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Please use this identifier to cite or link to this item: http://hdl.handle.net/1942/23267

Title: Considering economic and geological uncertainty in the simulation of realistic investment decisions for CO2-EOR projects in the North Sea
Authors: Welkenhuysen, Kris
Rupert, Jort
Compernolle, Tine
Ramirez, Andrea
Swennen, Rudy
Piessens, Kris
Issue Date: 2017
Citation: APPLIED ENERGY, 185, p. 745-761
Abstract: The use of anthropogenic CO2 for enhancing oil recovery from mature oil fields in the North Sea has several potential benefits, and a number of assessments have been conducted. It remains, however, difficult to realistically simulate the economic circumstances and decisions, while including the economic uncertainties that surround the relevant markets and policies, and the geological and technological uncertainties that are inherent to dealing with reservoirs and novel technologies in a challenging environment. A new method is proposed here introducing a unique combination of innovations, that include true limited foresight, project flexibility, and the consideration of realistic investment risk. The value of project is here expressed as the Net Present Value (NPV). These elements are combined in the PSS IV simulator. This is a techno-economic simulator for CO2-enhanced oil recovery (CO2-EOR), which applies limited foresight and Real Options Analysis to make realistic investment decisions on projects with significant uncertainties and thus risk. Consecutive project decisions are taken based on a decision tree. Multiple oil fields can be approached as a single cluster project, which can provide a lower investment hurdle. In a first test case for PSS IV, the Claymore and Scott oil fields are assessed, and it is shown that economic simulations where FOR projects are regarded as a sum of the individual field assessments will undervalue projects. Simulation results show that results are in a realistic range compared to published numbers, with individual project values for the Claymore field on average of 15.8 sic/barrel (bbl; standard deviation SD = 8.3) and for the Scott field of 14.3 sic/bbl (SD = 8.6). Due to the inclusion of uncertainties and the application of limited foresight, results range from -6 sic/bbl (loss) to over 30 sic/bbl. In a cluster configuration 5 sic/bbl of additional value is created. (C) 2016 Elsevier Ltd. All rights reserved.
Notes: [Welkenhuysen, Kris; Piessens, Kris] Royal Belgian Inst Nat Sci, Geol Survey Belgium, Jennerstr 13, B-1000 Brussels, Belgium. [Welkenhuysen, Kris; Swennen, Rudy] Katholieke Univ Leuven, Dept Earth & Environm Sci, Celestijnenlaan 200E, B-3001 Heverlee, Belgium. [Rupert, Jort; Ramirez, Andrea] Univ Utrecht, Copernicus Inst Sustainable Dev, Fac Geosci, Heidelberglaan 2, NL-3584 CS Utrecht, Netherlands. [Compernolle, Tine] Hasselt Univ, Ctr Environm Sci, Agoralaan Bldg D, B-3590 Diepenbeek, Belgium.
URI: http://hdl.handle.net/1942/23267
DOI: 10.1016/j.apenergy.2016.10.105
ISI #: 000390494600061
ISSN: 0306-2619
Category: A1
Type: Journal Contribution
Appears in Collections: Research publications

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