Matching Environmental and Economic Performance of CCUS Systems: An Approach to a Decision-Making Methodology for Sustainable Development

Carbon dioxide injection for enhanced oil recovery (CO₂-EOR) have been in existence for several decades as a mature technology used to increase oil production in qualifying depleted oil reservoirs. In these operations, CO₂ is injected into the oil bearing formation and produced back with the oil, but significant volumes of CO₂ get lost into the formation. In cases where the EOR operation is also a carbon capture, utilization, and storage (CCUS) project, this CO₂ loss is considered geological carbon storage (GCS).

The growing global pressure to find urgent solutions to the problem of Climate Change has reaffirmed GCS as one of the most promising tools to achieve the global Green House Gas (GHG) emissions reduction targets. Studies have suggested that a shift from traditional CO₂-EOR practices towards co-optimizing oil production and CO₂ storage could remain an interesting business for the oil industry with the right incentives and processes.

Historically most of the CO₂ supply for EOR has come from natural underground deposits, with the remaining supply coming from gas and fertilizer processing plants. The CO₂ reserves from natural sources has been declining during the past few years due to the increasing demand of CO₂ for EOR, creating incentives for alternative supply. More recently, some anthropogenic CO₂ supply projects have been developed, where the CO₂ used for EOR is captured from large power generation and industrial plants (sectors responsible for a significant amount of total global CO₂ emissions). In these projects, the environmental aspect becomes very important given the possibility of permanently storing millions of tons of CO₂ that would be, otherwise, released to the atmosphere.

In principle, CCUS seems like a promising win-win solution. However, the anthropogenic CO₂-EOR system is very complex and needs to overcome difficult challenges. One of them is the alignment of the industries that integrate the CO₂-EOR system (oil and gas, power/industrial), which respond to different intricate markets and therefore have different business models (economic performance). Another of them, the appropriate assignment of the environmental responsibilities and the integration in the decision-making strategies the GHG emission reduction goals (the environmental performance -LCA).

CO₂-EOR systems could potentially achieve a negative carbon balance, meaning that the CO₂ emitted throughout the CO-EOR system is less than the amount of carbon permanently stored in the reservoir in order to produce the oil. Achieving this ideal relationship poses methodological and practical complex challenges as well.

Different methodological approaches to emissions accounting and allocation processes across the CO₂-EOR system may yield different, even opposing, results. The common way to conduct a comprehensive analysis of GHG emissions from the CO₂-EOR system is through carbon Life Cycle Analysis (LCA). However, the discussion of methods for the allocation of GHG emission responsibilities (or credits) still seems to persist. In complex systems, the definition of boundaries, the management of co-products and, the definition of the Functional Unit, play a decisive role in the carbon balance analyses. In the case of "substitution/displacement" methods, there are arguments on which product or process (up, middle, or downstream) to substitute and consequently assign corresponding environmental credits. Regarding these issues, LCA analysis alone provides incomplete information on the important relationship between the economic and environmental aspects of CO₂-EOR systems, limiting its relevance to the proper decision-making of the private sector.

The development of commercial scale CCUS systems does not appear to have any technical limitations. The greatest uncertainties for stakeholders seem to be of economic and policy nature. Obviously, coherent regulatory and incentive policies would provide the institutional framework needed to drive CCUS expansion. However, in order to do so, the top priorities should be to clearly understand the economic implications/consequences of investment decisions, and the integration of the environmental “externalities”. The market has to give/receive the whole signs of cost and benefits of actor’s decisions to achieve a truly sustainable development of the CCUS system.

This study intent to explore, from the private and a sustainable point of view, a methodological route for the decision making of investments in the CCUS system, in a way that holistically harmonizes compensation mechanisms of the economic and environmental goals.