# U.S. POLICY

ANALYSIS FOR CARBON DIOXIDE ENHANCED OIL RECOVERY :

A CRITICAL DOMESTIC ENERGY, ECONOMIC, AND ENVIRONME NTAL OPPORTUNITY

—
DETAILED METHODOLOGY AND ASSUMPTIONS

May 25, 2012



# The Center for Climate and Energy Solutions (C2ES) and the Great Plains Institute (GPI) conducted an analysis, with extensive input from th e participants of National Enhanced Oil Recovery Initiative (NEORI), to inform NEORI’s recommendations for a federal production tax credit to support enhanced o il recovery with carbon dioxide

(CO 2 

# -EOR). In particular, C2ES and GPI explored the imp lications of the

recommendations for CO 2 

# supply, oil production and federal revenue. This d ocument describes the research, assumptions, and methodolog y used in the analysis. NEORI’s recommendations report, Carbon Dioxide Enhanced Oil Recovery: A Critical Do mestic Energy, Economic, and Environmental Opportunity, can be found at:

http://neori.org/publications/neori-report/

.

C2ES and GPI compared the likely cost of a federal ta x credit for greater CO 2 

### capture and supply with the federal revenues expected from applying existing tax rates to t he resulting incremental oil production. C2ES and GPI quantified two key relationships for CO 2 

### -EOR development and a related tax credit program:
1) Cost gap – the difference between CO 2 

### suppliers’
cost to capture and transport CO 2 

### and EOR operators’
willingness to pay for CO 2 

### . The goal of the tax credit is to
bridge the cost gap. Thus, the cost gap determines the expected level of the tax credit in a proposed compet itivebidding process.

2) Revenue neutrality/revenue-positive outcome the federal government will bear the cost of a CO 2 

### -EOR tax
credit program, yet it will enjoy increased revenues from the expansion of CO 2 

### -EOR oil production when existing
tax rates are applied to the additional production. C2ES and GPI analyzed when the net present value of expec ted revenues would equal or exceed the net present value of

program costs.National Enhanced Oil Recovery Initiative (NEORI)



### 2 

## FIGURE 1: Illustration of the Cost Gap and Revenue Neutral/Re venue Positive Outcome of Federal Production Tax Credit Program

*The “cost gap” is the difference between the cost to capture and transport CO 2 

### and what EOR operators are willing to pay for CO 2 

### **Net present value is the sum of annual tax revenu e minus annual production tax credit costs for each year of the production tax credit program, discounted for each year



### C2ES and GPI calculated the tax credit required to bridge the cost gap, and the cost and revenue implica

tions. C2ES and GPI developed input assumptions based on real-world physical and market conditions after consulting with NEORI participants and other industry experts and reviewing available literature. C2ES and GPI developed a core scenario based on “best guess” inputs and conducted several sensitivit y analyses of key inputs. C2ES and GPI demonstrated that a program can be designed that will become “revenue positive” (defined as when the federal revenues from additional new oil production exceed the cost of a carbon capture tax credit program after applying a discount rate to both costs and revenues) within ten years after tax credits are awarded. Sensitivity analysis reveals that the program remains revenue positive using a realistic range of likely
assumptions. 

### CO 2 

### TRANSPORTATION AND CAPTURE COSTS
Key Variables: CO 2 

### Capture Cost, CO 2 

### Transportation Cost,
Total Price of CO 2



### CO 2 

### capture and transportation costs determine the total price of CO 2



### .

• (Total Price of CO 2 

### ) = (CO 2 

### Capture Cost)
plus (CO 2 

### Transportation Cost)

The ultimate size of a federal incentives program wi ll be heavily influenced by the total price of CO 2 

### (capture costs plus transportation costs). Capture and
transportation costs vary among CO 2 

### suppliers, who

will bid for tax credits based on how much it costs to bring their CO 2 

### to market. Recognizing these cost differences among CO 2 

### suppliers, NEORI’s recommended federal tax credit program establishes separate tranches to incentivize different CO 2 

### supply sources. After consulting publicly available literat ure 

## 1. Production tax credit (PTC) closes the"cost gap"* 2. Incentivized

CO 2 

## supply leads to incremental EOR production 3. Tax revenue is

generated from incremental EOR production, while tax credits are awarded 

## 4. Over time, tax

revenue exceeds the cost of production tax credits 5. Revenue

neutral/revenue positive outcome achieved when net present value** becomes positiveAnalysis for Carbon Dioxide Enhanced Oil Recovery : A Critical Domestic Energy, Economic, and Environ mental Opportunity 

### 3



## FIGURE 2: Assumptions Regarding Carbon Capture and Transporta tion Costs for Different Technology Tranches

and consulting NEORI participants with industry expertise, C2ES and GPI made a best estimate of CO 2 

### capture and transportation costs for each CO 2 

### source

for its core scenario. NEORI’s core scenario used t he capture and transportation costs for each CO 2 

### supply source in the table listed below. Sensitivity analys is increased and decreased capture and transportation costs to reflect how changes in these key variables affect the year in which a revenue neutral/revenue positive outcome is achieved.



### CO 2 

### Transportation Costs

CO 2 

### transportation costs vary for different projects a nd across geographic regions. A literature review and consultation with NEORI participants suggested that the likely range of CO 2 

### transportation costs is $5 to $20 per tonne of CO 2 

### , but likely closer to $10. The core scenario assumed that transportation costs were $10
per tonne of CO 2 

### , and sensitivity analysis used $5 and $20 per tonne of CO 2 

### as low and high estimates of CO 2 

### transportation costs.



### CO 2 

### Capture Costs

CO 2 

### capture costs vary by CO 2 

### source. This is because

CO 2 

### capture technologies are in different stages of development and deployment. A literature review of publicly available sources and NEORI participant insight informed the selection of point estimates fo r

CO 2 

### capture costs. Appendix Table 1 lists the publicly available studies that informed NEORI’s analytic wo rk. The following list shows additional assumptions regarding CO 2 

### cost.National Enhanced Oil Recovery Initiative (NEORI)



### 4 Power Plant CO 2 

### Capture Costs - The CO 2 

### cost for a power plant with carbon capture can be calculated

either as a cost of avoided CO 2 

### emissions or a cost of captured CO 2 

### . Both calculations use incurred cost (the
calculation numerator) as the difference in leveliz ed cost of electricity ($/ megawatt-hour (MWhr))
between the plant with carbon capture and a referen ce plant (usually the same technology and configuration) without carbon capture. However, the two calculatio ns differ in the quantity of CO 2 

### (the calculation divisor)

associated with the cost. Avoided CO 2 

### (tonnes/MWhr)

is the reduction in CO 2 

### emissions per net MWhr with

CO 2 

### capture compared to the same reference plant

without CO 2 

### capture. The amount of CO 2 

### captured per net MWhr will always be greater than the amount of

CO 2 

### avoided per net MWhr because of the reductions in both net MWhr and efficiency when capturing CO 2



### . This also means that the capture cost per tonne of CO 2 

### will always be lower than the avoided cost per tonn e of

CO 2 

### . As an example, for first-generation coal plants with carbon capture, captured CO 2 

### may be 30%-45%
greater than avoided CO 2 

### . Since revenue and incentives will be based on the quantity of CO 2 

### that is delivered to EOR, the costs provided by NEORI are f or captured CO 2



### . Learning - CO 2 

### capture costs are unlikely to remain static over time. After pioneer, first-of-a-kind pro jects,

CO 2 

### capture costs are likely to fall as capture technology matures, and CO 2 

### suppliers learn from
building multiple facilities of a given type. A liter ature review (see Appendix Table 2) and insight from industry experts helped to determine an appropriate

estimate of cost decreases over time and with each
generation of CO 2 

### technology development.

Low-Cost CO 2 

### Source Aggregation - Many of the

lower-cost man-made sources are not much more expensive than the willingness-to-pay price for CO 2 

### at current oil prices. However, because the lower-cost

sources also tend to be small in volume, it is impractical to construct dedicated pipelines to ser ve only lower-cost sources except in some niche applications. It is assumed that if an incentive we re available at a sufficient level to bring on larger-vo lume, higher-cost sources, it would become possible to aggregate the lower-cost, smaller-volume industrial sources to bring them to market. NEORI’s analytic

work assumed that lower-cost CO 2 

### sources would receive a minimum tax credit amount depending on the observed willingness to pay.



### CO 2 

### SUPPLY OVER TIME
Key Variables: CO 2 

### Supply by Source

Projecting likely CO 2 

### supply over time is important for
projecting the size of an overall federal tax credit program. The availability of CO 2 

### is constrained by capture technology, pipeline capacity, time, and overall CO 2 

### potential. C2ES and GPI, with extensive input from NEORI participants, developed a realistic supply expansion scenario (See Appendix Tables 3a-3d). In terms of capture technology; power plants, low-cost industrial sources, and high-cost industrial sources each have different time horizons for development and deployment. For example, capture technology for low-cost industrial sources is closer to or already deployed at a commercial scale than capture technol ogies for power plant and high-cost industrial source s. In terms of pipeline capacity, the federal production tax credit will help cover the cost of
constructing new CO 2 

### pipeline networks across the country. Over time, these pipeline networks can

accommodate additional CO 2 

### capture projects, reducing future transportation costs and the level o f production tax credits needed for CO 2 

### capture.

In terms of time, CO 2 

### supply growth is constrained
on an annual basis, at least in the early years of the incentive program. Power plants and industrial

facilities take time and resources - material and financial - to complete, and, given current market conditions, it is unlikely for more than a few power plants or industrial facilities to go into operation in a given year during the early years of the program.

Over the longer term, capture technologies for both new-build facilities and retrofits are likely to be come available more broadly and at lower costs. CO 2 

### supplies
are projected to scale up rapidly after an initial deployment phase and approach the total available supply for a given CO 2 

### supply source.



### CO 2 

### DEMAND/EOR OPERATORS’ WILLINGNESS

TO PAY FOR CO 2 

### Key Variables: Oil Price, EOR Operators’ Willingnes s to Pay, Cost Gap, Annual Federal Production Tax Credit Cost s

In general, EOR operators obtain CO 2 

### through long-Analysis for Carbon Dioxide Enhanced Oil Recovery : A Critical Domestic Energy, Economic, and Environ mental Opportunity 

### 5

term contracts to ensure a reliable supply and a predictable price. Contracted prices for CO 2 

### are generally set by tying the price of CO 2 

### to the price of oil by a certain percentage (CO 2 

### prices are stated in

mcf of CO 2 

### ; multiplying a given mcf quantity of CO 2 

### by a factor of 18.9 expresses the CO 2 

### quantity in tonnes).

• (EOR Operators’ Willingness to Pay for

CO 2 

### ) =

(Price per Barrel of Oil) multiplied by

(Contracted Percentage of Oil Price for

mcf of CO 2 

### ) multiplied by

(18.9 mcf/tonne of CO 2 

### )

Oil Price - The U.S. Energy Information’s Administration’s Annual Energy Outlook’s 2011 “Reference Case” provided annual forecasts for the price of oil per barrel. Forecasts are not made pas t 2035, so post-2035 oil prices are assumed to be the price of oil in 2035 (See Appendix Table 4). Sensitivity analysis increased and decreased the annual oil pri ces by 20% to account for moderate shifts in forecasted o il
prices.

EOR Operators’ Willingness to Pay - EOR operators base their willingness to pay for CO 2 

### on the price of oil and usually enter long-term agreements to buy CO 2 

### at a certain percentage of the oil price. NEORI’s rese arch and consultation with oil industry experts revealed that contracted percentages usually range from 1.5 percent to 2.5 percent of the price of oil (per mcf of CO 2 

### ), taking into account project-specific transportation costs and the availability of other CO 2 

### supply sources. The core scenario assumed a willingness to pay percentage of 2 percent, which is considered the industry’s rule-of-thumb percentage. Sensitivity anal ysis assumed willingness to pay percentages from 1.5 percent to 2.5 percent of the price of a barrel of oi l.

Cost Gap - The cost gap is the difference between EOR operators’ willingness to pay for CO 2 

### and the total delivered price of CO 2 

### (expressed in dollars/tonne). NEORI’s proposed production tax credit was designed to overcome the cost gap and

enable CO 2 

### suppliers to bring man-made CO 2 

### to

market.

• (Cost Gap) = (Total Price of CO 2 

### ) minus (EOR operators’ Willingness to Pay for

CO 2 

### )

Multiplier - Capture cost estimates are based on a thirty-year operating period for power plants and a fifteen-year operating period for industrial facilit ies. However, NEORI recommends a 10-year production

tax credit, and a CO 2 

### supplier is expected to bid for an incentive amount that will help cover operating cost s

of CO 2 

### capture, compression, and transport after the tenth year of CO 2 

### production. To calculate a 10-year incentive that would cover a longer payback period f or

CO 2 

### suppliers, the cost gap was increased by a multiplier. Each multiplier represents a 15% internal

discount rate for CO 2 

### suppliers. Sensitivity analysis used multipliers that reflected lower and higher internal discount rates, or 10% and 20% respectively.



### COST GAP MULTIPLIER

Power Plants (30-Year Payback) 1.33

Industrial Facilities (15-Year Payback) 1.17

The equation below reflects the overall projected incentive to cover the cost gap.

• (Projected Tax Credits per Project) = (Cost Gap) multiplied by

(Cost Gap Multiplier)

In sum, CO 2 

### suppliers will bid for production tax

credits that will cover the difference between the EOR operators’ willingness to pay for CO 2 

### and their cost to produce CO 2 

### and bring it to market. CO 2 

### suppliers’

desired incentives are therefore a reflection of th e cost of investing in CO 2 

### capture, transporting CO 2 

### , and covering a longer payback period with a 10-year

incentive.

• (Annual Production Tax Credit Costs) = Sum of (Projected Tax Credits per Project, for all projects across all tranches) plus Sum of (Projected Tax Credits per Project, awarded in previous years)



### OIL PRODUCTION
Key Variables: Annual Oil Production

C2ES and GPI projected the incremental EOR oil production that results from incentivizing and increasi ng the supply of anthropogenic CO 2 

### . Assumptions for oil
supply and production resulting from new incremental

CO 2 

### supply were based on research by the Natural
Resources Defense Council and reviewed by Initiativ e participants. The analysis accounts for the multipl e phases of EOR production to project when the federa lNational Enhanced Oil Recovery Initiative (NEORI)



### 6 government is likely to realize revenues from incremental EOR production. As indicated in the assumptions list below, a CO 2 

### -EOR project’s annual oil
production will vary over its lifetime and reflect different development phases: initial injection, increasing production, plateau production, and declining production.



### Key Assumptions:
Oil production:

• After initial CO 2 

### injection, 1 year lag before oil production commences;

• 5 year ramp-up in oil production volume follows;

• 5 year plateau in oil production follows;

• 20 year decline in oil production follows; and

• After 30 years, oil production ceases.

CO 2 

### purchase use:

• Purchased CO 2 

### injected for first 10 years at 100%

(maximum level)

• Purchased CO 2 

### injections decline at 20% per year
after peak oil production

• Purchased CO 2 

### continues to be injected at 10% for
remainder of EOR project

• CO 2 

### injections cease at the end of 30 years

Once plateau oil production ceases, CO 2 

### that had been going to a project is redirected and used in different projects. The available amount of “redire cted”

CO 2 

### increases annually as an existing project uses less

and less CO 2 

### in late stages of development. The

addition of the redirected CO 2 

### supply to the CO 2 

### from a new source in a given year increases the amount of

CO 2 

### available for initial injection in later years. Th is leads to expanding oil production over time.

Net CO 2 

### Utilization Rate -Although EOR production takes place in several regions, most industry experience suggests CO 2 

### -EOR oil production will follow the production characteristics of CO 2 

### -EOR oil production in the Permian Basin. While the

characteristics of individual CO 2 

### -EOR projects vary, the

core scenario assumes a CO 2 

### net utilization rate of 0.4 tonnes/barrel of oil, which is typical for the Perm ian

Basin. The CO 2 

### net utilization rate is the amount of

tonnes of CO 2 

### needed to produce one barrel of oil. Sensitivity analysis used a range of CO 2 

### net utilization rates, from 0.28 to 0.7 tonnes per barrel, reflecting the
likely range of CO 2 

### utilization rates in projects across the country.



### FEDERAL REVENUE
Key Variables: Annual Oil Sales, Annual Federal Rev enue, Present Value of Federal Production Tax Credit Cost s and

Revenues
A federal tax credit program for CO 2 

### -EOR will
generate additional tax revenue as the new CO 2 

### supply
enables additional oil production, which will be ta xed at existing tax rates (the analysis assumes no tax changes other than the tax credit for CO 2 

### capture and
transportation for EOR). Over time, the net present value of this new revenue far exceeds the net presen t value of the cost of the tax credits provided for CO 2 

### -
EOR.



## FIGURE 3: Example of a Project’s CO 2 

## Injection/EOR Production TimeframeAnalysis for Carbon Dioxide Enhanced Oil Recovery : A Critical Domestic Energy, Economic, and Environ mental Opportunity 

### 7

Expected federal revenue from CO 2 

### -EOR
production was estimated by multiplying the total value of oil sales by the expected percentage of the value of a barrel of oil that the federal government

collects in revenue.

• (Annual Federal Revenue) = (Annual Oil
Sales) m ultiplied by (Percentage of Oil Sales Revenue Received by the Federal
Government)

Percentage of Oil Sales Revenue Received by the

Federal Government

- The federal government receives tax income from oil production through thre e main sources: corporate income taxes, royalties from oil production on federal land, and taxes on royalti es going to private individuals. First, corporate income resulting from EOR oil sales is taxed at typical fede ral corporate tax rates. Second, the federal government receives royalty payments for EOR production on

federal lands, which accounts for one in six barrels of oil produced in the United States. Finally, the fede ral government also taxes royalty income that private landowners receive from oil production on their lan d. Actual tax rates will vary for specific companies an d individuals, but the estimated percentage of the sal e of a barrel of oil that goes to the federal government i s 20 percent. The core scenario used 20 percent as the percentage of a barrel of oil that is received by t he federal government, and sensitivity analysis used 15 percent and 25 percent as the low and high range estimates for revenue received by the federal

government.
Annual federal production tax credit program costs and annual federal revenue are discounted to calcul ate present value.

Present Value of Annual Costs and Revenue

• PV of Annual Tax Credit Program Cost =

Cost

n 

### [ 1 / (1 + i) n 

### ]

• PV of Annual Revenue = Revenue

n 

### [ 1 / (1
+ i) n 

### ]

o i = discount rate

o n = program year Net Present Value of Federal Tax Credit Program:

• Sum of [(PV of Annual Revenue) - (PV of Annual Tax Credit Program Cost)] for all years of the program

Discount Rate - Both revenues and costs to the
federal government were discounted to determine the net present value of a tax credit program. All costs and revenues are in constant 2009 dollars. The Energy Information Administration’s Annual Energy Outlook 2011 Reference case provides oil prices in 2009 dollars, and capture costs from the range of available litera ture were usually presented in base year 2009 dollars. The Office of Management and Budget’s official discount rate is based on the interest rates on Treasury not es and bonds for specified maturities. To match the 2009 time period of oil prices and capture costs and the tenyear window for an incentive, the real interest rat e for 2009, 2.4 percent, was selected for this analysis. The core case scenario uses a 2.4 percent discount rate, and sensitivity analyses used discount rates of 2 percen t and 3.5 percent.

Revenue Impact

- The present value of annual

federal costs and revenues was calculated to determ ine 

### 0% 50% 100% 150% 200% 250%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35injection volume/projection rate



### Project Years 

# Purchased CO 2 

# /Oil Production

Oil

CO 2National Enhanced Oil Recovery Initiative (NEORI)



### 8 the production tax credit’s overall impact on the federal government’s budget. The tax credit program was considered to be “revenue-positive” in the year when the sum of present value annual revenues exceeded the sum of present value annual costs.

Additionality Sensitivity Analysis - In the core scenario, 100% of incremental oil production from

CO 2 

### -EOR is directly attributable to the federal production tax credit. Under sensitivity analysis, additional EOR production was reduced from 100% to 90%. The following equation was used in sensitivity
analysis:

• (Annual Federal Revenue) = (Annual Oil
Sales) multiplied by

(Percentage of Oil Sales Revenue Received by the Federal
Government) multiplied by (Percentage of

Additional CO 2 

### -EOR Incremental Oil
Production)Analysis for Carbon Dioxide Enhanced Oil Recovery : A Critical Domestic Energy, Economic, and Environ mental Opportunity 

### 9 

#  APPENDIX

TABLE 1: Publicly Available Studies on CO 2 

## Capture Cost Reviewed by NEORI

REFERENCE REFERENCE TITLE CO 2 

### CAPTURE COST LINK

EIA Assumptions to the

Annual Energy Outlook,

Oil and Gas Module from

NEMS All CO 2 

### Sources http://www.eia.gov/forecasts/aeo/assum ptions/pdf/0554(2011).pdf

IEA Cost and Performance of

Carbon Dioxide Capture

from Power Generation Power Plants http://www.iea.org/papers/2011/costper f _ccs_powergen.pdf

CURC TBD Power Plants Forthcoming, expected to be availa ble Spring 2012

SPE

International The Potential for

Additional CO 2 

### Flooding Project in the United

States All CO 2 

### sources http://science.uwaterloo.ca/~mauriced/e

arth691- duss/CO2_General%20CO2%20Seques
tration%20materilas/CO2_Mohan_Pote

ntial%20USA%20EOR%20CO2%20Pro jects_SPE-113975-MS-P.pdf

IPCC Table 3.7, p. 47 All CO 2 

### sources http://www.ipcc.ch/pdf/specialreports/srccs/srccs_chapter3.pdf

Lindsay Carbon Capture and

Storage in Industrial Applications (2010) (Synthesis from UNIDO) All CO 2 

### sources http://www.unido.org/fileadmin/user_m edia/Services/Energy_and_Climate_Cha nge/Energy_Efficiency/CCS_%20industr y_%20synthesis_final.pdf

RCI CO 2 

### Capture Transport

and Storage in Rotterdam

(2009) Hydrogen and Power

Plants http://www.rotterdamclimateinitiative.nl /documents/CO2%20capture%20and% 20storage%20in%20Rotterdam%20- %20a%20network%20approach%2020 11.pdf

HKS Belfer

Center Realistic Costs of Carbon

Capture Power Plants http://belfercenter.ksg.harvard.edu/pu bli
cation/19185/realistic_costs_of_carbon_ capture.html

Dooley On the Long-term

Average Cost of CO 2 

### Transport and Storage Transportation and Storage http://www.pnl.gov/main/publications/external/technical_reports/PNNL17389.pdfNational Enhanced Oil Recovery Initiative (NEORI)



### 10 

## TABLE 2: Publicly Available Studies on the Effect of Learni ng on CCS Cost Estimates Reviewed by NEORI

REFERENCE REFERENCE TITLE LINK

Herzog Scaling up carbon dioxide

capture and storage: From megatons to gigatons http://sequestration.mit.edu/pdf/Herzog_EnergyEcono mics_2011.pdf

Hamilton, Herzog,

Parsons Cost and U.S. public policy for

new coal power plants with carbon capture and sequestration http://www.sciencedirect.com/science/article/pii/S1 8

76610209009096

Chan, et al. Expert elicitation of cost,

performance, and RD&D budgets for coal power with

CCS http://www.sciencedirect.com/science/article/pii/S1 8

76610211003663

Lipponen, et al. The IEA CCS Technology

Roadmap: One Year On http://www.sciencedirect.com/science/article/pii/S1 8

76610211008502

IEA CO 2 

### Capture and Storage -

A key carbon abatement option http://www.iea.org/textbase/nppdf/free/2008/CCS_20 08.pdf

Al-Juaied,

Whitmore Realistic Costs of Carbon

Capture http://belfercenter.ksg.harvard.edu/files/2009_AlJu aie d_Whitmore_Realistic_Costs_of_Carbon_Capture_w eb.pdf

McKinsey & Company Pathways to a Low-Carbon

Economy – Version 2 of the

Global Greenhouse Gas

Abatement Cost Curve https://solutions.mckinsey.com/ClimateDesk/default.

aspxAnalysis for Carbon Dioxide Enhanced Oil Recovery : A Critical Domestic Energy, Economic, and Environ mental Opportunity 

### 11



## TABLE 3A: Core Scenario CO 2 

## Supply Growth (2013-2022)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Power

Plants Pioneer

- First of a Kind Projects ($/tonne) $70 $70 $70 $70 $70 $70 $70 $70

CO 2 

### Supply 3.9 4.26 6.89 10.96 11.94 13.02 13.63 14.28

Projects #2

- #5 ($/tonne) $60 $60 $60

CO 2 

### Supply 12.85 12.85 16.35

Nth of a Kind (Projects #6

- onward) ($/tonne)

CO 2 

### Supply

Cumulative Total CO 2 

### Supply 0.00 0.00 3.90 4.26 6.89 10.96 11.94 25.87 26.48 30.63

Low Cost

Industrial Pioneer

- First of a Kin d Projects ($/tonne) $38 $38 $38 $38 $38 $38 $38 $38 $38 $38

CO 2 

### Supply 1 1 1 1 5.5 5.5 5.5 5.5 5.5 5.5

Projects #2

- #5 ($/tonne) $38 $38 $38 $38 $38 $38 $38 $38 $38 $38

CO 2 

### Supply 0.85 0.85 8.45 17.45 17.45 17.45 17.45 17.45 17.45 17.45

Nth of a Ki nd (Projects #6

- onward) ($/tonne) $38 $38 $38 $38 $38

Natural Gas Processing CO 2 

### Supply 3 6 9 12 15

Ammonia CO 2 

### Supply 2 2 4 4 6

Ethanol CO 2 

### Supply 1 1 2 2 3

SNG/Gasification CO 2 

### Supply 1 1 2 2 2

CO 2 

### Supply Cumulative Tot al 1.85 1.85 9.45 18.45 22.95 29.95 32.95 39.95 42.95 48.95

High

Cost

Industrial Pioneer

- First of a Kind Projects ($/tonne) $65 $65 $65 $65 $65

Cement/Steel/Iron CO 2 

### Supply 1 1 1 1 1

Hydrogen CO 2 

### Supply 0.5 0.5 0.5 0.5 0.5

Refinerie s CO 2 

### Supply 1 1 1 1 1

New Build Gasification CO 2 

### Supply 1 1 1 1 1

Projects #2

- #5 ($/tonne) $55 $55 $55

Cement/Steel/Iron CO 2 

### Supply 1 1 2

Hydrogen CO 2 

### Supply 0.5 0.5 1

Refineries CO 2 

### Supply 1 1 2

New Build Gasification CO 2 

### Supply 1 1 2

Nth of a Kind (Projects #6

- onward) ($/tonne)

All High Cost Industrial CO 2 

### Supply

CO 2 

### Supply Cumulative Total 0.00 0.00 0.00 0.00 0.00 3.50 3.50 7.00 7.00 10.50

Total (All sources) 1.85 1.85 13.35 22.71 29.84 44.41 48.39 72.82 76.43 90.08

CO 2 

### supplies are listed in million tonnes. Prices are the $/tonne capture costs. Capture costs are only l isted for years when a production tax credit program might offer an incentive for a g iven CO2 supply source and technology development p hase.National Enhanced Oil Recovery Initiative (NEORI)



### 12 

## TABLE 3B: Core Scenario CO 2 

## Supply Growth (2023-2032)

2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Power

Plants Pioneer

- First of a Kind Projects $70 $70 $70 $70 $70

CO 2 Supply 14.7 14.7 14.7 14. 7 14.7 14.7 14.7 14.7 14.7 14.7

Projects #2

- #5 $60 $60 $60 $60 $60 $60 $60 $60 $60 $60

CO 2 Supply 16.35 16.35 16.35 16.35 16.35 16.35 16.35 16.35 16.35 16.35

Nth of a Kind (Projects #6

- onward) $55 $55 $55

CO 2 Supply 7.75 9.68 12.09

Cumulative Total CO 2 Supply 31.05 31.05 31.05 31.05 31.05 31.05 31.05 38.80 40.73 43.14

Low Cost

Industrial Pioneer

- First of a Kind Projects $38 $38 $38 $38

CO 2 Supply 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5

Projects #2

- #5 $38 $38

CO 2 Supply 17.45 17.45 17.45 17.45 17.45 17.45 17.45 17.45 17.45 17.45

Nth of a Kind (Projects #6

- onward) $38 $38 $38 $38 $38 $38 $38 $38 $38 $38

Natural Gas Processing CO 2 Supply 15 15 15 15 15 15 15 15 15 15

Ammonia CO 2 Supply 6 8 8 10 10 10 12 12 14 14

Ethanol CO 2 Supply 3 4 4 5 5 6 6 7 7 7

SNG/Gasification CO 2 Supply 3 3 4 4 5 5 6 6 7 7

CO 2 Supply Cumulative Total 49.95 52.95 53.95 56.95 57.95 58.95 61.95 62.95 65.95 65.95

High Cost

Industrial Pioneer

- First of a Kind Projects $65 $65 $65 $65 $65

Cement/Steel/Iron CO 2 Supply 1 1 1 1 1 1 1 1 1 1

Hydrogen CO 2 Supply 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Refineries CO 2 Supply 1 1 1 1 1 1 1 1 1 1

New Build Ga sification CO 2 Supply 1 1 1 1 1 1 1 1 1 1

Projects #2

- #5 $55 $55 $55 $55 $55 $55 $55 $55 $55 $55

Cement/Steel/Iron CO 2 Supply 2 3 3 4 4 4 4 4 4 4

Hydrogen CO 2 Supply 1 1.5 1.5 2 2 2 2 2 2 2

Refineries CO 2 Supply 2 3 3 4 4 4 4 4 4 4

New Build Gasi fication CO 2 Supply 2 3 3 4 4 4 4 4 4 4

Nth of a Kind (Projects #6

- onward) $45 $45 $45 $45 $45

All High Cost Industrial CO 2 Supply 6.30 8.18 10.21 12.37 14.67

CO 2 Supply Cumulative Total 10.50 14.00 14.00 17.50 17.50 23. 80 25.68 27.71 29.87 32.17

Total (All sources) 91.50 98.00 99.00 105.5 106.50 113.8 118.6 129.45 136.5 141.26



### CO 2 

### supplies are listed in million tonnes. Prices are the $/tonne capture costs. Capture costs are only l isted for years when a production tax credit program might offer an incentive for a g iven CO2 supply source and technology development p hase.Analysis for Carbon Dioxide Enhanced Oil Recovery : A Critical Domestic Energy, Economic, and Environ mental Opportunity 

### 13



## TABLE 3C: Core Scenario CO 2 

## Supply Growth (2033-2042)

2033 2034 2035 2036 2037 2038 2039 2040 2041 2042

Power

Plants Pioneer

- First of a Kind P rojects

CO 2 Supply 14.7 14.7 14.7 14.7 14.7 14.7 14.7 14.7 14.7 14.7

Projects #2

- #5 $60 $60 $60 $60 $60

CO 2 Supply 16.35 16.35 16.35 16.35 16.35 16.35 16.35 16.35 16.35 16.35

Nth of a Kind (Projects #6

- onward) $55 $55 $55 $55 $55 $55 $55 $55 $55 $55

CO 2 Supply 15.06 18.71 23.17 28.59 35.12 42.91 52.07 62.73 74.90 88.55

Cumulative Total CO 2 Supply 46.11 49.76 54.22 59.64 66.17 73.96 83.12 93.78 105.9 119.60

Low Cost

Industrial Pioneer

- First of a Kind P rojects

CO 2 Supply 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5

Projects #2

- #5

CO 2 Supply 17.45 17.45 17.45 17.45 17.45 17.45 17.45 17.45 17.45 17.45

Nth of a Kind (Projects #6

- onward) $38 $38 $38 $38 $38 $38 $38

Natural Gas Processing CO 2 Supply 15 15 15 15 15 15 15 15 15 15

Ammonia CO 2 Supply 14 14 14 14 14 14 14 14 14 14

Ethanol CO 2 Supply 7 7 7 7 7 7 7 7 7 7

SNG/Gasification CO 2 Supply 7 7 7 7 7 7 7 7 7 7

CO 2 Supply Cumulativ e Total 65.95 65.95 65.95 65.95 65.95 65.95 65.95 65.95 65.95 65.95

High Cost

Industrial Pioneer

- First of a Kind Projects

Cement/Steel/Iron CO 2 Supply 1 1 1 1 1 1 1 1 1 1

Hydrogen CO 2 Supply 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Refineries CO 2 Supply 1 1 1 1 1 1 1 1 1 1

New Build Gasification CO 2 Supply 1 1 1 1 1 1 1 1 1 1

Projects #2

- #5 $55 $55 $55

Cement/Steel/Iron CO 2 Supply 4 4 4 4 4 4 4 4 4 4

Hydrogen CO 2 Supply 2 2 2 2 2 2 2 2 2 2

Refine ries CO 2 Supply 4 4 4 4 4 4 4 4 4 4

New Build Gasification CO 2 Supply 4 4 4 4 4 4 4 4 4 4

Nth of a Kind (Projects #6

- onward) $45 $45 $45 $45 $45 $45 $45 $45 $45 $45

All High Cost Industrial CO 2 Supply 17.12 19.71 22.44 25.32 28.33 28.33 28. 33 28.33 28.33 28.33

CO 2 Supply Cumulative Total 34.62 37.21 39.94 42.82 45.83 45.83 45.83 45.83 45.83 45.83

Total (All sources) 146.67 152.9 160.1 168.4 177.95 185.7 194.9 205.55 217.7 231.38



### CO 2 

### supplies are listed in million tonnes. Prices are the $/tonne capture costs. Capture costs are only l isted for years when a production tax credit program might offer an incentive for a g iven CO2 supply source and technology development p hase.National Enhanced Oil Recovery Initiative (NEORI)



### 14 

## TABLE 3D: Core Scenario CO 2 

## Supply Growth (2043-2052)

2043 2044 2045 2046 2047 2048 2049 2050 2051 2052

Power

Plants Pioneer

- First of a Kind Projects

CO 2 Supply 14.7 14.7 8.7 8.7 5.3 5.3 5.3 0 0 0

Projects #2

- #5

CO 2 Supply 16.35 16.35 16.35 16.35 16.35 16.35 16.35 3.5 3.5 0

Nth of a Kind (Projects #6

- onward) $55 $55 $55 $55 $55 $55 $55 $55 $55 $55

CO 2 Supply 103.54 119.6 136.5 153.7 170.83 187.4 203.0 217.51 230.5 242.05

Cumulative Total CO 2 Supply 134.59 150.6 161.5 178.7 192.48 203.7 224. 7 221.01 234.0 242.05

Low Cost

Industrial Pioneer

- First of a Kind Projects

CO 2 Supply 5.5 4.5 4.5 4.5 0 0 0 0 0 0

Projects #2

- #5

CO 2 Supply 17.45 16.6 8.5 0 0 0 0 0 0 0

Nth of a Kind (Projects #6

- onward)

Natural Gas Processing CO 2 Supply 15 15 15 15 15 12 9 6 3 0

Ammonia CO 2 Supply 14 14 14 14 14 12 12 10 10 8

Ethanol CO 2 Supply 7 7 7 7 7 6 6 5 5 4

SNG/Gasification CO 2 Supply 7 7 7 7 7 6 6 5 5 4

CO 2 Supply Cumulative Total 65.95 64.10 56.00 47.50 43.00 36.00 33.00 26.00 23.00 16.00

High Cost

Industrial Pioneer

- First of a Kind Projects

Cement/Steel/Iron CO 2 Supply 1 1 1 1 1 0 0 0 0 0

Hydrogen CO 2 Supply 0.5 0.5 0.5 0.5 0. 5 0 0 0 0 0

Refineries CO 2 Supply 1 1 1 1 1 0 0 0 0 0

New Build Gasification CO 2 Supply 1 1 1 1 1 0 0 0 0 0

Projects #2

- #5

Cement/Steel/Iron CO 2 Supply 4 4 4 4 4 4 4 3 3 2

Hydrogen CO 2 Supply 2 2 2 2 2 2 2 1.5 1.5 1

Refineri es CO 2 Supply 4 4 4 4 4 4 4 3 3 2

New Build Gasification CO 2 Supply 4 4 4 4 4 4 4 3 3 2

Nth of a Kind (Projects #6

- onward) $45 $45 $45 $45 $45 $45 $45 $45 $45 $45

All High Cost Industrial CO 2 Supply 28.33 28.33 28.33 28.33 28.33 28.33 28.33 28.33 28.33 28.33

CO 2 Supply Cumulative Total 45.83 45.83 45.83 45.83 45.83 42.33 42.33 38.83 38.83 35.33

Total (All sources) 246.37 260.6 263.3 272.0 281.31 282.0 300.0 285.84 295.8 293.38



### CO 2 

### supplies are listed in million tonnes. Prices are the $/tonne capture costs. Capture costs are only l isted for years when a production tax credit program might offer an incentive for a g iven CO2 supply source and technology development p hase.Analysis for Carbon Dioxide Enhanced Oil Recovery : A Critical Domestic Energy, Economic, and Environ mental Opportunity 

### 15



## TABLE 4: Oil Price Assumptions

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

$88.03 $91.38 $94.58 $97.62 $100.50 $103.15 $105.71 $108.10 $110.30 $112.36

2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

$114.21 $115.96 $117.54 $118.99 $120.25 $121.34 $122.30 $123.09 $123.71 $124.20

2033 2034 2035 2036 2037 2038 2039 2040 2041 2042

$124.53 $124.68 $124.94 $124.94 $124.94 $124.94 $124.94 $124.94 $124.94 $124.94

2043 2044 2045 2046 2047 2048 2049 2050 2051 2052

$124.94 $124.94 $124.94 $124.94 $124.94 $124.94 $124.94 $124.94 $124.94 $124.94

Source: EIA (2011). Annual Energy Outlook 2011



### Oil prices are “Crude Oil Prices – Imported Low-Sul fur Light Crude Oil.” Prices are listed in 2009 do llars per barrel and represent “weighted average price delivered to U.S. refiners. ”

Source Link: http://www.eia.gov/oiaf/aeo/tablebrowser/#release=A EO2011&subject=0-AEO2011&table=12-AEO2011®ion=0-

0&cases=ref2011-d020911a