Regional Assessments of the Economic Barriers to CO2 Enhanced Oil Recovery in the North Sea, Russia and GCC States

 The use of CO₂ for enhanced oil recovery (EOR) is a well established commercial practice in the United States where it has been used for over 40 years. There is widespread potential for CO₂-EOR in other mature petroleum producing regions. If CO₂-EOR could be implemented it would offer an economic stimulus to develop CO₂ storage. There are, however, a number of barriers, not least the installation of infrastructure and modifications that would be necessary to supply CO₂ and inject it into target reservoirs. This study has looked at the challenges faced by the prospect of CO₂-EOR in three regions: the North Sea; Russia; and the Gulf Cooperation Council (GCC) states which is a regional political organisation comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In addition to the technical challenges the study included two hypothetical examples, one based on the North Sea and the other in a GCC state, to explore what economic conditions would be necessary for CO₂-EOR to be implemented. The most significant factor that influences of CO₂-EOR uptake is the prevailing price of oil. The injection rate, capital expenditure (CAPEX), operational costs (OPEX) and tax incentives are of secondary importance. Despite the challenges posed by this form of EOR there is growing interest in its use in Saudi Arabia where and Saudi Aramco launched the Uthmaniyah CO₂ EOR demonstration project in July 2015. There are also plans for CO₂-EOR in China for a potential project offshore Guangdong Province.

Key Messages:

• Approximately 95% of all CO₂ EOR activity takes place in the U.S., and in 2010, CO₂ EOR projects were producing approximately 300,000 barrels of oil per day, close to 4% of total U.S. oil production. To achieve this quantity of oil, approximately 60Mt of CO₂, is injected annually into oil fields.
• Investment in CO₂ EOR is highly constrained by the volatility of the price of oil. For EOR projects to remain profitable over their operational life the cost of supplied CO₂ supplied needs to fluctuate.
• Offshore production relies on fewer deviated wells with less spatial coverage of producing areas which is less advantageous for CO₂ EOR compared with onshore 5 or 9 spot closely-spaced injection and production well configurations commonly used in North America. This configuration provides a higher density and control for EOR operations.
• Experience with CO₂ EOR shows that the projected incremental recovery ranges from 7% to 23% of Original Oil in Place (OOIP). Estimates for CO₂ EOR recovery rates for the North Sea range from 4 – 18%.
• Based on previous estimates of suitable fields, and a 3 barrel/tonne of CO₂ recovery rate, the estimated incremental oil potential for the Norwegian sector could be 3,535 M barrels that would require 1,180 M tonnes of CO₂. In the UK sector an additional 2,520 M barrels could be recovered with 840 M tonnes of CO₂.
• The main factors that currently inhibit investment in offshore CO₂ EOR are the upfront investment costs, loss of oil production during work-overs and lack of significant CO₂ volumes.