CO₂-Enhanced Oil Recovery System Optimization for Contract-based versus Integrated Operations

CO₂-enhanced oil recovery (CO₂-EOR), with its incremental hydrocarbon revenue, is considered a more economical approach among potential carbon capture, utilization, and storage (CCUS) strategies. The economic performance of CO₂-EOR, however, is critically affected by factors such as associated energy penalty, time-varying CO₂ injection requirement for hydrocarbon production, volatile hydrocarbon prices, and the substitution effect of CO₂-EOR for gas-EOR for certain producers. As one of the first steps to understand the economic potential of CO₂-EOR, this paper presents two CO₂-EOR system optimization models corresponding to two regulatory regimes: (1) a contract operator focusing on minimizing the direct cost including energy penalty, and (2) an integrated operator concerned about maximizing broader payoffs including marginal hydrocarbon revenue. We apply the two models to a set of power plants and oil production reservoirs in California and show that the optimal infrastructure networks can be substantial different under different operation schemes. Market regulation is thus one of the influencing factors that shall be considered in the planning of CO₂-EOR.