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Abstract
The mitigation of environmental problems requires both
national and international agreements, since they have
possible global effects. In nationwide conventions (such as
Rio, 92; Kyoto Protocol, 1997), a common conclusion has
been the need to reduce greenhouse emissions, especially
those due to CO
2
from burning fossil fuels. For example,
Kyoto protocol has established that industrialized nations
should reduce their emissions over 2008-2012 by at least 5.2%
compared with the 1990 levels. An alternative USA proposal
is based on reducing greenhouse emissions by capturing and
stockpiling CO
2
in natural sites like oceans, caverns, depleted
oil reservoir, etc.

This paper presents a physical description
and an economic analysis of a project to capture and inject
CO
2
in oil production and its storage in the depleted oil
reservoir located in a mature field in Brazil. The Stella

Software has been used in order to analyze de dynamics of the
whole process of CO
2
sequestration in enhanced oil recovery,
considering each step of the process with its respective energy
requirements. The main findings of this have the following
benefits: i) reduction in the emission of CO
2
; ii) extension of
the operational life of the reservoir; and iii) improvement and
development of technology to promote EOR in mature fields.
Results indicate that project NPV is around US$ 3.2 million,
what is significant for a small mature field. Additionally, it
contributes by removing greenhouse gases (GHG) from the
atmosphere by storing 0.73 million tons of CO
2
over a period
of 20 years. Project feasibility, as expected, was found to be
very sensitive to oil price, oil production, and CAPEX.
1 Introduction
Carbon dioxide (CO
2
) produced from combustion of fossil
fuels has been increasing intensively, as can be seen in Figure
1. The concerns with the emission of CO
2
and other pollutants
discussed in several forums demonstrate the importance of a
stabilization scheme of these gases, although there is much
uncertainty regarding the impacts of these GHG emissions and
global warming. The meetings of more impact were United
Nations Framework Convention on Climate Change (Rio-92),
carried out in Rio de Janeiro in 1992, and the Kyoto Protocol
carried out in 1997, the first international treat designed to
stabilize greenhouse gas emissions.
One way to stabilize these emissions is through CO
2
sequestration. This policy is attractive because it has the
advantage of maintaining the use of fossil fuels while reducing
the CO
2
concentration levels in the atmosphere. The
technology of CO
2
sequestration consists of capturing CO
2

from an anthropogenic source of emissions, followed by
compression, transportation, and storage in an
environmentally acceptable place.
Regarding the effective reduction in CO
2
emissions into
the atmosphere, it should be evaluate if more CO
2
is stored
than the CO
2
emitted from the process of CO
2
sequestration in
order to certify that in fact reduction in emissions of the GHG
is occurring.
Taking this in consideration, possible sites and methods
for CO
2
storage include: depleted oil and gas reservoirs,
aquifers, oceans, forests, enhanced oil recovery (EOR) and
enhanced coalbed methane production (ECBM).
In spite of the several possibilities for storing CO
2

mentioned above, some barriers should be overcome to
stimulate the adoption of CO
2
sequestration procedures. The
first requirement is to reduce the high costs of the each step of
this mitigation option. The urgent need for reducing current
costs (mainly costs of capture) depends on further research
and development into CO
2
sequestration, as well as, the
incentive of mechanisms such as the ones proposed by the
Kyoto Protocol, which will create more opportunities for cost
reduction. If the carbon credits are internalized, the costs of
CO
2
sequestration will be offset and sequestration may
become attractive. It may also be necessary to implement a
CO
2
tax regime in order to generate incentives for the
reduction of CO
2
emissions into the atmosphere. If no
incentives are provided, capture and disposal methods may
never be used
1
.

SPE 94181
CO
2
Capture and Storage in Mature Oil Reservoir: Physical Description, EOR and
Economic Valuation of a Case of a Brazilian Mature Field
A.T. F. S. Gaspar, SPE, G.A.C. Lima, SPE, and S.B. Suslick, SPE, State U. of Campinas
2 SPE 94181
Under a stand-alone economic return basis, enhanced oil
recovery method (EOR) tends to be an attractive geologic
disposal option for CO
2
2
. EOR can combine in some situations
economic and environmental objectives.
CO
2
sequestration has already been practiced in some
places around the world as the case of Calgary- developed by
an independent oil and gas producer, which has implemented a
large-scale EOR project in south-eastern Saskatchewan in
order to study the mechanisms, reservoir storage capability
and economics of CO
2
sequestration in oil fields
3
. CO
2
for this
project has been supplied by a coal gasification plant
transported through a 325-km pipeline.
This paper is focused on the utilization of CO
2
for
enhancing oil recovery in a mature oil reservoir. The main
objective is to provide an overview of the process, costs of
CO
2
sequestration and to analyze the economic feasibility of
sequestrating CO
2
in reservoirs submitted to EOR operations
in a typical Brazilian mature oilfield.
This paper is organized as follow: Section 2 presents the
current carbon market conditions. In section 3, general aspects
of the economics of CO
2
sequestration are presented. Next
section, the main concepts about EOR are described, followed
by the methodology for the economic analysis in section 5.
The next section provides a case study of a mature oilfield
including the energy requirements of the EOR process. Results
are analyzed in the final section.
2 Carbon Market
Kyoto Protocol established that developed countries
individually or jointly would have to reduce at least an
average of 5.2% bellow the emissions level in 1990, during
the period 2008-2012. As developed countries were the
pioneers in the industrialization, so the first to use fossil fuels,
the convention notices that the larger part of global, historical
and current greenhouse gases emissions is originated in
developed countries. Moreover, the developing countries do
not have obligations to reduce greenhouse gases
4
.

To fulfill the agreement proposed by the Kyoto Protocol,
some flexible mechanisms were introduced, such as:
Clean Development Mechanism (CDM)
Join Implementation (JI)
Emission Trading (ET)
Join Implementation and Emission Trading are
exclusively to developed countries. The joint implementation
and the tradable certificate are the exchange of credits among
developed countries that establish the limits of the right to
pollute". The clean development mechanism is nothing less
than the right of a developed country to pollute the atmosphere
in change of an investment in developing countries in clean
energy or projects that remove carbon from the atmosphere.
With the development of systems for trading CO
2
credits,
GHG emissions will likely be reduced. As the market of
credits evolves, it will be there incentives for the application
of CO
2
sequestration policies, as well as an improvement in
the economics of the process.

No common standards have yet been developed,
although trading systems for CO
2
credits trading are emerging
worldwide. According to the estimations from the World
Bank, in 2002, worldwide trading in CO
2
emissions reached
67 million tons. It is expected that the total market value
reaches US$ 10 billion annually by 2008
3
.
According to Springer
5
, some models of CO
2
trading
among Kyoto Protocol partners with emission caps, assume
that the price of credits ranges from US$ 0.80 to US$
20.20/ton CO
2
. However, with prices at these levels, the value
of CO
2
credits may well not be sufficient to enable all the CO
2

sequestration projects to enter the market place.
In the literature, it can be seen that prices of CO
2
credits
vary widely. This can be attributed to the different
assumptions. As cited by Kallbekken and Torvanger
6
, the
prices of the credits are difficult to be estimated. Such prices
will depend strongly on the policy assumptions that are made,
such as, the size of the emission reductions to be undertaken
and the availability of mitigation options.
The prices of CO
2
credits will indicate if CO
2
is an
economic attractive option. If carbon price is greater than zero,
capture and disposal methods will become attractive and
should be used.
3 General Economic Aspects of the CO
2

Sequestration Process
One of the challenges to be overcome in the implementation
of a sound CO
2
sequestration policy is the high cost of the
whole process. Investment costs (CAPEX) and operating costs
(OPEX) of CO
2
sequestration can be split into 4 components:
Capture,
Compression,
Transportation, and
Storage.
Each component is described here separately. Usually,
costs (CAPEX and OPEX) of CO
2
sequestration are estimated
between US$ 40 and US$ 60 per ton of CO
2
avoided
7
,

depending on the methodology used in the capture process, the
amount of required compression, the distance from the source
to the storage site, and the site characteristics where CO
2
is
going to be injected.
These costs mentioned above present large variability. As
indicated by Gough and Shackley
8
, in many cases, the
variability reflects different assumptions about fuel prices,
discount rates, specific technologies, and different elements of
total costs besides being site-specific, becoming difficult a
direct comparison of the costs. By convention, some
organizations like the IEA Greenhouse Gas R & D Programme
incorporate the cost of compression into cost of capture
9

impeding direct comparison with just capture or compression
cost components. In this section, costs of each step of CO
2
sequestration process are briefly described.

SPE 94181 3
3.1 CAPEX and OPEX of Capture and Compression
A great contribution to the total cost formation in the
sequestration system comes from the capital and operation
cost for the compression, associated cooling and dehydration
equipment
10
.
For estimating compression costs, the amount of
required compression and the unit costs of compression should
be considered. However, these two elements can vary from
project to project. Great part of the cost is associated with the
use of electricity. In addition, compression costs are
considerably higher for small flows
11
. Costs of compression
vary from US$ 7.4 to 12.4/tonne
11
.
In addition to the compression costs, one issue which
causes concern is the high cost of capture. The economics of
CO
2
sequestration is dominated by the cost of capture
component (the dominant parameter for the current
technology) and has been one of the key barriers to the
introduction of CO
2
sequestration technology
9
.

OPEX of capture depends on labor, maintenance,
purchase of chemicals, etc. In case of solvent scrubbing plants,
the cost of solvent for make-up purposes should be
considered
9
. Capture costs depend on the amount of CO
2
to be
captured, CO
2
concentration and pressure in the stream of
emissions source, and the nature of the capture process
(chemical or physical absorption, chemical or physical
adsorption, membranes, cryogenic fractionation, etc.).
CAPEX of capture is associated with the equipment required
such as absorption columns, for instance.

As previously mentioned, the barrier concerning high
costs can be attenuated since there are some sources suitable
for capturing CO
2
at lower costs as the recovery of CO
2
from
industrial processes which provides higher concentrations,
consequently requiring less energy. As cited by Lysen
12
, if
CO
2
is nearly pure, at best, only dehydration and compression
may be required before transportation. Farla et al
13
mentioned
that so far, little attention has been given to CO
2
recovery
from industrial processes, although large amounts of CO
2
are
emitted at high concentration by few industries. Table 1
presents CO
2
capture and compression data for these cases and
for those with higher costs. Data are from Farla et al
13
and
Hendriks
14
.
3.2 CAPEX and OPEX of Transportation Cost
For large quantities and long distances, CO
2
is most common
transported via pipeline. However, very long distances can
become a barrier for the implementation of CO
2
sequestration.
Trucks can be used for reduced quantities and short distances.
Ships can be an alternative to offshore pipeline transport,
mainly when CO
2
has to be transported over large distances
15
.
Some factors should be considered for estimating
operating costs for transportation of CO
2
by pipeline: CO
2

flow rate and distance from the source to the storage site. The
costs for transportation are likely to be reduced when large
scale of operation is deployed. For capital costs, the following
parameters should be considered: pipeline geometry (internal
diameter), terrain characteristics, for example if it is a
mountainous area, because it would lead to higher
construction costs. Population density should also be
considered, since higher safety is required for populated areas
(i.e., more valves required) which may increase costs
11

considerably.
Considering these issues, transportation cost can vary
significantly for different projects. Table 2 presents some
figures from the literature
16,17
of CAPEX and OPEX of
transportation via pipeline.
3.3 CAPEX and OPEX of Storage
Cost components for CO
2
injection into storage sites include
mainly CAPEX for drilling wells, and costs related to the
operation and maintenance of the system
18
. The composition
of total storage cost includes: location, injection costs,
reservoir depth, average temperature, reservoir radius,
monitoring, flow rate and the value of saleable products (for
instance, the revenues from enhanced hydrocarbon recovery).
Due to so many parameters mentioned above, cost of
CO
2
storage cannot be estimated with certainty since large
variations can occur in these parameters. For example,
Nguyen and Allison
18
pointed out that in most CO
2
storage
cases in geological reservoir, costs range from below US$ 5 to
above US$$ 20 per ton. Onshore storage is generally less
expensive than offshore storage. Offshore drilling costs are
higher. Surely, costs vary considerably from project to
project
11
.
In some cases (as the case study of this paper), there are
opportunities for storage at small cost or even net benefits, by
means of improving oil or gas by injection of CO
2
into the
reservoir resulting in some offsetting income. Such cases
include the application of CO
2
in EOR and ECBM. EOR can
be attractive from the economic point of view since this
method can lower the costs of CO2 sequestration significantly.
However, ECBM option is more expensive since it requires a
large number of wells
11
. In addition, CO2 storage in coalbeds is
still in the early stage of development.
Besides the advantages due to revenues of CO
2
EOR it is
worthwhile to know that the cost of construction and operation
injection wells contributes with only a small portion of the
total cost for the system
10
.
4 Enhanced Oil Recovery
As many oilfields approach an advance stage of maturity,
enhanced oil recovery must be considered, in order to
recovery more oil from the reservoirs, extending the field
lifetime. Using CO
2
in EOR methods may help to reduce
emission of GHG into the atmosphere if CO
2
is captured from
anthropogenic sources. Technical expertise about CO
2

injection in oil reservoir already exists. Storage of CO
2
in
reservoirs submitted to EOR operations is a direct
consequence of CO
2
utilization.
4 SPE 94181
The gas is used in its supercritical form for extracting
more oil out of mature reservoirs in the EOR process. CO
2

displaces residual oil left in place after primary and secondary
production and has been successfully injected for forty years.
EOR has the potential to recover additionally 6-15% of the
original oil in place, increasing 10-30% the total production
from an oil reservoir
19
. Carbon Dioxide is an excellent solvent
in EOR operations and it is more effective than other gases to
recover some of 70% of the original oil in situ that secondary
recovery can leave behind
3
. CO
2
injection projects have
focused on oil reservoirs with densities between 16 and 45
API and reservoir depths up to 10.800 ft, permeability lower
than 2 mD, viscosity between 0.3 and 188 cP, among other
characteristics
20
.
An advantage to use CO
2
in EOR is that the pressure
required for achieving dynamic miscibility with it is lower
than the pressure required for dynamic miscibility with other
gases such as natural gas, flue gas or nitrogen
21
. Once CO
2
is
selected, it

is flooded into the reservoir at a pressure equal to
or above the minimum miscibility pressure. Then, CO
2
and oil
mix and can easily flow to the production well. Typically,
injected gas compositions have ranged from 97% to 99%
purity (the rest can be constituted of NO
2
and SO
2
for
example). Some of the CO
2
injected will remain stored in the
reservoir.
Successful EOR operations are routine business in USA
and can serve as example. Currently, about 71 of the 84
projects of CO
2
applications for EOR worldwide projects are
in USA, although the great majority of these projects are not
carried out specifically for reducing GHG. The amount of
enhanced oil being produced from these CO
2
EOR projects
averages 206,000 bbl/day
22
. Approximately 20,000 tons of
CO
2
are delivered daily into oil fields for EOR projects
23
.
According to EPRI
24
estimates, 3 million metric tons/year of
CO
2
are currently being sequestered (permanently stored) in
depleted oil fields in the western United States; although, data
concerning the specific volumes and flow rates of CO
2

injected into depleted oil fields for EOR are generally not
publicly available.
CO
2
combined with EOR can be used to recover oil
which otherwise would not be produced. Then, the revenues
from oil selling could help to offset the costs of CO
2
storage in
many instances
25
resulting in an economically attractive
storage option. CO
2
- EOR sequestration is the most viable
route for technology cost reductions in the near term, due to
the high oil prices
26
. Higher oil prices enhance revenue and
profitability, leading to increased investment in EOR facilities
and eventually higher levels of production. The possibility of
reducing costs in other CO
2
sequestration options such as
aquifers and depleted fields (without production of
hydrocarbons) will probably be less than EOR
11
. Moreover, in
agreement with Heddle
16
, CO
2
- EOR is also considered a very
attractive option, since most oil fields have already undergone
primary and secondary recovery, enabling the re-use of
facilities, since infrastructure is already present in the field
(i.e. wells, pipelines), requiring just some adaptation for CO
2

storage purposes.
5 Methodology for economic analysis
This section presents the economic analysis used to evaluate
the feasibility of the CO
2
sequestration with EOR. Costs for
each stage of the project including capture, compression,
transportation and storage are divided into capital expenditures
(CAPEX) and operating expenditures (OPEX). Typically in
carbon sequestration, the OPEX of the process include labor,
materials, maintenance, and possibly seismic monitoring
costs
18
.

Moreover, the economic data that must be considered
to calculate the costs of CO
2
sequestration are: market prices
of equipment and services, operational life of the project,
fiscal regime, CO
2
purchase, operating expenses with CO
2
recycle, operating cost of the well, investments in
compressors, separation equipment, well conversions, drilling
costs, fuel cost, etc.
The company net cash flow is estimated using the
following simplified annually relationship:
NCF= (R+C
CO2
RoyPISOPEXIWD) * (1T) +DCAPEX (1)
The cash flow is found by deducting from the inflows
(gross revenue and the possible CO
2
credits to be gain due to
the sequestration), the IW (investments costs)
1
*, OPEX, and
taxation according to the Brazilian fiscal regime (royalties,
PIS/PASEP, rental area, corporate tax and other levies). Due
to its linear character, with some pertinent adaptations,
Equation (1) could be applied to any R & D system, despite
the differences between the incidence of taxes and levies of
several fiscal systems.
The estimation of R (gross revenue) was carried out by
multiplying the oil production times their oil prices, i.e., the
inflows are generated by the oil production. The credits of
CO
2
to be implemented due to CO
2
sequestration are also
included in the cash flow. In this case, carbon credits were
also discounted. Some specialists may argue that just costs can
be discounted, not emissions or abatement
27
. While, other
authors consider that GHG emissions, if discounted should be
using a lower rate than that used for costs
28
.
The choice of the correct discount rate is one of the key
issues in the model of valuation and decision-making. The
discount rate for this EOR CO
2
sequestration project must
reflect the following considerations:
The opportunity cost of investing in this project rather
than, in other with the same risk and return
characteristics;
The time preference of the corporation for cash
(liquidity);
The social opportunity cost of not investing in this project
and, consequently, keeping on delivering CO
2
to the
atmosphere.

1
* Some costs such as drilling and completion expenditures,
may be accounted as yearly cost in some fiscal regimes.
SPE 94181 5
Moreover, according to Sathaye and Meyers
29
, generally
in developing countries the World Bank uses discount rates of
8 12% for economic analysis.
The components of costs (CAPEX and OPEX) of CO
2

sequestration included in the discounted cash flow (Equation
1) are estimated as follow:
The estimative of total CAPEX taking into account the
investment in each step of a CO
2
sequestration project is
represented in Equation (2).
CAPEX
t
=CAPEX
cap
+CAPEX
comp
+CAPEX
transp
+CAPEX
stor
(2)
The total OPEX is estimating similarly to the CAPEX
approach according to Equation (3).
OPEX
t
=OPEX
cap
+OPEX
comp
+OPEX
transp
+OPEX
stor
(3)
Finally, the next step is to apply this methodology to a
Brazilian mature oilfield.
6 Case study
6.1 Feasibility of CO
2
injection in a depleted
onshore reservoir
This study is based on a mature onshore standstone oilfield
located within the Reconcavo Basin in the northeastern part of
Brazil. This is a small basin where petroleum was discovered
in the late thirties. Moreover, light oil is produced from the
field. In addition, it is assumed that there is not production
without the application of EOR methods. Therefore, all
produced oil, which otherwise would not be recovered, is due
to the injection of CO
2
. Data were obtained from an expert in
CO
2
-EOR. The main technical and economical characteristics
of the oilfield are shown in Table 3.
CO
2
comes from a fertilizer industry. It will guarantee
the gas supply over the lifetime of the project. CO
2
is a by-
product from ammonia production that normally would be
emitted to the atmosphere. The gas is captured through the
conventional chemical absorption technique based on hot
potassium carbonate. After captured, CO
2
is compressed to a
supercritical state, transported through a 78 km pipeline and
utilized in the EOR project in the mature onshore oilfield. CO
2

flood extends over an area of 12 km
2
. CO
2
is injected into the
reservoir at a depth of about 1800m. Reservoir permeability
averages 300 mD. Moreover, leakage of CO
2
in the project is
negligible here.
In this project, current expenditures on CO
2

transportation are: 20.000 US$ per km per in, in a paved road,
i.e., the simulation includes an adequate infrastructure for
transportation of goods and services. The investments in
compression are approximately US$ 3 million for power
generation ranging from 2200 to 2400 HP.
For simplicity, a simple production profile with a
constant enhanced oil production over the total lifetime is
assumed. The EOR response is 0.34, or in other words, 0.34
tons of additional oil is produced for each ton of CO
2
injected.
Also, it is considered here that well costs are not accounted in
the economics of this project, since these are already presented
in the field. Besides, cost of CO
2
storage include costs of
separation, compression and recycling of CO
2
produced along
with the oil besides the small contribution of the costs of
monitoring of CO
2
sequestration.
Moreover, it is also assumed that half of the amount of
CO
2
injected remains stored in the reservoir. It is estimated
that 3.65 MMbbl of oil will have been recovered, contributing
to store 0.73 million tons of CO
2
over the 20 years of the
lifetime of the project.
Fiscal and economical assumptions used in this study are
shown in Table 4. The cash flow is estimated using the
following assumptions: oil revenues based upon actual market
conditions, CO
2
credits, project costs like fixed operating
costs, variable operating costs, capital costs such as CO
2

capture, compression, transportation, storage, taxes like
income tax, COFINS/PIS, Government Take such as
(royalties, rental area, etc). A discount rate of 12% is assumed
for the project. As discussed earlier in the previous section, the
discount rate reflects the opportunity cost of investing in this
project, which depends on worldwide market for CO
2
credits,
the macroeconomic setting, oil field stage (marginal fields,
etc.), among others. Moreover, depreciation of facilities has
started in the first year. In addition, abandonment costs are
depreciated from the fourth year.
6.2 Energy Requirements for EOR through CO
2

flooding
Normally, in the total process of CO
2
sequestration, there is a
little amount of CO
2
directly or indirectly emitted into the
atmosphere because of the intensive use of energy in the
capture, compression, transportation and storage of CO
2

combined with enhanced oil recovery stages. CO
2
is
additionally generated in these stages resulting in CO
2

emissions. Direct emissions result from the use of on-site
electricity generation while indirect emissions result from the
use of off-site electricity generation.
In order to quantify these secondary emissions, it should
be considered each step where energy was used. Firstly, in this
study, stream source contains almost pure CO
2
(approximately
98%). In view of this, no significant quantities of CO
2
are
emitted in the capture process (no substantial amounts of
energy to purify the stream are required). However, some
emissions occur when CO
2
is compressed, transported, and
utilized in enhanced oil recovery operations. Substantial
amounts of energy are needed to compress the CO
2
to a
supercritical state for pipeline transportation to the storage
site. In addition, EOR methods are highly energy intensive.
Electricity, as well as natural gas is an important power source
for EOR operations
24
.
In this particular case, the external power source for each
operation is based on natural gas. Steam is also utilized for
drying CO
2
in the compression stage. The energy requirement
for each stage of this CO
2
EOR sequestration project, as well
as the emission factors from energy generation, was based on
published data. Emission factors depend on the composition of
6 SPE 94181
the fuel type consumed. For example, burning coal will release
more CO
2
than will burning natural gas (117.080lbs/10
6
Btu).
According to Farla et al
13
, the carbon dioxide from
ammonia production in the fertilizer industry instead of be
vented may be compressed in a four-isentropic compression
process. The compression energy amounts to 393 kJ/kg-CO
2
.
Most of the water will be removed in the first compression
stages. Additional drying consumes 8 kJ/kg-CO
2
of heat, and
cooling takes 8 kJ/kg-CO
2
of electricity.
When CO
2
is injected in EOR operations, it consumes
significantly more electric energy per barrel of oil produced
than thermal EOR methods, for example. CO
2-
EOR methods
require about 5 hp per barrel of oil per day. The electric power
for gas EOR is required for pumping fluids from the wells,
separating product from produced and break through gases,
compression for gas injection and re-injection, and pumping
product to market and produced water to treatment and re-
injection
24
.
Some venting of CO
2
is inevitable at various stages in
the life of an EOR project
24
. For example, in the EOR
operation, CO
2
is emitted because of the utilization of
equipments on-site, besides the utilization of energy outside
the boundaries of the field. By the other hand, for EOR, it is
utilized CO
2
that otherwise would be vented to the
atmosphere.
In this paper it is assumed a carbon dioxide emission
factor of 51 kg-CO
2
/GJ, based on the fuel input in the
electricity production in the region of the project. The carbon
dioxide emission factor of 62 kg-CO
2
/GJ is assumed for
steam.
The Stella

Software has been used in order to analyze

de dynamics of the whole process of CO
2
sequestration in
enhanced oil recovery, considering each step of the process
with its respective energy requirements. Despite this is only a
preliminary stage in the development of the model, significant
outputs were obtained for the evaluation of EOR dynamics
and CO
2
sequestration.
Emission factors and energy requirements of each step
of the project were used as inputs to analyze the net storage of
CO
2
in the active oil reservoir. Figure 2 shows a sample screen
of the conceptual CO
2
storage model located in the interface
level of the model.
This model can be applicable to any oil reservoir. Each
component that should be used to estimate the net storage of
CO
2
is described in details in the mapping level of the
conceptual diagram illustrated in Figure 3.

7 Results and Discussion
It is important to keep in mind that the costs of CO
2

incorporated in the cash flow are in a CO
2
captured base, i.e.,
the gross amount of CO
2
stored. To incorporate each
component of sequestration cost in a CO
2
avoided base, it is
necessary to take into account the CO
2
emissions generated
associated with the energy use in each stage of CO
2
sequestration.
The NPV before taxes is US$ 6.95 million (US$
1.90/bbl), whereas the NPV including the CO
2
credits is US$
9.67 million (US$ 2.65/bbl). The effective NPV considering
the government take (NPV after all taxes) was US$ 3.20
million (US$ 0.86/bbl). It is important to highlight that if CO
2

credits had not been discounted it would be a gain of US$
860,000 in the effective NPV, and then the effective NPV
would be US$ 4.00 million (US$ 1.10/bbl). A comparative
analysis of NPV magnitude is shown in Figures 4a and 4b.
The NPV is a result of future cash flows under a static
scenario. Since the future is always uncertain, the NPV may
be considered as a random variable so that the confidence
level in its mean value is not absolute. Uncertainties in
parameters such as oil price, carbon credits market, oil
production, CAPEX, and OPEX were evaluated by means of
sensitivity analysis. Graphs for each input variable were
obtained in order to assess planning regarding CO
2
-EOR
economics optimization.
For the sensitivity analysis of NPV, the selected
variables were submitted to a range of 50% of their original
input values, except the oil production value, which varied
from minus 50% to 0 (because oil has been produced close to
its limit). Table 5 lists the input variables with their ranges for
the sensitivity analysis. This range was based on data from the
literature. These uncertainties and variability reflect
differences in assumptions and applications.
Figure 5a indicates the sensitivity of NPV in relation to
oil price, oil production, CAPEX, and OPEX of capture,
compression, transportation and storage, as well as CO
2

credits. In this project, it can be noted that uncertainties in the
oil price and oil production, followed by CAPEX play an
important role in the total CO
2
sequestration - EOR process
economics. However, in this hypothetical case, due to the
limited range of values considered (i.e., for the base case
values assumed), the values of CO
2
credits and OPEX of
capture, compression, transportation, and storage are very
small resulting in NPV relatively less sensitive to changes in
these variables. Taking this into account, CO
2
credits as well
as OPEX of capture, compression, transportation and storage
were isolated and submitted to an additional sensitivity
analysis. From figure 5b, it can be seen that CO
2
credits are a
significant parameter and an increase in the price results in an
increase in the NPV.
The sensitivity of NPV to these variables can be
exemplified as follow: a rise of US$ 1.00 in the oil price input
can result in a NPV of about US$ 1.00 million higher from the
base case. While a reduction of US$ 1.00 million in CAPEX
would result in an increase of about US$ 860,000 in the NPV.
An increase of US$ 1.00 in the value of CO
2
credits parameter
would result in an increase of about US$ 187,000.
A risk analysis was also performed to simulate the
performance of the uncertain variables. The required input
parameters for the risk analysis are: oil price, amount of
injected CO
2
, discount rate, capture cost, compression cost,
transportation cost, and storage cost besides storage ratio. The
range of variation of the respective uncertain inputs variables
is presented in Table 6 via probabilistic distribution. For
SPE 94181 7
example, oil price and discount rate uncertainty are modeled
using lognormal distribution, whereas the storage ratio is
modeled using normal distribution. Triangular distribution
(min, median, max) were used for the OPEX of capture,
compression, transportation and storage and amount of CO
2

injected parameters.
As a result of this simulation, a frequency of distribution
of the NPV was obtained as illustrated in Figure 6. From this
figure it can be seen that there is a risk of about 50% that the
NPV will be lower than its expected value. In addition, Figure
7 shows that excluding the oil price, oil production and
CAPEX in the risk analysis, the most significant parameter is
CO
2
credits. Figure 7 shows that OPEX of each step of CO
2

sequestration is almost an upright line, indicating a low
sensitivity.
The maximum financial exposure was in the beginning
of the project, mostly because of high capital investments.
Nevertheless, the payback time occurred within six years,
which is relatively early considering the lifetime of this
oilfield.
The net storage of the CO
2
in the reservoir per kg of oil
recovered was also analyzed using Stella

software (the
storage of CO
2
considering the energy requirements and
related CO
2
emissions of the whole process).
It is assumed that 3.00 kg of CO
2
are required for
injection in order to produce 1 kg of oil. The injected amount
depends on the characteristics of the reservoir. From this
required amount, 1.50 kg is supposed to remain in the
reservoir, while the rest of the CO
2
is produced along with the
oil. However, the net amount of CO
2
stored per kg of oil
produced is about 1.32 kg oil, since CO
2
is emitted from the
use of energy (an amount of approximately 0.18 kg of CO
2

emitted per kg of oil produced). Despite that, it is still
worthwhile sequestering CO
2
in active oil reservoirs because
in each kg of oil produced, 1.32 kg of CO
2
remains stored in
the ground, that is, in this project 0.18 ton of CO
2
is stored per
barrel of oil produced. This result is in agreement with the
available literature. According to Wilson et al
30
, a net amount
of about 0.15 ton of CO
2
is stored per barrel of oil, while
Espie
31
reports a value of 3.3 barrels of oil for each ton of CO
2

stored in the Permian settings in the North Sea area, or 0.3 ton
of CO
2
per barrel of oil. According to Stalkup
21
, the net ratio
in four field experiments varies between 0.17 and 0.78 tons
per barrel of oil, gross ratios are roughly twice as high.
8 Conclusions
The main barriers for the implementation of CO
2
sequestration
are the high costs. However, increasing level of knowledge
and experience "learning by doing", and contributions of new
technologies in the field of CO
2
sequestration will probably
reduce these costs. Another obstacle is the general lack of
taxes or credit systems in most countries to support long term
investments by companies in CO
2
sequestration. These high
costs can be minimized combining CO
2
sequestration with
enhanced oil recovery, due to the revenues from the extra oil
recovered which can help to offset the costs of the process of
CO
2
sequestration.
Results from the project cash flow showed that the NPV
is around US$ 3.2 million (US$0.86/bbl). Moreover the
project will contribute to store 0.73 million tons of CO
2
that
normally would be emitted into the atmosphere.
In addition, oil price, oil production and CAPEX play
important role in the project feasibility. The sensitivity
analysis indicates that higher oil prices can incentive
investments in CO
2
sequestration combined with EOR
projects. In this simulation, the value of CO
2
credits can be
considered small, not having a great effect on NPV. However,
high values for CO
2
credits would have a significant impact in
EOR coupled with CO
2
sequestration projects. Oilfield
operators can gain good returns sequestering CO
2
in the
reservoirs if the values of credits increase substantially. CO
2

sequestration can be economically viable if costs of CO
2
can
be reduced and carbon credits increased. New market
mechanisms are necessary to create a climate for positive
investments in new technologies.
Finally it must be considered that not all the CO
2
injected
remains stored in the reservoir. Some of this amount is
produced along with the oil, recycled and the rest remains
stored in the reservoir. From this amount we should consider
the energy used to carry out all the process, from the capture
in the emissions source to the storage site.
Acknowledgements
The authors gratefully acknowledge financial support for this
research from CAPES, CNPq, CEPETRO, and ANP. Prof.
Roelof Boumans from the Gund Institute for Ecological
Economics, University of Vermont, gave important insights
for the Stella Model.
Nomenclature
bbl = Barrel of Oil
C = Carbon
CAPEX = Capital Expenditure (Sum of all investments,
except IW, and is considered linearly depreciable in
10 years)
CAPEX
t
= Total CAPEX
CAPEX
cap
=

CAPEX of Capture
CAPEX
comp
= CAPEX of Compression
CAPEX
transp
= CAPEX of Transportation
CAPEX
stor
= CAPEX of Storage
CO
2
= Carbon Dioxide
D = Total Depreciation
ECBM = Enhanced Coal Bed Methane Recovery
EOR = Enhanced Oil Recovery
8 SPE 94181
GHG = Greenhouse Gases
IW = Investment accounted as costs
MMbbl= Million of barrels
NCF = Net Cash Flow
OPEX = Operational Expenditure
OPEX
t
= Total OPEX
OPEX
cap
= OPEX of Capture
OPEX
comp
= OPEX of Compression
OPEX
transp
= OPEX of Transportation
OPEX
stor
= OPEX of Storage
PIS = Social tax, directly charged over gross revenue
R = Gross revenue, given by k * p * q (where p is the
price of Brent Dated oil and q is the number of
barrels produced in the considered year. The
conversion factor k depends only on oil quality
(API, sulfur content, etc)
Roy = Total amount paid in Royalties
T = Corporate tax rate
References
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sequestration technology", IEA GHG R
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2
sinks. Proceedings
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storage, Regina, Canada, 2002.
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2

Storage". MIT LFEE 2003-003 RP, 2003. available in:
http://lfee.mit.edu/publications/reports
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2

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the 2002 SPE Asia Pacific Oil and Gas Conference and
Exhibition held in Melbourne, Australia.
SPE 94181 9
19. Hustad, C. W. and Austell, J. M.: Mechanisms and
incentives to promote the use and storage of CO
2
in the
North Sea, Memo, CO
2
Norway, Kongsberg, 2003.
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da Bacia do Recncavo, a mais antiga provncia
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-
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available at http://www.grida.no/climate/vital/07.htm.








10 SPE 94181
Table 1: OPEX of capture and compression from several sources of CO
2

Source of Emissions Costs of Capture and Recompression (US$/ ton CO2) Literature Source
Fertilizer Industry 8 13
Ethylene Oxide Production 9 13
Iron Steel Production 35 13
Power Plant 35-40 14
Petrochemical 46 13
Table 2: CAPEX and OPEX of CO
2
Transportation by Pipeline
Pipeline Costs (US$)
Comments
Literature Source
CAPEX 21/ in / km
(US$21 per inch of diameter per km of length)
16
OPEX 3.1/ km
(not depend on pipeline diameter)
16
OPEX 0.82 3.27 / t CO2 per 100 km
(depending on the size and capacity of the pipeline)
17

Table 3: Reservoir Technical Characteristics
Proved Reserves (MMbbl) 3.97
API Gravity 35
Field Area (Km
2
) 12.00
CO2 Injected (ton/day) 200
Storage ratio (%) 50
Oil Production (bbl/year) 182,500
CO2 Injection versus Oil Production Ratio 0.398
Capex of capture (million US$) 6.00
Capex of compression (million US$) 3.00
Capex of transportation (million US$) 6.00
Capex of storage (million US$) 1.00
Costs of abandonment (million US$) 1.10
Opex of capture (US$/ton) 3.00
Opex of Compression (US$/ton) 7.50
Opex of Transport (US$/ton) 8.00
Opex of storage (US$/ton) 3.00
Total Opex (million US$/ year) 1.46

Table 4: Economic Model: Fiscal and Economic Assumptions
Useful Life of the project (years) 20
Oil Price (US$/ bbl) 25
Discount Rate 12%
Corporate Tax 25%
Other Corporate Taxes under Net Revenue (PIS/ PASEP + COFINS) 3.65%
Royalties (net production) 5%
Rental Area (US$/Km
2
) 300

Table 5: Economic Model: Parameters for Sensitivity Analysis
Parameter Assumed Value Range
Oil Price (US$/bbl) 25.00 12.50 37.50
Oil Production (bbl/year) 182,500.00 91,250.00 182,500.00
CAPEX (MMUS$/ton CO2) 16.00 8.00-24.00
Capture Cost (US$/ton CO2) 3.00 1.50 4.50
Compression Cost (US$/ton CO2) 7.50 3.75 11.25
Transportation Cost (US$/ ton CO2) 8.00 4.00 12.00
Storage Cost (US$/ton CO2) 3.00 1.50 4.50
Credits (US$/ ton CO2) 10 5.00 15.00





SPE 94181 11

Table 6: Input Parameters of Risk Analysis
Uncertain Variables Selected Distribution Input Parameter Values
Oil Price (US$/bbl) lognormal mean = 25; standard deviation= 10
Amount of CO2 Injected triangular 150; 200; 250
Storage Ratio normal mean = 50%; standard deviation= 10%
Discount Rate lognormal mean = 12%; standard deviation = 4%
CO2 Credits lognormal mean=10; stand deviation= 5
Opex Transport triangular 6; 8; 10
Opex Compression triangular 6; 7,5; 9
Opex Storage triangular 1,5; 3; 4,5
Opex Capture triangular 1,5; 3; 4,5

The values of the parameters referring to the triangular distribution are the optimistic, most likely and pessimistic ones, respectively.




Figure 2: Interface level: Basic Conceptual Conditions of the CO2 Sequestration- EOR Process


Figure 1: Global CO2 concentration in the atmosphere (after UNEP/GRID-Arendal
32
)
12 SPE 94181

Figure 3: Mapping Level of CO2 Sequestration in EOR operation simulated by Stella Model


0
0.5
1
1.5
2
2.5
3
Stand-alone
Tax NPV
NPV + Carbon
Credits
Effective NPV Effective NPV-
undiscounted
carbon credits
U
S
$
/

b
b
l
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Stand-alone
Tax NPV
NPV + Carbon
Credits
Effective NPV Effective NPV-
undiscounted
carbon credits
M
M
U
S
$

Figure 4: a) Net Present Value of CO2 Sequestration-EOR project; b) Net Present Value per oil barrel
SPE 94181 13
-15
-10
-5
0
5
10
15
20
-60% -40% -20% 0% 20% 40% 60%
Variation
N
e
t

P
r
e
s
e
n
t

V
a
l
u
e

(
M
M
U
S
$
)
Oil Price
Oil Production
CAPEX
Transportation
Cost
Compression
Cost
Storage Cost
Capture Cost
CO2 Credits
o

0
1
2
3
4
5
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%
Variation
N
e
t

P
r
e
s
e
n
t

V
a
l
u
e

(
M
M
U
S
$
)
Opex
Transport
Opex
Compress
Opex
Storage
Opex
Capture
CO2 Credits

Figure 5: a) Sensitivity Analysis of CO2 Sequestration-EOR project considering all variables; b) considering OPEX and CO2 credits
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-30 -10 10 30 50 70 90 110
effective NPV (US$ Million)
C
u
m
u
l
a
t
i
v
e

P
r
o
b
a
b
i
l
i
t
y

o
f

N
P
V

Figure 6: Distribution of Cumulative Probability of NPV
14 SPE 94181
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1
1 2 3 4 5 6 7 8
NPV (MMUS$)
C
u
m
u
l
a
t
i
v
e

P
r
o
b
a
b
i
l
i
t
y

o
f

N
P
V
OpexCapture
OpexCompr
OpexTransport
OpexStorage
CO2Credits

Figure 7: Results of Risk Analysis