BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR PRIVACY & COOKIE NOTICE
X


California's largest solar project to be used for EOR

New York (Platts)--1 Dec 2017 536 pm EST/2236 GMT


GlassPoint Solar and oil producer Aera Energy are building an 850-MW solar thermal plant to supply steam for enhanced oil recovery at the 80,000 b/d Belridge Field in California, GlassPoint said.

"Solar powered oil production technologies -- solar steam generation and solar electric power generation -- have the potential to contribute to California's economy significantly while reducing costs and risks associated with meeting the state's climate goals," John O'Donnell, GlassPoint's vice president of business development, said in an email Friday.

Dubbed the Belridge Solar project, the facility will use mirrors to focus solar energy on pipes containing water produced along with oil to generate 12 million barrels of steam/yr that will be reinjected for EOR at the oilfield located 45 miles northwest of Bakersfield. The plant will also include a 26.5-MW solar photovoltaic array to generate power that will be used for oilfield operations.

Aera Energy, jointly owned by Shell and ExxonMobil, accounts for almost 25% of California's 510,000 b/d of oil production. The Belridge Solar project will be the state's largest in terms of peak energy output when completed in 2020, pending financing and permitting.

The Belridge field began steam injection for EOR in the 1960s, which according to Aera, increased production tenfold. However, steam injection is energy intensive and expensive to maintain, as it typically relies on large volumes of gas, which is burned to generate the steam. The oil field currently consumes 13,343 Mcf/d of gas for EOR.

Gas prices at Pacific Gas & Electric's Topock price point, near Bakersfield, were $2.44/MMBtu on Friday and the Southern California Gas Border was at $3/MMBtu, according to S&P Global Platts. GlassPoint declined to discuss the project's costs, with O'Donnell simply saying Belridge Solar "will deliver steam and electricity at market-competitive prices."

THE PROJECT REDUCES EMISSIONS AND COSTS

The switch to solar power is estimated by the companies to reduce CO2 emissions by 376,000 tons/yr. The state emitted just over 440 million tons of CO2 in 2015, according to the California Air Resources Board. Emissions from oil and gas extraction -- about 20 million tons in 2015 -- represent 22% of 2015 industrial sector emissions. Belridge Solar will cut California's carbon emissions from oil and gas production by around 2%.

California's cap-and-trade program and low-carbon fuels standard help make the economic case for the project. Using solar power instead of burning gas for EOR provides Aera an opportunity to reduce the number of GHG emission allowances it needs to purchase.

Approximately 14% of the state's gas consumption is used for oil production, according to Timothy O'Connor, director of the Environmental Defense Fund's California oil and gas program. "There are a number of opportunities to reduce pollution across California and this is one of the best examples of the types of projects that can be driven by the cap and trade and LCFS programs," he said in a Friday phone call. "Aera partnered with GlassPoint on this project in part due to California's Cap and Trade and Low Carbon Fuel Standard (LCFS) programs, which create market-based incentives for companies to reduce greenhouse gas emissions," O'Donnell said.

The cap and trade program prices carbon at $15/ton and LCFS emissions reduction credits are currently at $100/ton.

"This project shows how market-friendly climate policies like California's LCFS can effectively reduce greenhouse gas emissions," O'Donnell said. "We hope to plan and execute more projects like Belridge Solar elsewhere in California and any other jurisdiction with similarly supportive climate policy."

Getting Aera Energy as a customer is a strong "seal of approval" for the technology's commercial viability, Raymond James analysts said in a Thursday note to clients. They added that solar enhanced oil recovery operations can compete with gas prices in the range of $3/Mcf to $4/Mcf and the technology could be "bearish for natural gas demand."

--Jared Anderson, jared.anderson@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com




Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.