Economic and operational investigation of CO2 sequestration through enhanced oil recovery in unconventional reservoirs in Colorado, USA

Abstract

The ongoing CCUS commercial projects are highly relied on the support of government incentives due to massive capital investment. This study analyzes the economics of carbon capture utilization and sequestration (CCUS) projects, shows a state-wide CCUS deployment exercise, followed by simulation results of enhanced oil recovery (EOR) based CO2 storage in unconventional reservoirs. The comprehensive economic analysis of capture, transportation, sequestration costs, enhanced 45Q tax credits, and EOR revenue implies the practicality of CO2-EOR to offset the high CCUS costs. With the economics understanding, we study the top CO2 sources, existing CO2 pipelines, and sequestration sinks in the state of Colorado, USA. This paper next presents results from EOR simulation in one section of the unconventional Denver-Julesburg (DJ) Basin Niobrara and Codell reservoirs. The simulation model is based on a geological static model, incorporated with hydraulic fracture stimulation, history matched to production, and calibrated to the microseismic and time-lapse surface seismic data. The CO2-EOR simulation results show that oil production can be increased and more CO2 stored with: a longer primary production period; the presence of a shut-in period; higher injection rates; and multi-well injectors. The modeling results show that about 7–10 Mscf of CO2 will be stored when recovering 1 stb of EOR oil. By adding the enhanced oil revenue and the carbon credits together, it is estimated that the most economic case can generate $13 MM when oil price is assumed to be $80/stb, and the EOR oil revenue is 3.4 times greater than that generated from 45Q incentives. It corresponds to the scenario that a five-year primary production is followed by CO2 injection into four wells with the sequence of injection (4 MMscf/day for 6 months), shut-in (6 months) and production (12 months). The best practices in this study will provide valuable insights for similar CCUS projects in other unconventional fields. Furthermore, this study defines a term named “Carbon Neutrality Index (CNI)” by comparing the amount of CO2 stored with that burned by EOR oil. The CNI value of 0 indicates the enhanced oil is carbon neutral; a negative CNI value implies there is a net reduction in carbon emission. The 4-year huff-n-puff (HnP) simulation leads to a positive CNI value, indicating that the EOR oil generated in this process is not carbon neutral yet.