The Challenge

A major oil company needed to know how it could provide CO2 to operating oil fields to accelerate the production schedule (increase oil recovery/increase total reserves that can be recovered), reduce the cost and availability risks related to CO2 flood gas, capture the benefits associated with GHG emissions reduction, provide power generation and cogeneration products, and improve the economics of client’s equity in the fields. The key uncertainties of the recovery challenge include:

• Value of CO2 (price which could be sold to oil field)
• Purchase Price of Fuel for power generation
• Power Plant CAPEX
• Pipeline CAPEX
• Value of power generated

Our Approach

We helped the client frame their strategic question by identifying the costs and benefits of several strategies through framing and issue-raising sessions. The client had the option of:

• Several refueling options of existing power plants with capture of CO2 (using range of fuel sources)
• Several new power plant development options using differing technologies and fuel sources
• Operating one CO2 hub & regional aggregator

Insights gained during the framing sessions showed that the CAPEX for new power plants was too expensive to make delivered cost of CO2 economic; the use of existing pipelines could greatly increase the economic viability of the project; re-lining of the pipeline with corrosive resistant materials would allow for use of larger percentage of existing pipelines. Through our analysis, the client discovered that the existing power plants that are close to the oil field or existing pipeline infrastructure should be early targets for CO2 sourcing.

Results

By turning these insights into action, the client was able to realize a project value of $110 million by providing CO2 in the optimum way as proven by the analysis.