Ethanol, oil companies to study feasibility of CO2 project

By Tim Albrecht | June 21, 2018

Occidental Petroleum Corp. and White Energy agreed Tuesday to evaluate the economic feasibility of carbon capture, utilization and storage project. The project would capture CO2 at White Energy’s ethanol facilities in Hereford and Plainview, Texas, and transport it to the Permian Basin, where Occidental would use it in its enhanced oil recovery (EOR) operations. Occidental injects CO2 into oil reservoirs, causing trapped oil to flow more easily and efficiently.

“The collaboration between Occidental and White Energy is a direct result of the passage of the FUTURE Act,” said Occidental Petroleum President and CEO Vicki Hollub. “Carbon capture technologies have the potential to play a critical role in reducing global emissions, and this project is an important first step in cross-industry collaboration to make these efforts economic, practicable and scalable.”

White Energy President and CEO Greg Thompson says the collaboration has potential to benefit both companies. “For Occidental Petroleum their CEO and their corporate strategy revolves around the reuse of carbon, whether through enhanced oil recovery or carbon sequestration projects. For us, it would allow us to act in both an economical and environmentally sustainable manner, by taking emissions from our ethanol plants and being able to take that into a value-added product.

The collaboration of the two companies also has benefits from an environmental perspective. Carbon capture projects are critical in the current environmental climate if “we hope to reduce temperature changes over the next 10 to 20 years,” Thompson says.

The engineering study, expected to last six months, will examine the costs of building a carbon capture facility. If Occidental and White Energy determine the project is economically feasible, operations could begin as soon as 2021. The carbon capture project would be designed to be eligible for 45Q tax credits and California’s Low Carbon Fuel Standard Carbon Capture and Storage protocol, both currently in development, demonstrating that these important incentives result in near-term investment, reduced CO2 emissions and jobs.

The two companies began discussing a collaboration a number of years ago when 45Q was first being discussed by politicians, and made sense for both parties due to the close proximity of the companies’ plants, Thompson says. “The leadership and direction of Occidental with their carbon capture and initiatives made a lot of sense for us.”

Occidental is an industry leader in applying CO2 EOR technology. This technology can increase oil recovery by 10 to 25 percent in the fields where it is employed, while at the same time permanently sequestering the CO2 in the reservoir. The U.S. EPA approved Occidental’s two monitoring, reporting and verification (MRV) plans for CO2 EOR fields in its Permian Basin operations. These plans, which were the first-ever approved by EPA, demonstrate that the captured CO2 is safely and permanently stored and establish a framework to quantify the amount of CO2 sequestered.

The FUTURE Act, which became law in February 2018, supports the conversion of CO2 emissions from industrial sources, including ethanol and coal- or gas-fired power plants, to a commodity product that can be stored in a secure geological formation through EOR.

New pipeline infrastructure to transport the CO2 is a hurdle to overcome if the engineering study yields positive results for Occidental and White Energy, says Al Collins, senior director of regulatory affairs for Occidental. “The USE IT (Utilizing Significant Emissions with Innovative Technologies) Act which was passed last month by the Senate Environment and Public Works Committee could provide funds to help support this build out of pipelines. Also in May, the House introduced the Fossil Energy Research and Development Act. Both bills continue the momentum to support carbon capture research to reduce emissions and build needed pipeline infrastructure. 

“Ethanol, and White Energy's specifically, have benefits that fit Occidental's strategy and we are excited to work this with them while expanding to other opportunities,” Collins said.

Thompson sees a bright future of similar collaborations between the ethanol and oil industries due to the large amount of CO2 produced at ethanol facilities.  “It’s more advantageous than what’d you would find in other energy industries as far as a cost and tax effective means of capturing CO2 and putting projects together in collaboration with forward thinking companies like Occidental. It’s substantial and we’d love to see more ethanol companies participating in this space.”