Evaluation of two alternative carbon capture and storage technologies

Publications

Keywords: carbon capture and storage, enhanced oil recovery, power plants, stochastic model, futures markets

Author(s): Luis M. Abadie, Ibon Galarraga and Josu Lucas

Date: 2013-16-05

Issue: 2013-03

Keypoints

Carbon dioxide capture and storage (CCS) is one of the technologies for
fighting climate change in the future. The use of CO2 for enhanced oil
recovery (EOR) paired with storage in deep saline formations (DSF) could
effectively help to support CCS demonstration projects, reduce costs and
thus guarantee the future economic viability of power plants incorporating
both EOR and CCS.
CCS without EOR is highly unprofitable at both current and expected
carbon market prices.
The profitability of these technologies is highly influenced by the volatility
of future electricity prices, oil prices and carbon allowance prices.
Investment in EOR and secondary DSF storage can only be profitable
with a long-term equilibrium price for oil higher than $51/barrel. When
the investment decision can be made at any time the trigger value for
optimal investment is significantly higher at $89/barrel. However, an increase
in the investment cost can substantially raise these trigger prices.