrogen production. Also, the high levels of hydrogen diffusivity and reactivity (with rock, in situ fluids and bacteria) require assessment of reservoir and caprock integrity using coupled compositional flow and bio‑geo-chemical reactive transport models.

What Skills Need Updating?

We believe that the foundational preparation for the subsurface science and engineering aspects of both CCUS and HUS should come from traditional petroleum engineering and geoscience curricula via core courses in reservoir characterization, wellbore hydraulics, and reservoir engineering. In addition, several specialized courses would be required to address the CCUS and HUS industry-specific needs, as follows.

Foundations of CCUS. CCUS rationale, CO2 capture, pipeline transport, geological storage basics, aquifers vs. depleted oil/gas fields, monitoring, risk analysis, permitting, and global status/outlook.

Foundations of HUS. Hydrogen usage rationale, pipeline transport, geological storage options (salt caverns, depleted gas/oil fields, aquifers), cavern engineering, geological characterization, well deliverability, reservoir mechanics, and risk analysis.

Advanced reservoir science and engineering for CCUS and HUS. Storage resource estimation, source-sink matching, monitoring, verification, and accounting (MVA), well deliverability, injectivity and plume migration models, and pressure and rate transient analysis.

Risk analysis and permitting for CCUS. Risk source identification, consequence analysis, risk management and mitigation, regulatory framework (EPA class VI permitting, EU CCS directive), regulatory compliance, and MVA documentation.

These courses can be incorporated into existing petroleum engineering and/or geoscience curricula as specializations and/or certificate programs.

They can also be introduced in the continuing education marketplace through providers such as training consortia or university extension programs. Some key aspects of CCUS and HUS as compared to typical E&P operations.

Future Prognosis

The pace of the current energy transition will depend on (a) availability of low-carbon technologies deployable at scale, and (b) societal demands linked to cost-benefit considerations.

Given the magnitude of capital inflows required and the complex restructuring of the supply chain, existing oil and gas companies can play a major role from both techno-economic and human capital perspectives.

To that end, we have discussed how relevant E&P expertise can be leveraged to meet the needs of the nascent CCUS and HUS marketplace. We strongly believe that the capabilities of oil and gas professionals are readily adaptable for such projects with appropriate re-education and training, and our industry can contribute not just with technology but also with skilled manpower.

On a related note, petroleum engineering skills are already being applied to geothermal energy, another emission-free and fully dispatchable power and heat source that will also play a critical role in the energy transition.

In closing, we recognize that the aspirational goals set forth in most decarbonization plans and net-zero scenarios would require a significant switch from fossil fuel to low-carbon sources. However, with the continued increase in energy demand to improve quality of life (especially in developing countries), energy transition in the near term will most likely reduce to energy diversification as a pragmatic solution.

A variety of energy sources including renewables and fossil fuel (primarily natural gas) will most probably be utilized in conjunction with CCUS and HUS, with CO2-EOR used as a bridge technology in the interim. As such, the technology and human resource base from the E&P sector is poised to play a vital role in the new energy economy—regardless of the trajectory of low‑carbon pathway adoption.

Pro Trial: Access 12,600 Tank Terminal and Production Facilities

12,600 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data

Tangier Island Awarded $2.3 Million Grant for Fuel Storage
06.20.2024 - NEWS
June 20, 2024 [National Fisherman]- Tangier Island, Va., sits in the middle of Chesapeake Bay wit... Read More
Sweco Supports VoltH2 in Design and Development of New Green Hydrogen Plant in The Netherlands
06.20.2024 - NEWS
June 20, 2024 [Public Now]- The European energy company VoltH2 has selected Sweco as its partner ... Read More
ONEOK Completes Acquisition of Gulf Coast NGL System
06.20.2024 - NEWS
June 20, 2024 [ONEOK]- ONEOK, Inc. announced that it has completed its acquisition of a system of... Read More
Phillips 66 Refining Margins Tighten on TMX Expansion Start-Up
06.20.2024 - NEWS
June 20, 2024 [Market Screener]- U.S. refiner Phillips 66 said on Tuesday its margins have tighte... Read More