Evaluation of cooperative mitigation: captured carbon dioxide for enhanced oil recovery

Abstract

Robust mitigation options will play significant role in achieving the target of limiting global change to below 1.5°C above pre-industrial levels by 2100. To support cooperation for mitigation development, we establish a real options-based model to evaluate the rational decisions of exercising the abandon option for carbon capture and storage-enhanced oil recovery (CCS-EOR) projects under oil market and geological uncertainties. Three possible cooperative mechanisms (fixed carbon dioxide (CO 2 ) price, oil-indexed CO 2 price, and joint venture contracts) among CO 2 -EOR stakeholders are evaluated. The results show that the conflicts in profit maximization targets for different stakeholders in cooperative mitigation are to a great extent unable to be avoided. A joint venture business model is preferred in cooperative mitigation as it can effectively weaken such conflicts. And it is more reasonable to provide incentives to the downstream of the CO 2 -EOR chain than compensating the adoption cost of carbon capture technologies in the upstream. From a global perspective, the inefficient cooperation can be a main barrier that hinders the development of deep-cutting options. Global mitigation strategies should not only focus on promoting technology progress but also the design of innovative business models to balance the benefits among stakeholders. A joint venture business model is recommended in both the developed and developing countries for seizing the early mitigation opportunities. Keywords Real options . Monte Carlo simulation . Carbon capture and storage (CCS) . Enhanced oil recovery (EOR) . Cooperative mechanism of mitigation

CLIMATE CHANGE MITIGATION STRATEGIES IN THE OIL & GAS SECTOR: A REVIEW OF PRACTICES AND IMPACT

“…Governments can provide incentives and regulatory support for emissions reduction initiatives, while companies can bring innovation and investment to the table. Publicprivate partnerships can leverage the strengths of both sectors to achieve common goals (Ghazinoori & Nozari, 2021, Masucci, Brusoni & Cennamo, 2020, Zhu, Yao & Zhang, 2020. Engaging with stakeholders, including communities, NGOs, and investors, is critical for successful emissions reduction efforts.…”

Using Real Options Thinking to Value Investment Flexibility in Carbon Capture and Utilization Projects: A Review

“…Finally, Deeney et al [18] benchmarked the real options-based value of the R&D investment against a static NPV that did not include any flexibility; (3) Policy appraisal: The applications of ROT can also be helpful in evaluating how different policy instruments affect the timing or level of investments in CCU projects, subject to uncertainty. To evaluate the effectiveness of different policy incentives, the real options-based value of CCU investments was calculated under different government subsidy modes or levels in seven papers from the literature set [7,33,36,[39][40][41][42]; (4) Business model: The evaluation of different business models can demonstrate how investments in CCU projects can be optimized. The CCU value chain involves different processes, from CO 2 capture to CO 2 utilization, with different partners being responsible for each process.…”

“…How these stakeholders cooperate can affect investment decisions in CCU projects. Zhu et al [40] investigated three different business models between a coal-fired power plant (CFPP) and a oil producer with different contract terms: a fixed CO 2 price; an oil-indexed CO 2 price; and a joint venture contract. Compernolle and Thijssen [17] compared the investment thresholds for a CFPP (CO 2 capture) and an oil producer (CO 2 -EOR) on a stand-alone basis with their investment thresholds in a joint venture.…”

Hollow Fiber Membrane Contactors in CO2 Desorption: A Review

“…The CO 2 capture cost is predicted to be higher than $60/t CO 2 captured, which is not economically viable based on carbon prices in the short term . Therefore, more research has to be done in the field of postcombustion CO 2 capture based on promising technologies, such as membrane contactors, for the operational and economic viability of power plants with CO 2 capture systems …”

“…8 Therefore, more research has to be done in the field of postcombustion CO 2 capture based on promising technologies, such as membrane contactors, for the operational and economic viability of power plants with CO 2 capture systems. 9 1.1. Postcombustion Carbon Capture.…”