{% hint style="info" %} For this section we use CO2e (carbon dioxide equivalent) as the main metric which depending on the source data could be CO2 (jargon: carbon), CH4 (methane) or BOE (Barrel of Oil Equivalent). Several conversions were needed from BBL (barrel of crude oil), MCF (1,000 cubic feet of natural gas) as well as BTU to BOE or CO2e. If you find any math errors please tell us. {% endhint %}
The Carbon Retirement Portfolio approach hits core systemic climate issues on the head by lowering oil and gas production and emissions while simultaneously restoring degraded lands.
Carbon Retirement Portfolios (CRP) are bundles of carbon emitting assets that are retired faster than the business-as-usual (BAU) retirement i.e. wells and rights that decommissioned or plugged sooner than BAU. (source World Economic Forum)
For Basin, the three main CRP approaches are:
- shorter term, lower production oil and gas wells,
- methane leaks from abandoned oil and gas wells and coal mines and
- buying mineral extraction rights and preventing extraction.
{% hint style="success" %} It should be noted that for this model we have an Oil & Gas partner that owns 850 wells, 300+ miles of pipelines and has an in-house plugging division. {% endhint %}
The size of the opportunity? There are over 3.2 million abandoned oil and gas wells in the US alone emitting the equivalent of 7.8M tonnes of CO2e per yearin. (Reuters) And there are approximately 100 abandoned coal mines that leak the equivalent of almost 3M tonnes of CO2e per year (EPA). This is over 10M tonnes per year.
The climate impact of this strategy is significant: methane is the second most important greenhouse gas after carbon dioxide. In fact, methane is 28–36 times more potent than carbon dioxide on a mass basis over a 100-year time period. (EPA)
Under this model the Basin network facilitates the acquisition of oil and gas rights (with and without real estate) and then calculates how many tonnes of carbon emissions are in the ground. We then permanently “retire” those potential emissions via legal agreements and well capping to prevent further extraction. These tonnes are monetized through sales of the CO2e as carbon credits and donation of the mineral rights for tax deduction. This approach can and will in most cases be combined with Ecosystem & Ecological Carbon and of course land restoration.
{% hint style="info" %} We are working with CarbonPath and MethaneRx to hone and refine these numbers and corresponding methodologies. The open source methodologies will be available for use by Basin Members and we are seeking comment and participation. Please contact us to get involved. {% endhint %}
Overall, more than half of U.S. oil and natural gas production comes from wells that produce between 100 barrels of oil equivalent per day (BOE/d) and 3,200 BOE/d. 80% of oil and natural gas wells produce less than 15 BOE/d.
U.S. Energy Information Administration
Older wells or those of lower quality would fall in the 15 BOE/d and these are our targets. The standard conversion is 1 bbl of oil is 6 MCF of Natural Gas; both equal 1 BOE.
For Oil, the EPA calculates there is on average .43 mtCO2e per barrel (bbl). Carnegie Endowment for International Peace calculates .475 to .770 mtCO2e bbl. As an example, TX and WY oil wells produce 16 bbl and 22 bbl per day respectively which is ~ 8 mtCO2e per day or 2,920 tonnes per year per well.
For natural gas burned as a fuel (not leaked) the EPA calculates there is 0.0551 metric tons CO2/Mcf. As an example, TX and WY gas wells produce 308 and 298 Mcf per day respectively which on average is 16.69 mtCO2e per day or 6,091 mtCO2e per year per well. (Using the BOE conversion, 300 Mcf is ~50 BOE which using the bbl to CO2e conversion is 21.5 mtCO2e per day or 7,847 tonnes per year.)
Using our target example of 15 BOE/d per well and using the EPA .43 CO2e factor is 6.45 tonnes per day. Annually this is 2,354 tonnes per year per well.
Using the US of 15 BOE/d here is the annual revenue potential of 100, 1,000 and 10,000 wells which is only a micro-fraction of the 1M active wells and 3.2M abandoned wells in the US. This does not include any Ecosystem Carbon sales.
Note that the top calculations are per year. The lower “Reserves” section shows approximately how many tonnes could be sold based on the number of Reserves in the well which could be sold upfront or sold over time.
It is also important to note that we are using low per tonne pricing as these would be considered “avoided emissions” or “emissions reductions” which historically have sold for lower prices. However, this could easily change in a high demand, low supply market as well work well as part of our High Quality Carbon strategy.
Separately from the above oil and gas numbers, we are also currently working on the calculations for other mineral rights such as coal and by-products like nitrous oxide N2O.