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The economics of CO2-EOR cluster developments in the UK Central North Sea

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  • Kemp, Alexander G.
  • Kasim, Sola

Abstract

Studies to date have generally shown that individual CO2-EOR offshore projects are uneconomic except under questionable assumptions. The present study is based on an interconnected cluster of nine oilfields in the Central North Sea linked to an onshore CO2 collection hub by a set of existing and new pipelines. Monte Carlo simulation modelling was undertaken of the prospective returns to investments in CO2-EOR in the fields. Relatively high oil prices were employed for the study period (2020–2050) and two contrasting CO2 transfer price scenarios, the first being the Carbon Price Floor (CPF) introduced by the UK Government and the second being relatively low negotiated prices reflecting recent and prospective levels under the EU-ETS. At CPF prices the investment returns were all found to be negative, but at prices averaging £10 per tonne positive returns were generally achieved. The study emphasises the importance of CO2 prices and the taxation system in determining the viability of the investments.

Suggested Citation

  • Kemp, Alexander G. & Kasim, Sola, 2013. "The economics of CO2-EOR cluster developments in the UK Central North Sea," Energy Policy, Elsevier, vol. 62(C), pages 1344-1355.
    • Handle: RePEc:eee:enepol:v:62:y:2013:i:c:p:1344-1355
    DOI: 10.1016/j.enpol.2013.07.047
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    References listed on IDEAS

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    1. Kemp, Alexander G. & Sola Kasim, A., 2010. "A futuristic least-cost optimisation model of CO2 transportation and storage in the UK/UK Continental Shelf," Energy Policy, Elsevier, vol. 38(7), pages 3652-3667, July.
    2. Middleton, Richard S. & Bielicki, Jeffrey M., 2009. "A scalable infrastructure model for carbon capture and storage: SimCCS," Energy Policy, Elsevier, vol. 37(3), pages 1052-1060, March.
    3. Klokk, Ø. & Schreiner, P.F. & Pagès-Bernaus, A. & Tomasgard, A., 2010. "Optimizing a CO2 value chain for the Norwegian Continental Shelf," Energy Policy, Elsevier, vol. 38(11), pages 6604-6614, November.
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    Cited by:

    1. Janssen, Aljoscha, 2022. "Innovation Begets Innovation and Concentration: The Case of Upstream Oil & Gas in the North Sea," Working Paper Series 1431, Research Institute of Industrial Economics.
    2. Roman Mendelevitch & Pao-Yu Oei, 2015. "The Impact of Policy Measures on Future Power Generation Portfolio and Infrastructure: A Combined Electricity and CCTS Investment and Dispatch Model (ELCO)," Discussion Papers of DIW Berlin 1521, DIW Berlin, German Institute for Economic Research.
    3. Song, Xiaohua & Ge, Zeqi & Zhang, Wen & Wang, Zidong & Huang, Yamin & Liu, Hong, 2023. "Study on multi-subject behavior game of CCUS cooperative alliance," Energy, Elsevier, vol. 262(PB).
    4. Michele Fioretti & Alessandro Iaria & Aljoscha Janssen & Robert K Perrons & Clément Mazet-Sonilhac, 2022. "Innovation Begets Innovation and Concentration: the Case of Upstream Oil & Gas in the North Sea," SciencePo Working papers hal-03791971, HAL.
    5. Oei, Pao-Yu & Mendelevitch, Roman, 2016. "European Scenarios of CO2 Infrastructure Investment until 2050," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 37, pages 171-194.
    6. Compernolle, T. & Welkenhuysen, K. & Huisman, K. & Piessens, K. & Kort, P., 2017. "Off-shore enhanced oil recovery in the North Sea: The impact of price uncertainty on the investment decisions," Energy Policy, Elsevier, vol. 101(C), pages 123-137.
    7. Lars Ingolf Eide & Melissa Batum & Tim Dixon & Zabia Elamin & Arne Graue & Sveinung Hagen & Susan Hovorka & Bamshad Nazarian & Pål Helge Nøkleby & Geir Inge Olsen & Philip Ringrose & Raphael Augusto M, 2019. "Enabling Large-Scale Carbon Capture, Utilisation, and Storage (CCUS) Using Offshore Carbon Dioxide (CO 2 ) Infrastructure Developments—A Review," Energies, MDPI, vol. 12(10), pages 1-21, May.

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