A partnership between oilfield operators and the federal government in the coupled CO2 enhanced oil recovery (EOR) and storage projects may bring long-term benefits for both. This paper quantifies the win-win condition for this partnership in terms of an optimum storage tax credit.

We introduce a basic conceptual model for the CO2 market and investigate the market sustainability conditions. We quantitatively show how the storage tax credit affects the optimum economic storage capacity of an oilfield as well as the benefits for the oilfield operator and the government. Two field-scale models for the EOR-storage operation are developed, namely Sandstone and Carbonate. The Sandstone model is tuned according to the top 10% performing West Texas CO2-EOR reservoirs while the Carbonate model is tuned according to the moderately performing reservoirs. The EOR-storage performance of the simulated Sandstone and Carbonate reservoirs is likely to be moderate to optimistic where the oil production performance is between 50 and 100 stbd/well and the CO2 utilization is between 5 and 10 Mscf/stb. Assuming $60/stb oil price and $80/tonne anthropogenic CO2 cost, the storage tax credit should be between 20 and $40/tonne to allow for an economically feasible EOR-storage operation and satisfy market sustainability (win-win) for both the oilfield operators and the federal government. Below this range, EOR-storage is infeasible and neither the operators nor the government gain benefits (lose-lose); above the optimum tax credit range the government spends too much while the operator gains benefits (lose-win). This study, however, does not consider the intangible social, economical, and environmental benefits of anthropogenic CO2 storage.

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