The markets for carbon dioxide (CO2) are among the most diverse and dynamic in the industrial gas industry. Applications for CO2 range from carbonating beverages to recovering oil. Delivery methods include pipeline, bulk and microbulk trucks, cylinders, and as dry ice.
The rapidly increasing use of carbon dioxide for Enhanced Oil Recovery (EOR) and for oil and gas field services, combined with the continued drive to limit CO2 emissions into the atmosphere, is creating change in the CO2 supply chain. In this review of the US CO2 market in 2012, we look at how new oil field plays and new technology are opening up new business opportunities for industrial gas players and distributors.
Two Distinct Markets
There are two distinct market segments for carbon dioxide: the merchant segment, which supplies CO2 for many food and industrial markets; and the EOR segment, which supplies CO2 in large volumes for enhanced oil recovery. In terms of volume, the merchant segment represents about 20 percent of the market, and EOR consumes about 80 percent. As shown in Figure 1, within the merchant market, CO2 is supplied for oil and gas services, including those related to EOR, like pilot testing (CO2 floods). EOR is the largest demand driver for CO2, and this application represents an important and growing part of the merchant CO2 business as well as the EOR segment.
The Merchant Market
Companies within the industrial gas industry both produce and distribute CO2. Others buy crude, process it to pure liquid, and deliver it. Some companies are strictly distributors that buy bulk CO2 and dry ice and deliver them in repackaged and smaller volumes. There are companies outside the industrial gas industry that are active in both merchant markets and the much larger-volume EOR market. As carbon capture applications become more prevalent (and cost effective), we may see more industrial gas companies participating in the EOR market. Phase one of the Air Products carbon dioxide capture demonstration project in Port Arthur, TX is now onstream. Ultimately, the project will capture approximately one million tons of CO2 annually—to be recovered, purified by Air Products, and transported by Air Products via a pipeline for injection into the Denbury Onshore-operated West Hastings Unit, an EOR project in Texas. (See “Meeting EOR and Unconventional Oil and Gas Market Needs,” An Energy Report from Air Products, CryoGas, April 2013, p. 34.)
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