Abstract
Enhanced oil recovery (EOR) schemes have been slow to evolve in the exploitation of hydrocarbons from the UK Continental Shelf. They are generally much more expensive to execute offshore than in onshore USA where they are relatively common. This paper provides a detailed analysis of the economic aspects of several EOR projects namely low salinity waterflood, polymer flood, and miscible gas injection. Detailed economic modelling of example schemes finds that, in current circumstances in the UKCS, prospective returns, while worthwhile in undiscounted cash flow terms, are only very modest at discount rates reflecting the cost of capital. It is also noted that there are several significant investment risks. Further tax incentives relating to the purchase of polymer and miscible gas could enhance returns to these EOR projects without introducing any distortions.
