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Economic co-optimization of oil recovery and CO2 sequestration

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  • Wang, Xiao
  • van ’t Veld, Klaas
  • Marcy, Peter
  • Huzurbazar, Snehalata
  • Alvarado, Vladimir

Abstract

Drawing on techniques from both petroleum engineering and economics, we analyze how oil fields that use CO2injection to enhance oil recovery are likely to respond to CO2 storage incentives by “co-optimizing” oil recovery and CO2 sequestration. We focus specifically on predicting the CO2-injection path that co-optimizing operators will choose, and on how sensitive this path and the cumulative oil production and CO2 sequestration resulting from it are to variation in the oil price and CO2 subsidy. A study by Leach et al. (2011), which to date is the only rigorous economic study of co-optimization, addresses these questions using an ad hoc reservoir model. Our study applies Leach et al.’s analysis to dynamic reservoir-simulation models of two different oil fields. We find that, even though Leach et al.’s assumptions about how a reservoir responds to CO2injection are quite far off the mark quantitatively, their main findings hold up remarkably well qualitatively.

Suggested Citation

  • Wang, Xiao & van ’t Veld, Klaas & Marcy, Peter & Huzurbazar, Snehalata & Alvarado, Vladimir, 2018. "Economic co-optimization of oil recovery and CO2 sequestration," Applied Energy, Elsevier, vol. 222(C), pages 132-147.
  • Handle: RePEc:eee:appene:v:222:y:2018:i:c:p:132-147
    DOI: 10.1016/j.apenergy.2018.03.166
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    References listed on IDEAS

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    1. Leach, Andrew & Mason, Charles F. & Veld, Klaas van ‘t, 2011. "Co-optimization of enhanced oil recovery and carbon sequestration," Resource and Energy Economics, Elsevier, vol. 33(4), pages 893-912.
    2. Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, August.
    3. Tapia, John Frederick D. & Lee, Jui-Yuan & Ooi, Raymond E.H. & Foo, Dominic C.Y. & Tan, Raymond R., 2016. "Optimal CO2 allocation and scheduling in enhanced oil recovery (EOR) operations," Applied Energy, Elsevier, vol. 184(C), pages 337-345.
    4. William Ampomah & Robert S. Balch & Reid B. Grigg & Brian McPherson & Robert A. Will & Si‐Yong Lee & Zhenxue Dai & Feng Pan, 2017. "Co‐optimization of CO 2 ‐EOR and storage processes in mature oil reservoirs," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 7(1), pages 128-142, February.
    5. Ampomah, W. & Balch, R.S. & Cather, M. & Will, R. & Gunda, D. & Dai, Z. & Soltanian, M.R., 2017. "Optimum design of CO2 storage and oil recovery under geological uncertainty," Applied Energy, Elsevier, vol. 195(C), pages 80-92.
    6. Cuevas, Antonio & Febrero, Manuel & Fraiman, Ricardo, 2006. "On the use of the bootstrap for estimating functions with functional data," Computational Statistics & Data Analysis, Elsevier, vol. 51(2), pages 1063-1074, November.
    7. Klokk, Ø. & Schreiner, P.F. & Pagès-Bernaus, A. & Tomasgard, A., 2010. "Optimizing a CO2 value chain for the Norwegian Continental Shelf," Energy Policy, Elsevier, vol. 38(11), pages 6604-6614, November.
    8. Welkenhuysen, Kris & Rupert, Jort & Compernolle, Tine & Ramirez, Andrea & Swennen, Rudy & Piessens, Kris, 2017. "Considering economic and geological uncertainty in the simulation of realistic investment decisions for CO2-EOR projects in the North Sea," Applied Energy, Elsevier, vol. 185(P1), pages 745-761.
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    Cited by:

    1. Chen, Bailian & Pawar, Rajesh J., 2019. "Characterization of CO2 storage and enhanced oil recovery in residual oil zones," Energy, Elsevier, vol. 183(C), pages 291-304.
    2. Roussanaly, S. & Aasen, A. & Anantharaman, R. & Danielsen, B. & Jakobsen, J. & Heme-De-Lacotte, L. & Neji, G. & Sødal, A. & Wahl, P.E. & Vrana, T.K. & Dreux, R., 2019. "Offshore power generation with carbon capture and storage to decarbonise mainland electricity and offshore oil and gas installations: A techno-economic analysis," Applied Energy, Elsevier, vol. 233, pages 478-494.

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