The Stunning Key That Could Unlock 160 Billion Barrels of Oil Trapped Underneath America

 

Photo credit: Flickr/Melissa 

It is estimated that there are 160 billion barrels of oil still trapped underneath this country in what are considered depleted oil fields. That's a tremendous amount of oil given that America uses about seven billion barrels of it each year. In fact, if we could only find the key to unlock this trapped oil we could extend fleeting our reserves by more than 22 years.

That's why it probably comes as a surprise to learn that we've already found the key we need to unlock this oil. That key is none other than discarded carbon dioxide, with the primary source of this practically prized greenhouse gas coming from none other than coal emissions. It's a stunning turn of events to say the least.

Cleaner coal and more oil, too
America has actually been flooding depleting oil fields with carbon dioxide since the 1970's. Most of the carbon dioxide used has come from naturally occurring sources. The problem is that carbon is costly as getting it from those sources to spent oil fields requires pipelines. But thanks to technological advances in carbon capture and storage we're beginning to see new investments that are directed to cleaning coal and using the captured carbon to produce more oil. It's this combination that has the potential to breathe new life into some of America's long dormant oil fields. 

A positive forward was taken when NRG Energy (NYSE: NRG  ) announced earlier this week that it began construction on a billion dollar retrofit to its East Texas coal-fired power plant. While the project is being underwritten in part by $167 million from the Department of Energy, NRG Energy sees it being self-liquidating as the carbon dioxide that is captured will be used to yield a 30-fold increase in oil production from an aging oil field NRG Energy also co-owns.

The reason production will surge is because carbon dioxide, which is injected into an oil reservoir, mixes with oil droplets that are left behind after initial production and expands the oil so that it can move through producing wells. The following slide shows how the oil recovery process works.

Source: Denbury Resources Investor Presentation (link opens a PDF

NRG Energy expects this process will improve the production at its West Ranch oilfield from a meager 500 barrels of oil per day to 15,000 barrels of oil per day at its peak. Put another way, at current oil prices that field will go from producing about $18.2 million worth of oil each year to well over half a billion dollars of black gold per year.

Meanwhile, the project will also substantially clean up the carbon emissions of NRG Energy's coal plant. About half of the flue gas that would typically be emitted into the atmosphere will go into the carbon capture facility, which will remove all of the sulfur as well as capture about 90% of the carbon. Because of that it will remove the equivalent of the exhaust of 336,000 cars each year.

Small steps
NRG Energy isn't the only company seeking to use captured carbon to clean up coal and fuel oil production. Denbury Resources (NYSE: DNR  ) is building its business completely around the enhanced oil recovery process. So far the company has produced over a hundred million barrels of oil through carbon flooding. However, it is investing to build out the necessary carbon dioxide transportation infrastructure to revive even more nearly dead oil fields.

While most of Denbury Resources investments have been to take naturally occurring carbon dioxide to these fields, the company is beginning to use more industrially produced and captured carbon in its Gulf Coast operations as noted on the slide below.

Source: Denbury Resources Investor Presentation (link opens a PDF

As that slide points out, Denbury Resources currently has three projects either currently producing or pending start-up. The most important is the upcoming Mississippi Power project from Southern Company (NYSE: SO  ) . The $5.2 billion power plant is the first large-scale plant in America that will transform coal into a gas, capture the carbon, and then sell it to Denbury Resources for enhanced oil recovery. If successful, Southern Company's plant should supply Denbury Resources with about 115 MMcf/d of carbon dioxide. Overall it is expected that the carbon captured from Southern Company's plant will be used to boost oil output by two million barrels per year.

Investor takeaway
There is an incredible amount of oil stranded in America in what are currently thought to be depleted oil reservoirs. But by using carbon dioxide captured by coal power generation, the energy industry will could breathe new life into these oil fields and revive production. It's a stunning turn of events that can provide Americans with cheap and cleaner coal-fired electricity as well as enough oil to get our nation off of OPEC's oil. 

OPEC is absolutely terrified of this game-changer
OPEC isn't afraid of carbon capture and storage. At least not yet. That's because it has its hands fully worrying about another game-changing technology in the energy patch. You can learn all about it in an exclusive, brand-new Motley Fool report where we reveal the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock.


Read/Post Comments (14) | Recommend This Article (39)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 20, 2014, at 5:37 PM, Mentallect wrote:

    First, the error of saying America uses "billions" of barrels of oil per day is trumped by the myth called "clean coal." All coal is dirty, and it cannot be cleaned.

  • Report this Comment On July 20, 2014, at 7:27 PM, KMRN wrote:

    @ Mentallect...and Fire came from the gods and the Earth is not only flat but the center of the universe. Locomotives cannot travel faster than 56 mph because it will suffocate the passengers, man will never fly, science has learned all it can about our world, the Earth is only 6000 years old, man cannot break the speed of sound, the Universe is only as large as the Milky Way Galaxy and my favorite.... "What use is an infant?"

  • Report this Comment On July 20, 2014, at 7:48 PM, GeaugaTruck wrote:

    Anyone who believes that coal cannot be burned cleanly has his head buried either in the sand or up his behind. It is simply a matter of economics. At some point it becomes more expensive to burn coal cleanly than to convert to natural gas. The desire on the part of tree-huggers to have zero emissions is what is throwing a monkey wrench in the works.

  • Report this Comment On July 20, 2014, at 7:55 PM, peterwolf wrote:

    How much of this is in California?? Because you can kiss that goodbye. The screwballs in that state will never extract it.

  • Report this Comment On July 20, 2014, at 8:07 PM, MoreBS wrote:

    It sounds like a win win, The tree huggers can continue to drive their cars and feel good about it. Synergy

  • Report this Comment On July 20, 2014, at 8:41 PM, bcweir wrote:

    1) Doesn't the name NRG Energy sound just a little bit redundant?

    2) Here's how to tell how much education has become politicized since the days I was in school 30 years ago.

    I was taught that trees respirate the reverse of how humans and animals do; they INHALE carbon dioxide and RELEASE oxygen. They also provide food and shelter for insects, animals, and HUMANS (wood is the most popular material for HOMES). They also prevent erosion of the soil, help absorb water and filter it to an extent through the root system. As much as 40 percent of the world's oxygen is supplied by trees and other plant life.

    These days, our children are taught NONE of that; instead that trees are just large vertical plants that have to be torn down because they obstruct vision, roads, building smog factories, etc. Or they're used as a label to denigrate anybody who shows even TOPICAL concern for the environment and the sustainability of our natural resources.

    Enjoy your dinner of carbon monoxide, MoreBS. Breathe deeply. :D

  • Report this Comment On July 20, 2014, at 9:00 PM, Vallinor wrote:

    Why are we trying to extract more oil when if we were to burn all that we've already got it would raise the global temperature 3 degrees centigrade? That's not opinion, that's fact. Don't believe me? ExxonMobil, which has in the past pursued and funded efforts to propagate the view that climate change isn't occurring at all, has taken the unusual step of publishing an entire report affirming its existence. The aim may be to assuage shareholders about the IPCC's dire climate findings, also released this week. That synthesis of the last six years' worth of climate research found that global warming threatens to do no less than destabilize human civilization as we know it.

    When legislation that sought to reduce carbon emissions threatened to pass Congress in 2009, Exxon spent more money lobbying against it than the entire clean energy industry spent lobbying in favor. Before that, it funneled hundreds of thousands of dollars to organizations that published scientifically-debunked materials claiming climate change wasn't real, or wasn't a problem. As recent as 2012, its CEO was still downplaying the threats posed by a warming world. That isn't exactly what most would consider to be "constructive dialogue."

    http://youtu.be/0KhDUz13kBc

  • Report this Comment On July 20, 2014, at 9:02 PM, NobodysFool111 wrote:

    Funding is being provided by taxpayers not the Department of Energy.

  • Report this Comment On July 20, 2014, at 9:40 PM, emailnodata wrote:

    Dear Motley Fool:

    "Stunning Key"???

    Next you'll be "Weird Trick" and, finally, "Kimye says"....

    Want to be taken seriously, kill the 13-year old teen headline.

  • Report this Comment On July 20, 2014, at 10:37 PM, Usurped wrote:

    Without coal, you anthropological climate change cultists wouldn't be enjoying the affluence, life expectancy or probably even been born. You're freaks indoctrinated without neo communistic greeny crap. Can't wait to meet you on the streets. You destroy liberty by your mere existence.

  • Report this Comment On July 21, 2014, at 1:08 AM, JNew wrote:

    22 years??? Whoopty-doo! That anyone is getting excited about a 22 year oil supply demonstrates the dire straits we are in. 22 years is NOTHING and who's to say U.S. consumers will get all of it? It's not as if it's going to be state-owned oil. How long are we going to delay the inevitability of switching to sustainable energy sources? Until we can't delay any longer? There WILL be a day on this earth when there are no fossil fuels left. (At least ones worth the cost of extraction.) There WILL be a day when emissions are much closer to zero simply because there will be nothing dirty left to burn. Why don't we just get on with the process of converting? (It's because there is a cheaper, more profitable energy source. Translation, the invisible hand endangers us all.) This inevitable transition is going to be so ugly. It already is. (Does it have to be? Or can we have a more proactive approach?) There are big incentives to speeding up the transition (an end to conflicts with oil as a root cause for starters) but I'm afraid those with the most power to do so (energy corporations) are those that are least likely to suffer if they fail to act. I think the writing is on the wall and I'm glad I won't be around to witness the worst of it. Everyone can go back to zoning out on their iPhones now.

  • Report this Comment On July 21, 2014, at 9:18 AM, fpl1954 wrote:

    There was a conference in Denmark last year where it was suggested that one solution to carbon capture was inject the exhaust from fossil fuel plants into depleted gas fields, which are fairly common near Denmark. Some scientist at the conference got up and informed everyone that it was not the solution it looked like. Bacteria that formed the methane (natural gas) in the depleted gas field were still there, and if they injected exhaust gasses from a power plant, that bacteria would turn it into methane. Although it would get rid of the carbon monoxide, it would create a far worse greenhouse gas, methane.

    I am sure that any oilmen in the room immediately left.

  • Report this Comment On July 21, 2014, at 12:31 PM, nomadd22 wrote:

    Carbon Dioxide flooding has always had disappointing results and is not much of an answer in any case.

  • Report this Comment On July 21, 2014, at 12:44 PM, t4 wrote:

    Good article and we should always be looking at new technologies to solve or develop answers to our problems. Whether this is one of them I don't know. But hyping a nascent technology with jingoistic rhetoric about OPEC makes no sense. OPEC is afraid of nothing like this. They could use it in their own fields which are becoming depleted. This country has this political myth that we are heavily "dependent" on foreign oil this is false. WE buy more than we locally produce - yes but it is a minority of our purchases. And the companies that are pumping the oil are American and European.

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