DBPapers
DOI: 10.5593/SGEM2014/B11/S6.086

APPLICATION OF MONTE CARLO SIMULATIONS FOR ECONOMIC EFFICIENCY EVALUATION OF CARBON DIOXIDE ENHANCED OIL RECOVERY PROJECTS

S. Kuczynski, J. Hendel
Wednesday 1 October 2014 by Libadmin2014

References: 14th International Multidisciplinary Scientific GeoConference SGEM 2014, www.sgem.org, SGEM2014 Conference Proceedings, ISBN 978-619-7105-07-0 / ISSN 1314-2704, June 19-25, 2014, Book 1, Vol. 1, 663-670 pp

ABSTRACT
Methods for the economic evaluation of oil and gas projects, both onshore and offshore, are discussed in many papers. Every year, top energy companies and research institutions publish outlooks of global energy supply and demand. Apart from fluctuations caused by economic cycles, in each of the published reports, the energy consumption growth is observed as well. Despite the percentage share decline of nonrenewable energy in the energy mix, the total consumption of fossil fuels will increase. This results in growth of CO2 emissions. The price of oil might also grow over the next decade. For the above-mentioned reasons, applications of carbon dioxide enhanced oil recovery methods (CO2-EOR) are being considered. The economic efficiency of CO2- EOR with carbon capture and storage (CCS) depends on many factors, i.e. capital expenditures (CAPEX), fixed and variable operational expenditures (OPEX), capture of CO2 from the plant, CO2 transport and sequestration costs, monitoring program, costs of CO2 emission permits for the emitter and, of course, future oil prices. In this paper, an offshore CO2-EOR project, based on real data, is analyzed. The oilfield operator and the emitter (heat power plant) are in one capital group, so reduction of CO2 emission provides additional income. Due to limited experience in CCS projects implementation, especially in Europe, project costs are difficult to estimate. Monte Carlo simulation method is employed to evaluate the economic efficiency of this CO2-EOR & CCS project. Based on literature and industrial experience, probability distributions for CAPEX and OPEX are defined. Additionally, various scenarios of oil and CO2 permits prices are discussed and implemented to economic model. Net present values (NPV) and internal rate of return (IRR) are calculated. To show the impact of selected input data on the project efficiency, sensitivity analysis is created.

Keywords:carbon dioxide enhanced oil recovery (CO2-EOR), carbon capture and storage (CCS), net present value (NPV), Monte Carlo simulation, economic efficiency