115

Arch. Min. Sci., Vol. 53 (2008), No 1, p. 115–124
STANISLAW NAGY*, ANDRZEJ OLAJOSSY*
ECONOMIC ANALYSIS OF USE OF THE EARLY APPLICATION
CO
2
AND CO
2
/N
2
-EOR TECHNOLOGY IN POLAND
ANALIZA EKONOMICZNA TECHNOLOGII WTÓRNEJ EKSPLOATACJI ZŁOŻA ROPY NAFTOWEJ
Z WYKORZYSTANIEM CO
2
ORAZ CO
2
/N
2
W POLSCE
Enhanced oil recovery methods are applied more frequently nowadays, mainly because of economic
reasons. The classic waterflooding methods that aim to maintain the reservoir pressure are substituted or
updated by the Water Alternating Gas technology (WAG).
It involves alternating injection of water and gas, or simultaneous injection of water into the bottom
of reservoir and gas into the cap of it. The new intelligent methods (which use synergy of gathering and
processing reservoir data, special injection systems and modification of viscosity if injection fluids) are
very promising in new EOR. The application of high-nitrogen content gas, residue gases after methane-
nitrogen separation processes, carbon dioxide or solutions containing carbon dioxide and nitrogen are
considered in terms of the oil recovery efficiency, defined as obtaining of a maximal depletion during
twenty years of exploitation. For the selected small oil reservoir in the Polish Lowland, it was performed
model research with usage of a pseudo-compositional simulator. Various aspects of gas injection concer-
ning increasing of the reservoir pressure and increase of recovery has been analyzed. Presented results
show possibility to increase of recovery factor from 11% and 36% up to 53/56% in case of CO
2
/N
2
and
CO
2
EOR. The presented results are promising and show potential possibilities of rising oil recovery up
to 60% for average oil price higher than 40 $ per bbl.
Keywords: Enhanced Oil Recovery, EOR, gas injection, nitrogen carbon dioxide sequestration, econo-
mics
Metody wtórne w procesach eksploatacji ropy naftowej są stosowane coraz powszechniej w świecie,
głównie z przyczyn ekonomicznych. Klasyczne metody nawadniania złoża celem podtrzymania ciśnienia
złożowego są zastępowane lub uzupełniane poprzez technologię WAG – naprzemiennego zatłaczania
wody i gazu, czy równoczesnego zatłaczania wody do spągu złoża i gazu do czapy oraz poprzez nowe
„inteligentne” metody wykorzystujące synergistyczny efekt nowych technik zbierania i przetwarzania
informacji oraz aplikacji specjalnych technologii zatłaczania gazu/wody do wyselekcjonowanych
partii złoża, modyfikacji mobilności płynów etc. Wykorzystanie gazu ziemnego zaazotowanego, azotu
* AGH UNIVERSITY OF SCIENCE & TECHNOLOGY, AL. MICKIEWICZA 30, 30-059 KRAKOW, POLAND, nagy@agh.edu.pl,
olajossy@agh.edu.pl
116
odpadowego po separacji metanu i węglowodorów lub też roztworów zawierających dwutlenek węgla
i odpadowy azot jest rozważane w aspekcie skuteczności procesu sczerpania złoża,. Dla przykładowego
złoża ropy naftowej Niżu Polskiego wykonano badania modelowe z wykorzystaniem symulatora pseudo-
kompozycyjnego. Analizowano różne aspekty zatłaczania gazu w celu podniesienia ciśnienia złożowego
oraz zwiększenia wydobycia. Zaprezentowane wyniki są obiecujące i pokazują potencjalne możliwości
zwiększenia od 11% i 36% do 56% wydobycia ropy naftowej ze złoża w przypadku użycia CO
2
/N
2
i CO
2

w porównaniu do przypadku eksploatacji pierwotnej złoża. Wykonano dla tych przykładów szereg analiz
ekonomicznych, które zamieszczono w niniejszej pracy. Instalacje wspomagające mogą być opłacalne
i mogą prowadzić do wzrostu końcowego współczynnika wydobycia ropy do 60% dla średniej ceny ropy
na poziomie 40 USD.
Słowa kluczowe: wtórne metody eksploatacji ropy naftowej, EOR, zatłaczanie gazu, azot, sekwestracja
dwutlenku węgla, ekonomika
1. Introduction
The increasing importance of carbon dioxide sequestration processes, together with
possibilities of application of gases with low caloric values, and high prices of oil will favor
attempts of “waste” CO
2
exploitation from large energy sources (e.g. power plants) for
EOR purposes (e.g. Nagy, Olajossy & Siemek, 2006; Krzystolik et al., 2007; Siemek et al.,
2006; Nagy 2006; Nagy et al., 2006). Those methods include: injection of gases like CO
2
,
N
2
or the natural gas. The combination of CO
2
sequestration and EOR processes seems
to be an interesting idea, provided that carbon dioxide is available. Also large amounts
of available gases of low-calorific values (or non-calorific ones (very high N
2
content))
leads its application into the EOR processes. Another additional issue is the possibility of
introducing of the new EOR technology called “Game Changer”, accepted by the Depart-
ment of Energy (DOE U.S.A.) (Kuuskraa et al., 2006). The aforementioned technologies
allow increasing the total recovery factor to the level of 60-80% (Kuuskraa et al., 2006).
2. „Game Changer” CO
2
-EOR Technology
In order to create the new technology, it was used the results of 82 projects con-
cerning CO
2
EOR analysis since 80’s (Kuuskraa et al., 2006). Those projects, which
were realized in the USA, make use of four natural CO
2
sources in Jackson Dome,
McElmo Dome, Sheep Mountain and Bravo Dome. Most of those projects concern the
Permian Basin and the Rocky Mountains. The total production of oil in those processes
exceeds 250 thousands of barrels per day. The main purpose of the new technology is
the recovery of significant amount of oil which arises in a reservoir after finishing the
primary exploitation process and the secondary exploitation process (waterflooding of
reservoir). The remaining amount of oil, following those two processes, equals usually
between 40-50% of original geological resources. The analysis of the present amount
of resources exploitable in the context of increasing prices of oil allowed specifying the
new economically affordable EOR-CO
2
technology.
117
The old (classic) technology differs from an optimal system of CO
2
flooding mainly
because of (Kuuskraa et al., 2006):
• Complex geological characterization
• Inability to monitor the real course of the EOR process
• Limited abilities of fluid injection process steering
In particular, high price of CO
2
, lack of information and inability to control process led
to the fact that too low amount of CO
2
was injected into the reservoir (see the analysis of
the amount of injected CO
2
influence for Hadlow (1992)). Increasing of injected CO
2
from
0.2 HCPV to 0.8 HCPV allows to boost the recovery coefficient by 20%. New laboratory
research and computer modeling indicate that it is necessary to increase the amount of
injected CO
2
to 1.5-2 HCPV. For present economical conditions it is possible to increase
exploitation from 8 to 15 times in comparison to the classic CO
2
-EOR technologies.
The old technological limits were not only involved with the small amount of CO
2
,
but also with phenomena limiting CO
2
-oil contact (viscous fingering, low mobility ra-
tio). Applied presently viscosity modifiers (polymers) allow eliminating those negative
issues. The additional possibilities of precise specification of vertical distribution of
horizontal permeability allow the selective choice of active (opened) layers that can be
flooded. Those layers have lower permeability that results in lower risk of quick CO
2

breakthrough between injection and production wells.
Applied new techniques of CO
2
-EOR process show that it is possible to increase the
recovery coefficient in carbonate rocks even to 80% (Wilkinson et al., 2004). The new
recommendation of DOE (Game Changer Document) specifies a number of innovative
hints to successfully develop “Game Changer CO
2
-EOR” technology.
1. Innovative project of injection and well’s placement
2. Increasing of mobility and changing of viscosity
3. Increasing of CO
2
injection amount (above 1.5 HCPV)
4. Diagnosis of the EOR process and its consequences:
• Creating of interdisciplinary experts teams
• Usage of 4D seismic
• Introduction of in situ measurements
• Determination of information concerning saturation zones
The additional benefit of such CO
2
-EOR projects, which will be realized in following
years, is increasing of the storage capacity coefficient of CO
2
during the process mainly
due to reduction of saturation of oil and dissolution of parts of CO
2
in bottom aquifer
layers. The example of such a leading CO
2
-EOR project is the “Weyburn” one.
Apart from the “Game Changer CO
2
-EOR” technology applied mainly after finishing
classic program of the reservoir flooding, it is possible to use the simplified methodology.
It involves omitting of reservoir waterflooding period and CO
2
injection immediately after
finishing of primary exploitation process. Such an approach concerns mainly increasing
of economic efficiency of the venture by shortening exploitation period.
118
3. Use of CO
2
and CO
2
/N
2
Mixture After Short Period of CO
2
Injection
Recently Nagy& Olajossy (2007) show that use of N
2
/CO
2
in injection stream after
two years of injection of CO
2
into oil reservoir may be possible. Nitrogen as a reservoir
injection medium for EOR purposes is very easily accessible, which is a great benefit.
One of ways of obtaining nitrogen is its separation from hydrocarbons included in natural
gas. When natural gas includes sulfide it is necessary to initially remove sulfide using
standard methods (Clauss, MDE et al.).
However, in many cases natural gas recovered in wells does not contain sulfur. Even
more profitable situation is when natural gas has additionally the limited nitrogen content
of no more than 37% of its volume. In such cases, the authors have access to own modern
technology of enriching natural gas with methane which exploits separated nitrogen. In
this technology the vacuum pressure swing absorption (VPSA) technique could be ap-
plied which uses itemized adsorbent (zeolite molecular sieve – ZMS). This sieve comes
from a natural zeolite reservoir and was treated with ionic activation. The product of
this installation is, apart from nitrogen, gas of high-methane content which is obtained
under a high pressure (equal to the pressure at the well head). This gas can be directly
transported to the gas net (Olajossy, 2007). The waste nitrogen can be compressed and
inject into reservoir. The main problem is sufficient quantity of nitrogen. In most cases
the quantity is limited. In this case additional cryogenic installation to separate nitrogen
from air has to be used. This may be economical questionable in some cases
4. Project of cash flow analysis (CF) of small oil field with early
application CO
2
& CO
2
/N
2
EOR
The techno-economical model integrates the EOR module for small field (43° API,
Initial Oil in Place (IGIP) is 25 mln Sm
3
,
with initial Gas Oil Ratio 170 m
3
/m
3
, satura-
tion pressure about 250 bar, and initial pressure 260 bar) with economic quantities that
enables calculations of cost and incomes related to CO
2
enhanced oil recovery projects.
One of the most important variables needed in an oilfield development decision, is the
preliminary estimate of the number of wells required to exploit the reservoir. This best
(“optimum”) number should satisfy both the technical and economic criteria. Four well
has been designed for production process, and for scenario 2 & 3 additional four well
located in the gas cap has been assumed after finishing the modeling process.
From the reservoir modeling (Nagy & Olajossy, 2007) information it is possible
to calculate the EOR profiles for each reservoir scenario (primary restrictive scenario,
primary forced scenario, EOR CO
2
scenario, EOR CO
2
/N
2
scenario). In the restrictive
scenario only 11% of primary recovery is assumed in 25 years exploitation, 33% during
“forced” production by 25 years, and 38% and 56% has been obtained from modeling
for scenario 2 & 3 after 25 and 36 years of exploitation (EOR CO
2
). The scenario for
119
CO
2
/N
2
gives 53% for 36 years. Total eight econonomic scenario has been calculated
(two base scenario at oil price 40 and 60 $ per bbl, additional four scenarios with CO
2

injection, and two scenarios with CO
2
/N
2
). The additional two scenario with CO
2
/N
2
has
been cancelled, because of high investment cost of CO
2
pipeline used only two years in
proposed project. From economical point of view – project, which may be technological
effective is generally non profitable.
The CO
2
-EOR project economies are calculated based on incremental oil profiles
(Campbell et al., 1991; Seba, 1998), investment costs, operating costs and costs for CO
2

or CO
2
/N
2
mixture. It is assumed that all gas is re-circulated after CO
2
breakthrough,
and the amount of imported CO
2
to the field is therefore reduced over time (about 40%).
The cost for CO
2
transportation is entered in the economy sheet based on the capacity of
the main CO
2
infrastructure (see Tab. 2-3). The capital cost of pipeline for 100 km with
diameter 300 mm is below 25 mln $. The operating cost for transport of 1 CO
2
tone is
in range 4-6 $. In this project the upper limit has been selected (6 $ per tone). Cost of
compression of CO
2
is included, as well as cost of four injection wells. The all investment
costs for a CO
2
incremental oil project are calculated based on costing of:
1. tapping point for CO
2
on the main transport line
2. branch CO
2
pipeline to the field
3. modification of oil production process
4. CO
2
/N
2
compressors
5. injection gas drying plant
6. injection wells.
A starting time for the CO
2
injections are entered (after 12 years), and investment and
operating costs for each project are calculated based on the CO
2
injection rates defined
in the field sheet. Most of the listed costs are capacity dependent, and the compressor
costs are also dependent on the injection pressure. The running costs consist of:
1. CO
2
costs
2. operating costs for the process equipment
3. energy costs.
For the presented project economy expressed as yearly cash flow is calculated and
the accumulated discounted net cash flow is found and show in the tables 1a-3b. The
calculated IRR and NPV is given in the table 4. The plots of NPV & IRR for each 1-3
scenario is presented also in fig. 1-3. Also at the early decision phase, none of the re-
servoir and financial variables involved are known to a high degree of certainty. The
project stops in the year 25 (scenario 1) or 38 (scenario 2,3).
120
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122
Fig. 1. NPV & IRR for scenario 1a and 1b in k $ (2007) dollar (discount rate 10%,
long forecasting oil price 40 $ per barrel (a), and oil price 60 $ per barrel (b))
Rys. 1. Rentowność inwestycji – NPV i IRR dla scenariusza „1a” i „1b” w tys. $ (2007).
Założona cena ropy naftowej 40 $ za baryłkę (a) oraz 60 $ za baryłkę (b)
6.000
4.000
2.000
0
(2.000)
(4.000)
(6.000)
(8.000)
(10.000)
(12.000)
(14.000)
0% 10% 20% 30% 40% 50% 60%
IRR
N
P
V
(
k
$
)
40 $ per bbl
60 $ per bbl
TABLE 4
Comparison of NPV and IRR for each scenarios (NPV in k $, assumed discount rate 10%)
TABLICA 4
Porównanie wartości NPV i IRR dla każdego scenariusza (NPV w tys. $,
założona stopa dyskontowa 10%
NPV IRR
Scenario 1a –5840 6.2%
Scenario 1a 2120 13.9
Scenario 2a 41530 44.8%
Scenario 2b 50230 51.2%
Scenario 3a 17700 37.7%
Scenario 3b 42300 51.0%
5. Conclusions
Based on analysis from the reservoir modeling it was possible to calculate the EOR
profiles for each reservoir scenario (primary restrictive scenario, primary forced scena-
rio, EOR CO
2
scenario, EOR CO
2
/N
2
scenario). In the restrictive scenario only 11% of
primary recovery is assumed in 25 years exploitation, 33% during “forced” production
by 25 years, and 38% and 56% has been obtained from modeling for scenario 2 & 3
123
after 25 and 36 years of exploitation (EOR CO
2
). The scenario for CO
2
/N
2
gives 53% for
36 years. Total eight economical scenario has been calculated (two base scenario at oil
price 40 and 60 $ per bbl, and additional four scenarios with CO
2
injection two scenarios
for CO
2
/N
2
injections). From economical point of view – CO
2
/N
2
project may be tech-
nological effective is generally non profitable. The best scenario for designing of early
Fig. 3. NPV & IRR for scenario 3a and 3b in USD (2007) dollar (discount rate 12%,
long forecasting oil price 40 $ per barrel (a), and oil price 60 $ per barrel, (b))
Rys. 3. Rentowność inwestycji – NPV i IRR dla scenariusza „3a” i „3b” w tys. $ (2007).
Założona cena ropy naftowej 40 $ za baryłkę (a) oraz 60 $ za baryłkę (b)
Fig. 2. NPV & IRR for scenario 2a and 2b in USD (2007) dollar (discount rate 12%,
long forecasting oil price 40 $ per barrel (a), and oil price 60 $ per barrel (b))
Rys. 2. Rentowność inwestycji – NPV i IRR dla scenariusza „2a” i „2b” w tys. $ (2007).
Założona cena ropy naftowej 40 $ za baryłkę (a) oraz 60 $ za baryłkę (b)
0% 10% 20% 30% 40% 50% 60%
N
P
V
(
k
$
)
IRR
40 $ per bbl
60 000
50 000
40 000
30 000
20 000
10 000
0
(10 000)
60 $ per bbl
0% 10% 20% 30% 40% 50% 60%
N
P
V
(
k
$
)
IRR
40 $ per bbl
50 000
40 000
30 000
20 000
10 000
0
(10 000)
60 $ per bbl
124
application of EOR is scenario 2b, which is result of high oil price (60$) and additional
income from CO
2
storage service (assumed 8 $ per tone). The scenario 3 gives also high
NPV but high CO
2
cost (at the level 12 $ per tone) diminishes NPV about 15%. The
analysis show that very restrictive primary production may be uneconomical, because
may not cover capital cost related to drilling of wells in the first stage of project.
6. Acknowledgements
This study is funded by the Ministry of Science and Higher Education grant R09 02301
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Received: 06 August 2007