Optimization of the Net Present Value of Carbon Dioxide Sequestration and Enhanced Oil Recovery
Authors: Jahangiri Hamid Reza , Zhang Dongxiao 
Published: May 2011

Abstract
Sequestration of carbon dioxide (CO2) in depleted or partially depleted oil reservoirs is an immediate, cost-effective option to reduce CO2 emissions into the atmosphere. Carbon dioxide has been injected into oil reservoirs for the purpose of enhancing oil recovery (EOR). With EOR, the goal is to maximize the oil production by minimizing the use of CO2 while with sequestration, the goal is to maximize the storage of the CO2. During EOR, a significant amount of CO2 may be sequestered in the reservoir. If CO2 emissions are regulated, the EOR process may therefore be able to earn sequestration credits in addition to oil revenues.
We develop a theoretical framework that analyzes the co-optimization of oil extraction and CO2 sequestration. The economic analysis takes into account factors such as capture, transportation and recycling costs. This paper discusses the effects of several injection strategies and injection timing on optimization of oil recovery - CO2 storage capacity for a synthetic, three dimensional, heterogeneous reservoir model. A simulation study is completed using a 3-D compositional simulator " ECLIPSE 300?? and an optimization algorithm in order to optimize the net present value of oil recovery and CO2 storage. A number of simulations are studied to achieve comprehensive understanding of the financial performance of coupled CO2 sequestration and EOR projects. The simulations have showed that the projects would be unprofitable for immiscible cases when using costs typical of current CO2 capture from power plants unless there is some form of credit for storage. In contrast, in miscible cases, the projects may be profitable even without considering any CO2 credits and their profitability is further enhanced with possible carbon credits. The results show that innovative reservoir engineering techniques are required for co-optimizing CO2 storage and oil recovery.

1. Introduction
CO2 concentration in the atmosphere has drastically increased over the past 250 years from 280 to 380 ppm (Bryant 1997). The major cause of increasing CO2 emissions into the air has been recognized as the dramatic increase in the fossil fuel consumption for energy production. Increasing concentrations of CO2 leads to climate change via enhancing the natural greenhouse effect.
Several measures have been suggested to control the problem of increasing CO2 emissions in the air. One of such measures is to decrease carbon intensity of energy production, which means less CO2 per specified amount of produced energy (Forooghi, Hamouda and Eilertsen 2009). CO2 emissions can also be reduced by increasing the share of renewable energies in the energy consumption portfolio. The most promising, immediate option for reducing a large amount of CO2 is, however, the long-term sequestration of CO2 in geological formations. Depleted or mature oil and gas reservoirs, deep saline formations, and unminable coalbeds are usually considered as the most applicable CO2 sequestration formations (Bachu 2003).
Geological CO2 storage as the effective option to mitigate atmospheric CO2 emissions has been considered since the 1990's and has been implemented at a large scale for the first time in Norway (Moritis 2002). Oil and gas reservoirs are good candidates for sequestration because industrial experiences already exist for CO2 injection. Regarding economic aspects of the sequestration process, coupled enhanced oil recovery (EOR) and sequestration processes have advantages since the increased oil recovery will offset some of the costs of CO2 sequestration process. The Weyburn CO2 sequestration and EOR project is an example of commercial coupled CO2 EOR and sequestration process, which has shown a great success in terms of both objectives of the project (Malik and Islam 2000). In this project, carbon dioxide is transported from the North Dakota coalgasification plant through pipelines and is injected into the Weyburn oil field.