CCS IN MATURE OIL- EOR.pdf

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Copyright 2005, Society of Petroleum Engineers Inc.

This paper was prepared for presentation at the SPE Europec/EAGE Annual Conference heldin Madrid, Spain, 13-16 June 2005.

This paper was selected for presentation by an SPE Program Committee following review ofinformation contained in an abstract submitted by the author(s). Contents of the paper, aspresented, have not been reviewed by the Society of Petroleum Engineers and are subject tocorrection by the author(s). The material, as presented, does not necessarily reflect anyposition of the SPE, their officers, or members. Electronic reproduction, distribution, or storageof any part of this paper for commercial purposes without the written consent of the Society of

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Abstract

The mitigation of environmental problems requires bothnational and international agreements, since they have

possible global effects. In nationwide conventions (such asRio, 92; Kyoto Protocol, 1997), a common conclusion has

been the need to reduce greenhouse emissions, especiallythose due to CO2 from burning fossil fuels. For example,

Kyoto protocol has established that industrialized nationsshould reduce their emissions over 2008-2012 by at least 5.2%compared with the 1990 levels. An alternative USA proposalis based on reducing greenhouse emissions by capturing andstockpiling CO2in natural sites like oceans, caverns, depletedoil reservoir, etc. This paper presents a physical descriptionand an economic analysis of a project to capture and injectCO2 in oil production and its storage in the depleted oilreservoir located in a mature field in Brazil. The Stella

Software has been used in order to analyze de dynamics of thewhole process of CO2sequestration in enhanced oil recovery,considering each step of the process with its respective energyrequirements. The main findings of this have the following

benefits: i) reduction in the emission of CO2; ii) extension ofthe operational life of the reservoir; and iii) improvement anddevelopment of technology to promote EOR in mature fields.Results indicate that project NPV is around US$ 3.2 million,what is significant for a small mature field. Additionally, itcontributes by removing greenhouse gases (GHG) from theatmosphere by storing 0.73 million tons of CO2over a periodof 20 years. Project feasibility, as expected, was found to bevery sensitive to oil price, oil production, and CAPEX.

1Introduction

Carbon dioxide (CO2) produced from combustion of fossil

fuels has been increasing intensively, as can be seen in Figure

1. The concerns with the emission of CO2and other pollutantsdiscussed in several forums demonstrate the importance of astabilization scheme of these gases, although there is muchuncertainty regarding the impacts of these GHG emissions andglobal warming. The meetings of more impact were United

Nations Framework Convention on Climate Change (Rio-92),carried out in Rio de Janeiro in 1992, and the Kyoto Protocolcarried out in 1997, the first international treat designed tostabilize greenhouse gas emissions.

One way to stabilize these emissions is through CO2sequestration. This policy is attractive because it has theadvantage of maintaining the use of fossil fuels while reducingthe CO2 concentration levels in the atmosphere. Thetechnology of CO2 sequestration consists of capturing CO2from an anthropogenic source of emissions, followed bycompression, transportation, and storage in anenvironmentally acceptable place.

Regarding the effective reduction in CO2 emissions into

the atmosphere, it should be evaluate if more CO2 is storedthan the CO2emitted from the process of CO2sequestration inorder to certify that in fact reduction in emissions of the GHGis occurring.

Taking this in consideration, possible sites and methodsfor CO2 storage include: depleted oil and gas reservoirs,aquifers, oceans, forests, enhanced oil recovery (EOR) andenhanced coalbed methane production (ECBM).

In spite of the several possibilities for storing CO2mentioned above, some barriers should be overcome tostimulate the adoption of CO2 sequestration procedures. The

first requirement is to reduce the high costs of the each step ofthis mitigation option. The urgent need for reducing currentcosts (mainly costs of capture) depends on further researchand development into CO2 sequestration, as well as, theincentive of mechanisms such as the ones proposed by theKyoto Protocol, which will create more opportunities for costreduction. If the carbon credits are internalized, the costs ofCO2 sequestration will be offset and sequestration may

become attractive. It may also be necessary to implement aCO2 tax regime in order to generate incentives for thereduction of CO2 emissions into the atmosphere. If noincentives are provided, capture and disposal methods maynever be used

1.

SPE 94181

CO2Capture and Storage in Mature Oil Reservoir: Physical Description, EOR andEconomic Valuation of a Case of a Brazilian Mature Field

A.T. F. S. Gaspar, SPE, G.A.C. Lima, SPE, and S.B. Suslick, SPE, State U. of Campinas


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2 SPE 94181

Under a stand-alone economic return basis, enhanced oilrecovery method (EOR) tends to be an attractive geologicdisposal option for CO2

2. EOR can combine in some situations

economic and environmental objectives.

CO2 sequestration has already been practiced in someplaces around the world as the case of Calgary- developed by

an independent oil and gas producer, which has implemented alarge-scale EOR project in south-eastern Saskatchewan inorder to study the mechanisms, reservoir storage capabilityand economics of CO2sequestration in oil fields

3. CO2for this

project has been supplied by a coal gasification planttransported through a 325-km pipeline.

This paper is focused on the utilization of CO2 forenhancing oil recovery in a mature oil reservoir. The mainobjective is to provide an overview of the process, costs ofCO2 sequestration and to analyze the economic feasibility ofsequestrating CO2 in reservoirs submitted to EOR operationsin a typical Brazilian mature oilfield.

This paper is organized as follow: Section 2 presents thecurrent carbon market conditions. In section 3, general aspectsof the economics of CO2 sequestration are presented. Nextsection, the main concepts about EOR are described, followed

by the methodology for the economic analysis in section 5.The next section provides a case study of a mature oilfieldincluding the energy requirements of the EOR process. Resultsare analyzed in the final section.

2 Carbon Market

Kyoto Protocol established that developed countriesindividually or jointly would have to reduce at least an

average of 5.2% bellow the emissions level in 1990, duringthe period 2008-2012. As developed countries were the

pioneers in the industrialization, so the first to use fossil fuels,the convention notices that the larger part of global, historicaland current greenhouse gases emissions is originated indeveloped countries. Moreover, the developing countries donot have obligations to reduce greenhouse gases4.

To fulfill the agreement proposed by the Kyoto Protocol,some flexible mechanisms were introduced, such as:

Clean Development Mechanism (CDM) Join Implementation (JI) Emission Trading (ET)Join Implementation and Emission Trading are

exclusively to developed countries. The joint implementationand the tradable certificate are the exchange of credits amongdeveloped countries that establish the limits of the right to

pollute". The clean development mechanism is nothing lessthan the right of a developed country to pollute the atmospherein change of an investment in developing countries in cleanenergy or projects that remove carbon from the atmosphere.

With the development of systems for trading CO2credits,GHG emissions will likely be reduced. As the market ofcredits evolves, it will be there incentives for the applicationof CO2 sequestration policies, as well as an improvement inthe economics of the process.

No common standards have yet been developed,although trading systems for CO2credits trading are emergingworldwide. According to the estimations from the WorldBank, in 2002, worldwide trading in CO2 emissions reached67 million tons. It is expected that the total market valuereaches US$ 10 billion annually by 2008

3.

According to Springer5, some models of CO2 trading

among Kyoto Protocol partners with emission caps, assumethat the price of credits ranges from US$ 0.80 to US$20.20/ton CO2. However, with prices at these levels, the valueof CO2credits may well not be sufficient to enable all the CO2sequestration projects to enter the market place.

In the literature, it can be seen that prices of CO2creditsvary widely. This can be attributed to the differentassumptions. As cited by Kallbekken and Torvanger

6, the

prices of the credits are difficult to be estimated. Such priceswill depend strongly on the policy assumptions that are made,such as, the size of the emission reductions to be undertakenand the availability of mitigation options.

The prices of CO2 credits will indicate if CO2 is an

economic attractive option. If carbon price is greater than zero,capture and disposal methods will become attractive andshould be used.

3 General Economic Aspects of the CO2Sequestration Process

One of the challenges to be overcome in the implementationof a sound CO2 sequestration policy is the high cost of thewhole process. Investment costs (CAPEX) and operating costs(OPEX) of CO2sequestration can be split into 4 components:

Capture,

Compression,

Transportation, and

Storage.

Each component is described here separately. Usually,costs (CAPEX and OPEX) of CO2sequestration are estimated

between US$ 40 and US$ 60 per ton of CO2 avoided7,

depending on the methodology used in the capture process, theamount of required compression, the distance from the sourceto the storage site, and the site characteristics where CO2 isgoing to be injected.

These costs mentioned above present large variability. Asindicated by Gough and Shackley8, in many cases, thevariability reflects different assumptions about fuel prices,discount rates, specific technologies, and different elements oftotal costs besides being site-specific, becoming difficult adirect comparison of the costs. By convention, someorganizations like the IEA Greenhouse Gas R & D Programmeincorporate the cost of compression into cost of capture9impeding direct comparison with just capture or compressioncost components. In this section, costs of each step of CO 2sequestration process are briefly described.


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SPE 94181 3

3.1 CAPEX and OPEX of Capture and Compression

A great contribution to the total cost formation in thesequestration system comes from the capital and operationcost for the compression, associated cooling and dehydrationequipment

10.

For estimating compression costs, the amount ofrequired compression and the unit costs of compression should

be considered. However, these two elements can vary fromproject to project. Great part of the cost is associated with theuse of electricity. In addition, compression costs areconsiderably higher for small flows

11. Costs of compression

vary from US$ 7.4 to 12.4/tonne11

.

In addition to the compression costs, one issue whichcauses concern is the high cost of capture. The economics ofCO2 sequestration is dominated by the cost of capturecomponent (the dominant parameter for the currenttechnology) and has been one of the key barriers to the

introduction of CO2sequestration technology9

.

OPEX of capture depends on labor, maintenance,purchase of chemicals, etc. In case of solvent scrubbing plants,the cost of solvent for make-up purposes should beconsidered9.Capture costs depend on the amount of CO2to becaptured, CO2 concentration and pressure in the stream ofemissions source, and the nature of the capture process(chemical or physical absorption, chemical or physicaladsorption, membranes, cryogenic fractionation, etc.).CAPEX of capture is associated with the equipment requiredsuch as absorption columns, for instance.

As previously mentioned, the barrier concerning highcosts can be attenuated since there are some sources suitablefor capturing CO2 at lower costs as the recovery of CO2 fromindustrial processes which provides higher concentrations,consequently requiring less energy. As cited by Lysen12, ifCO2is nearly pure, at best, only dehydration and compressionmay be required before transportation. Farla et al

13mentioned

that so far, little attention has been given to CO 2 recoveryfrom industrial processes, although large amounts of CO2 areemitted at high concentration by few industries. Table 1

presents CO2capture and compression data for these cases andfor those with higher costs. Data are from Farla et al

13 and

Hendriks14

.

3.2 CAPEX and OPEX of Transportation Cost

For large quantities and long distances, CO2is most commontransported via pipeline. However, very long distances can

become a barrier for the implementation of CO2sequestration.Trucks can be used for reduced quantities and short distances.Ships can be an alternative to offshore pipeline transport,mainly when CO2 has to be transported over large distances

15.

Some factors should be considered for estimatingoperating costs for transportation of CO2 by pipeline: CO2flow rate and distance from the source to the storage site. Thecosts for transportation are likely to be reduced when largescale of operation is deployed. For capital costs, the following

parameters should be considered: pipeline geometry (internaldiameter), terrain characteristics, for example if it is amountainous area, because it would lead to higherconstruction costs. Population density should also beconsidered, since higher safety is required for populated areas(i.e., more valves required) which may increase costs

11

considerably.

Considering these issues, transportation cost can varysignificantly for different projects. Table 2 presents somefigures from the literature

16,17 of CAPEX and OPEX of

transportation via pipeline.

3.3 CAPEX and OPEX of Storage

Cost components for CO2 injection into storage sites includemainly CAPEX for drilling wells, and costs related to theoperation and maintenance of the system18. The compositionof total storage cost includes: location, injection costs,reservoir depth, average temperature, reservoir radius,

monitoring, flow rate and the value of saleable products (forinstance, the revenues from enhanced hydrocarbon recovery).

Due to so many parameters mentioned above, cost ofCO2 storage cannot be estimated with certainty since largevariations can occur in these parameters. For example,

Nguyen and Allison18

pointed out that in most CO2 storagecases in geological reservoir, costs range from below US$ 5 toabove US$$ 20 per ton. Onshore storage is generally lessexpensive than offshore storage. Offshore drilling costs arehigher. Surely, costs vary considerably from project to

project11.

In some cases (as the case study of this paper), there areopportunities for storage at small cost or even net benefits, bymeans of improving oil or gas by injection of CO2 into thereservoir resulting in some offsetting income. Such casesinclude the application of CO2in EOR and ECBM. EOR can

be attractive from the economic point of view since thismethod can lower the costs of CO2sequestration significantly.However, ECBM option is more expensive since it requires alarge number of wells

11. In addition, CO2 storage in coalbeds is

still in the early stage of development.

Besides the advantages due to revenues of CO2EOR it isworthwhile to know that the cost of construction and operation

injection wells contributes with only a small portion of thetotal cost for the system10

.

4 Enhanced Oil Recovery

As many oilfields approach an advance stage of maturity,enhanced oil recovery must be considered, in order torecovery more oil from the reservoirs, extending the fieldlifetime. Using CO2 in EOR methods may help to reduceemission of GHG into the atmosphere if CO2is captured fromanthropogenic sources. Technical expertise about CO2injection in oil reservoir already exists. Storage of CO2 inreservoirs submitted to EOR operations is a directconsequence of CO2utilization.


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SPE 94181 5

Moreover, according to Sathaye and Meyers29, generallyin developing countries the World Bank uses discount rates of8 12% for economic analysis.

The components of costs (CAPEX and OPEX) of CO2sequestration included in the discounted cash flow (Equation1) are estimated as follow:

The estimative of total CAPEX taking into account theinvestment in each step of a CO2 sequestration project isrepresented in Equation (2).

CAPEXt=CAPEXcap+CAPEXcomp+CAPEXtransp+CAPEXstor (2)

The total OPEX is estimating similarly to the CAPEXapproach according to Equation (3).

OPEXt=OPEXcap+OPEXcomp+OPEXtransp+OPEXstor (3)

Finally, the next step is to apply this methodology to aBrazilian mature oilfield.

6 Case study

6.1 Feasibility of CO2 injection in a depletedonshore reservoir

This study is based on a mature onshore standstone oilfieldlocated within the Reconcavo Basin in the northeastern part ofBrazil.This is a small basin where petroleum was discoveredin the late thirties. Moreover, light oil is produced from thefield. In addition, it is assumed that there is not productionwithout the application of EOR methods. Therefore, all

produced oil, which otherwise would not be recovered, is due

to the injection of CO2. Data were obtained from an expert inCO2-EOR. The main technical and economical characteristicsof the oilfield are shown in Table 3.

CO2 comes from a fertilizer industry. It will guaranteethe gas supply over the lifetime of the project. CO2 is a by-

product from ammonia production that normally would beemitted to the atmosphere. The gas is captured through theconventional chemical absorption technique based on hot

potassium carbonate. After captured, CO2 is compressed to asupercritical state, transported through a 78 km pipeline andutilized in the EOR project in the mature onshore oilfield. CO2flood extends over an area of 12 km

2. CO2is injected into the

reservoir at a depth of about 1800m. Reservoir permeabilityaverages 300 mD. Moreover, leakage of CO2in the project isnegligible here.

In this project, current expenditures on CO2transportation are: 20.000 US$ per km per in, in a paved road,i.e., the simulation includes an adequate infrastructure fortransportation of goods and services. The investments incompression are approximately US$ 3 million for powergeneration ranging from 2200 to 2400 HP.

For simplicity, a simple production profile with aconstant enhanced oil production over the total lifetime is

assumed. The EOR response is 0.34, or in other words, 0.34

tons of additional oil is produced for each ton of CO2injected.Also, it is considered here that well costs are not accounted inthe economics of this project, since these are already presentedin the field. Besides, cost of CO2 storage include costs ofseparation, compression and recycling of CO2produced alongwith the oil besides the small contribution of the costs ofmonitoring of CO2sequestration.

Moreover, it is also assumed that half of the amount ofCO2 injected remains stored in the reservoir. It is estimatedthat 3.65 MMbbl of oil will have been recovered, contributingto store 0.73 million tons of CO2 over the 20 years of thelifetime of the project.

Fiscal and economical assumptions used in this study areshown in Table 4. The cash flow is estimated using thefollowing assumptions: oil revenues based upon actual marketconditions, CO2 credits, project costs like fixed operatingcosts, variable operating costs, capital costs such as CO2capture, compression, transportation, storage, taxes like

income tax, COFINS/PIS, Government Take such as(royalties, rental area, etc). A discount rate of 12% is assumedfor the project. As discussed earlier in the previous section, thediscount rate reflects the opportunity cost of investing in this

project, which depends on worldwide market for CO2credits,the macroeconomic setting, oil field stage (marginal fields,etc.), among others. Moreover, depreciation of facilities hasstarted in the first year. In addition, abandonment costs aredepreciated from the fourth year.

6.2 Energy Requirements for EOR through CO2flooding

Normally, in the total process of CO2 sequestration, there is alittle amount of CO2 directly or indirectly emitted into theatmosphere because of the intensive use of energy in thecapture, compression, transportation and storage of CO2combined with enhanced oil recovery stages. CO2 isadditionally generated in these stages resulting in CO2emissions. Direct emissions result from the use of on-siteelectricity generation while indirect emissions result from theuse of off-site electricity generation.

In order to quantify these secondary emissions, it shouldbe considered each step where energy was used. Firstly, in thisstudy, stream source contains almost pure CO2 (approximately98%). In view of this, no significant quantities of CO2 areemitted in the capture process (no substantial amounts ofenergy to purify the stream are required). However, someemissions occur when CO2 is compressed, transported, andutilized in enhanced oil recovery operations. Substantialamounts of energy are needed to compress the CO2 to asupercritical state for pipeline transportation to the storagesite. In addition, EOR methods are highly energy intensive.Electricity, as well as natural gas is an important power sourcefor EOR operations

24.

In this particular case, the external power source for eachoperation is based on natural gas. Steam is also utilized fordrying CO2in the compression stage. The energy requirementfor each stage of this CO2EOR sequestration project, as wellas the emission factors from energy generation, was based on

published data. Emission factors depend on the composition of


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the fuel type consumed. For example, burning coal will releasemore CO2than will burning natural gas (117.080lbs/10

6Btu).

According to Farla et al13

, the carbon dioxide fromammonia production in the fertilizer industry instead of bevented may be compressed in a four-isentropic compression

process. The compression energy amounts to 393 kJ/kg-CO2.Most of the water will be removed in the first compression

stages. Additional drying consumes 8 kJ/kg-CO2of heat, andcooling takes 8 kJ/kg-CO2of electricity.

When CO2 is injected in EOR operations, it consumessignificantly more electric energy per barrel of oil producedthan thermal EOR methods, for example. CO2-EOR methodsrequire about 5 hp per barrel of oil per day. The electric powerfor gas EOR is required for pumping fluids from the wells,separating product from produced and break through gases,compression for gas injection and re-injection, and pumping

product to market and produced water to treatment and re-injection

24.

Some venting of CO2 is inevitable at various stages inthe life of an EOR project

24. For example, in the EOR

operation, CO2 is emitted because of the utilization ofequipments on-site, besides the utilization of energy outsidethe boundaries of the field. By the other hand, for EOR, it isutilized CO2 that otherwise would be vented to theatmosphere.

In this paper it is assumed a carbon dioxide emissionfactor of 51 kg-CO2/GJ, based on the fuel input in theelectricity production in the region of the project. The carbondioxide emission factor of 62 kg-CO2/GJ is assumed forsteam.

The StellaSoftware has been used in order to analyzede dynamics of the whole process of CO2 sequestration inenhanced oil recovery, considering each step of the process

with its respective energy requirements. Despite this is only apreliminary stage in the development of the model, significantoutputs were obtained for the evaluation of EOR dynamicsand CO2sequestration.

Emission factors and energy requirements of each stepof the project were used as inputs to analyze the net storage ofCO2in the active oil reservoir. Figure 2 shows a sample screenof the conceptual CO2 storage model located in the interfacelevel of the model.

This model can be applicable to any oil reservoir. Eachcomponent that should be used to estimate the net storage ofCO2 is described in details in the mapping level of theconceptual diagram illustrated in Figure 3.

7 Results and Discussion

It is important to keep in mind that the costs of CO2incorporated in the cash flow are in a CO2captured base, i.e.,the gross amount of CO2 stored. To incorporate eachcomponent of sequestration cost in a CO2 avoided base, it isnecessary to take into account the CO2 emissions generatedassociated with the energy use in each stage of CO2sequestration.

The NPV before taxes is US$ 6.95 million (US$

1.90/bbl), whereas the NPV including the CO2credits is US$

9.67 million (US$ 2.65/bbl). The effective NPV consideringthe government take (NPV after all taxes) was US$ 3.20million (US$ 0.86/bbl). It is important to highlight that if CO2credits had not been discounted it would be a gain of US$860,000 in the effective NPV, and then the effective NPVwould be US$ 4.00 million (US$ 1.10/bbl). A comparativeanalysis of NPV magnitude is shown in Figures 4a and 4b.

The NPV is a result of future cash flows under a staticscenario. Since the future is always uncertain, the NPV may

be considered as a random variable so that the confidencelevel in its mean value is not absolute. Uncertainties in

parameters such as oil price, carbon credits market, oilproduction, CAPEX, and OPEX were evaluated by means ofsensitivity analysis. Graphs for each input variable wereobtained in order to assess planning regarding CO2-EOReconomics optimization.

For the sensitivity analysis of NPV, the selectedvariables were submitted to a range of 50% of their original

input values, except the oil production value, which variedfrom minus 50% to 0 (because oil has been produced close toits limit). Table 5 lists the input variables with their ranges forthe sensitivity analysis. This range was based on data from theliterature. These uncertainties and variability reflectdifferences in assumptions and applications.

Figure 5a indicates the sensitivity of NPV in relation tooil price, oil production, CAPEX, and OPEX of capture,compression, transportation and storage, as well as CO2credits. In this project, it can be noted that uncertainties in theoil price and oil production, followed by CAPEX play animportant role in the total CO2 sequestration - EOR process

economics. However, in this hypothetical case, due to thelimited range of values considered (i.e., for the base casevalues assumed), the values of CO2 credits and OPEX ofcapture, compression, transportation, and storage are verysmall resulting in NPV relatively less sensitive to changes inthese variables. Taking this into account, CO2credits as wellas OPEX of capture, compression, transportation and storagewere isolated and submitted to an additional sensitivityanalysis. From figure 5b, it can be seen that CO2credits are asignificant parameter and an increase in the price results in anincrease in the NPV.

The sensitivity of NPV to these variables can be

exemplified as follow: a rise of US$ 1.00 in the oil price inputcan result in a NPV of about US$ 1.00 million higher from the

base case. While a reduction of US$ 1.00 million in CAPEXwould result in an increase of about US$ 860,000 in the NPV.An increase of US$ 1.00 in the value of CO 2credits parameterwould result in an increase of about US$ 187,000.

A risk analysis was also performed to simulate theperformance of the uncertain variables. The required inputparameters for the risk analysis are: oil price, amount ofinjected CO2, discount rate, capture cost, compression cost,transportation cost, and storage cost besides storage ratio. Therange of variation of the respective uncertain inputs variables

is presented in Table 6 via probabilistic distribution. For


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SPE 94181 7

example, oil price and discount rate uncertainty are modeledusing lognormal distribution, whereas the storage ratio ismodeled using normal distribution. Triangular distribution(min, median, max) were used for the OPEX of capture,compression, transportation and storage and amount of CO2injected parameters.

As a result of this simulation, a frequency of distributionof the NPV was obtained as illustrated in Figure 6. From thisfigure it can be seen that there is a risk of about 50% that the

NPV will be lower than its expected value. In addition, Figure7 shows that excluding the oil price, oil production andCAPEX in the risk analysis, the most significant parameter isCO2 credits. Figure 7 shows that OPEX of each step of CO2sequestration is almost an upright line, indicating a lowsensitivity.

The maximum financial exposure was in the beginningof the project, mostly because of high capital investments.

Nevertheless, the payback time occurred within six years,

which is relatively early considering the lifetime of thisoilfield.

The net storage of the CO2in the reservoir per kg of oilrecovered was also analyzed using Stella

software (the

storage of CO2 considering the energy requirements andrelated CO2emissions of the whole process).

It is assumed that 3.00 kg of CO2 are required forinjection in order to produce 1 kg of oil. The injected amountdepends on the characteristics of the reservoir. From thisrequired amount, 1.50 kg is supposed to remain in thereservoir, while the rest of the CO2is produced along with theoil. However, the net amount of CO2 stored per kg of oil

produced is about 1.32 kg oil, since CO2 is emitted from the

use of energy (an amount of approximately 0.18 kg of CO 2emitted per kg of oil produced). Despite that, it is stillworthwhile sequestering CO2 in active oil reservoirs becausein each kg of oil produced, 1.32 kg of CO2remains stored inthe ground, that is, in this project 0.18 ton of CO2 is stored per

barrel of oil produced. This result is in agreement with theavailable literature. According to Wilson et al

30, a net amount

of about 0.15 ton of CO2 is stored per barrel of oil, whileEspie

31reports a value of 3.3 barrels of oil for each ton of CO 2

stored in the Permian settings in the North Sea area, or 0.3 tonof CO2per barrel of oil. According to Stalkup

21, the net ratioin four field experiments varies between 0.17 and 0.78 tons

per barrel of oil, gross ratios are roughly twice as high.8Conclusions

The main barriers for the implementation of CO2 sequestrationare the high costs. However, increasing level of knowledgeand experience "learning by doing", and contributions of newtechnologies in the field of CO2 sequestration will probablyreduce these costs. Another obstacle is the general lack oftaxes or credit systems in most countries to support long terminvestments by companies in CO2 sequestration. These highcosts can be minimized combining CO2 sequestration withenhanced oil recovery, due to the revenues from the extra oilrecovered which can help to offset the costs of the process of

CO2sequestration.

Results from the project cash flow showed that the NPVis around US$ 3.2 million (US$0.86/bbl). Moreover the

project will contribute to store 0.73 million tons of CO2 thatnormally would be emitted into the atmosphere.

In addition, oil price, oil production and CAPEX playimportant role in the project feasibility. The sensitivity

analysis indicates that higher oil prices can incentiveinvestments in CO2 sequestration combined with EOR

projects. In this simulation, the value of CO2 credits can beconsidered small, not having a great effect on NPV. However,high values for CO2credits would have a significant impact inEOR coupled with CO2 sequestration projects. Oilfieldoperators can gain good returns sequestering CO2 in thereservoirs if the values of credits increase substantially. CO2sequestration can be economically viable if costs of CO2 can

be reduced and carbon credits increased. New marketmechanisms are necessary to create a climate for positiveinvestments in new technologies.

Finally it must be considered that not all the CO2injectedremains stored in the reservoir. Some of this amount is

produced along with the oil, recycled and the rest remainsstored in the reservoir. From this amount we should considerthe energy used to carry out all the process, from the capturein the emissions source to the storage site.

Acknowledgements

The authors gratefully acknowledge financial support for thisresearch from CAPES, CNPq, CEPETRO, and ANP. Prof.Roelof Boumans from the Gund Institute for EcologicalEconomics, University of Vermont, gave important insights

for the Stella Model.

Nomenclature

bbl= Barrel of Oil

C= Carbon

CAPEX = Capital Expenditure (Sum of all investments,except IW, and is considered linearly depreciable in10 years)

CAPEXt= Total CAPEX

CAPEXcap =CAPEX of Capture

CAPEXcomp= CAPEX of Compression

CAPEXtransp= CAPEX of Transportation

CAPEXstor= CAPEX of Storage

CO2= Carbon Dioxide

D= Total Depreciation

ECBM = Enhanced Coal Bed Methane Recovery

EOR= Enhanced Oil Recovery


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8 SPE 94181

GHG = Greenhouse Gases

IW= Investment accounted as costs

MMbbl= Million of barrels

NCF = Net Cash Flow

OPEX = Operational Expenditure

OPEXt= Total OPEX

OPEXcap = OPEX of Capture

OPEXcomp= OPEX of Compression

OPEXtransp= OPEX of Transportation

OPEXstor= OPEX of Storage

PIS=Social tax, directly charged over gross revenue

R = Gross revenue, given by k * p * q (where p is theprice of Brent Dated oil and q is the number ofbarrels produced in the considered year. Theconversion factor k depends only on oil quality(API, sulfur content, etc)

Roy=Total amount paid in Royalties

T =Corporate tax rate

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3. Waldie, K.: Carbon Sequestration: Defining the future of

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competitive?, CICERO Working Paper 2004:05, 2004.

6. Kallbekken, S. and Torvanger, A.: Can geological carbonstorage be competitive?; CICERO Working Paper2004:05, 2004.

7. Davison, J. E., Freund, P. Smith, A.: " Putting carbon backin the ground", published by IEA Greenhouse Gas R & DProgramme, Cheltenham, U.K., ISBN1 89837328, 2001.

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9. Freund, P. and Davison, J.: "General Overview of Costs",Proceedings of the IPCC workshop on carbon dioxidecapture and storage, Regina, Canada, 2002.

10. Smith, L. A., Gupta, N., Sass, B. M., and Bubenik, T. A.:"Engineering and Economic Assessment of CarbonDioxide Sequestration in Saline Formations". Journal of

Energy & Environmental Research, 2002, Volume 2,pp.5.

11. Ecofys & TNO NITG.: "Global carbon dioxide storagepotential and costs", report, n EEP 02001, 2004.

12. Lysen, E. H.: "PEACS - Opportunities for earlyapplication of CO2sequestration technology", IEA GHG R& D Programme, 2002.

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Covers. Mgmt. , 1995, Vol. 36, N 6-9, pp. 827.

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15. Wildenborg, A. F. B. and van der Meer, L. G., H.: Theuse of oil, gas and coal fields as CO2sinks. Proceedingsof the IPCC workshop on carbon dioxide capture andstorage, Regina, Canada, 2002.

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19. Hustad, C. W. and Austell, J. M.: Mechanisms andincentives to promote the use and storage of CO2 in theNorth Sea, Memo, CO2Norway, Kongsberg, 2003.

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Table 6: Input Parameters of Risk AnalysisUncertain Variables Selected Distribution Input Parameter Values

Oil Price (US$/bbl) lognormal mean = 25; standard deviation= 10Amount of CO2 Injected triangular 150; 200; 250Storage Ratio normal mean = 50%; standard deviation= 10%Discount Rate lognormal mean = 12%; standard deviation = 4%CO2 Credits lognormal mean=10; stand deviation= 5

Opex Transport triangular 6; 8; 10Opex Compression triangular 6; 7,5; 9Opex Storage triangular 1,5; 3; 4,5Opex Capture triangular 1,5; 3; 4,5

The values of the parameters referring to the triangular distribution are the optimistic, most likely and pessimistic ones, respectively.

Figure 2: Interface level: Basic Conceptual Conditions of the CO2Sequestration- EOR Process

Figure 1: Global CO2 concentration in the atmosphere (after UNEP/GRID-Arendal )


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Figure 3: Mapping Level of CO2 Sequestration in EOR operation simulated by Stella Model

0

0.5

1

1.5

2

2.5

3

Stand-alone

Tax NPV

NPV + Carbon

Credits

Effective NPV Effective NPV-

undiscountedcarbon credits

US$/bbl

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

Stand-alone

Tax NPV

NPV + Carbon

Credits

Effective NPV Effective NPV-

undiscounted

carbon credits

M

M

US$

Figure 4: a) Net Present Value of CO2Sequestration-EOR project; b) Net Present Value per oil barrel


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SPE 94181 13

-15

-10

-5

0

5

10

15

20

-60% -40% -20% 0% 20% 40% 60%

Variation

NetPresentValue(MMUS$)

Oil Price

Oil Production

CAPEX

Transportation

Cost

Compression

Cost

Storage Cost

Capture Cost

CO2 Credits

o

0

1

2

3

4

5

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%Variation

NetPresentValue(MMUS$)

OpexTransport

OpexCompress

OpexStorage

OpexCapture

CO2 Credits

Figure 5: a) Sensitivity Analysis of CO2Sequestration-EOR project considering all variables; b) considering OPEX and CO2credits

0%

10%

20%

30%40%

50%

60%

70%

80%

90%

100%

-30 -10 10 30 50 70 90 110

effective NPV (US$ Million)

Cumulative

ProbabilityofNPV

Figure 6: Distribution of Cumulative Probability of NPV


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