A Profitability Study of CO2-EOR and Subsequent CO2 Storage in the North Sea under Low Oil Market Prices

Abstract

A wide-scale application of CO2-enhanced oil recovery (CO2-EOR) in North Sea oil fields can have many advantages, especially when followed by CO2 geological storage. Under the current low oil prices though, even maintaining basic oil production is challenging. A techno-economic assessment is made of the Claymore oil field with the PSS IV simulator, focusing on uncertainty and investment risk. For a stochastic oil price ranging between 10 and 70 €/bbl, a stochastic CO2 revenue of -10 to 70 €/t and stochastic reservoir parameters, an average NPV of almost 500 M€ is obtained with a 73% chance on a positive NPV if the investment is made. Disregarding uncertainty relating to the underground by fixing the stochastic reservoir parameters, leads remarkably, but also erroneously, to a lower average NPV. Results also show that geological uncertainty is an important factor for determining the economic threshold level of an EOR project, and a proper assessment of the real uncertainties can make the difference between profit and loss. In case of assuming a fixed CO2 revenue at 30 €/t, the probability of implementing EOR becomes higher, but the average NPV and project success rate are significantly lower, at 300 M€ and 63% respectively. This demonstrates that a fixed CO2 tax is not a generic CGS enabling solution. It not well-weighted, it can hamper the deployment of certain technologies. A phase of CO2 geological storage (CGS) after oil production becomes economically interesting from a CO2 revenue of 17€/t. If such a price level can be guaranteed, then continuation of CO2 injection can reduce investment risk for both the EOR and CGS investment, reduces the investment hurdle, and can be a catalyzer for large-scale and widespread CO2 storage in Europe.