ENHANCED OIL RECOVERY (EOR) AS A STEPPING STONE TO CARBON CAPTURE AND SEQUESTRATION (CCS)

摘要

Fossil fuels compromising 85% of the world’s energy use are forecasted to dominate global energy supplies for decades to come. At the same time, carbon emissions mount year after year with potentially disastrous effects. The International Energy Agency (IEA) notes that the continued use of fossil fuels at current rates of consumption could increase average global temperature by more than 3.5°C by 2100 (IEA, 2014). On the flip side, the growth of enhanced oil recovery that utilizes CO_2 (CO2-EOR), especially in the US, has been curbed primarily because of limits on accessibility to affordable supplies of CO2. Environmental concerns about carbon emissions coupled with the oil industry’s need to secure additional CO_2 for EOR has sparked interest in the potential CO2-EOR may have in jumpstarting carbon capture and sequestration (CCS).CCS’ technical viability and capability of abating immense amounts of CO_2 per year makes it a strong contender in mitigating emissions. But, large-scale CCS projects have progressed far more slowly than is required to achieve climate change targets. Commercial deployment of CCS has been stunted from the lack of any significant carbon price coupled with the high cost of implementation, technological uncertainties in performance at the scale of commercial power plants and other stationary sources and the absence of guaranteed storage sites. While the oil industry’s infrastructure, expertise, and decades of experience in separating, transporting, injecting and securing CO_2 in underground oil reservoirs makes it a logical partner in initiating the transition from CO2-EOR to CCS.As we move to a world where atmospheric disposal of CO_2 is no longer free, policy makers, who will be influencing CO_2 prices, and oil companies, which will be reacting to them, all need more knowledge of the potential role that CO2-EOR transitioning to full scale CCS might play. As such, there exists an opportunity for a CO_2 market to develop where carbon capture facilities supply the CO_2 to EOR projects. As in any other market, we can assume that the interactions between players will influence the effectiveness of regulatory policies set to correct externalities. CO_2 typically considered a negative externality that needs to be regulated, has a market that values it as an input in production. We model how these opposing needs may be reconciled through effective regulatory policies.Many have studied EOR and CCS processes separately from either an engineering or economic policy aspect. Few have considered both aspects simultaneously; let alone in an appropriate dynamic optimization framework. We build on the limited previous work, with both the policy makers and oil producers in mind, by combining both aspects to investigate the practicality of wide scale implementation of CCS when partnered with CO2-EOR. We develop a two-stage dynamic optimization model that tracks total carbon movements during the CO2-EOR process and beyond oil production activities, when carbon continues to be sequestered. Our model of a profit maximizing producer at a single field level quantifies the impacts of various oil and carbon prices on the transition from CO2-EOR to CCS.