Regional assessment of the economic barriers to carbon dioxide enhanced oil recovery in the North Sea, Russia and GCC States

Publication Overview

The objective of this study is to explore the economic conditions that would be necessary for a CO₂ EOR project in the North Sea and in the Middle East. Traditional oil production can recover up to 20-40% of the original oil in place (OOIP). The application of an EOR technique, typically performed towards what is normally perceived to be the end of the life of an oilfield, can increase the cumulative recovery by an additional 5-15%. The investment decision for a CO₂ EOR project hinges on key factors relating to geological site suitability, capital and operational costs. A number of identified success factors for the well-established CO₂ EOR industry in the U.S. are listed below:

Publication Summary

• 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. 
• The widespread success of CO₂ EOR in the U.S. could potentially be extended to other petroleum provinces around the world where it is technically and economically feasible. CO₂ EOR also offers the prospect of providing a commercial driver to develop and expand CO₂ storage and even CCUS. 
• The main factor that will drive potential 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.
• 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. One example from this study, based on the North Sea, shows that the cost of CO₂ could be ~35 €/tonne if the price of oil reached US$150/bbl but it would need to drop to ~2 €/tonne if the price of oil fell to US$50/bbl. In an onshore Middle East location CO₂ could be supplied at a higher cost (€8.2/tonne) at this oil price.
• 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
• There is growing interest in CO₂ EOR in the Middle East. The Abu Dhabi National Oil Company (ADNOC) has implemented a CO₂ EOR pilot project into its Rumaitha oilfield and Saudi Aramco launched the Uthmaniyah CO₂ EOR demonstration project in July 2015.
• It is recommended that IEAGHG should conduct a follow up review of actual CO₂ EOR projects in Middle East and proposed projects in China (Offshore Guangdong Province) including the longer-term transition and/or incorporation of storage accounting / infrastructure development. An active watching brief should be maintained and when substantial information released its significance should be reported.
• A Review should also be conducted when North Sea developments reach an advanced stage particularly the deployment of subsea separation and injection systems and platform modification related to CO₂