ENHANCED OIL RECOVERY (EOR) AS A STEPPING STONE TO CARBON CAPTURE AND SEQUESTRATION (CCS) Dana M Abdulbaqi, Saudi Aramco Carol Dahl, Colorado School of Mines & Luleo Technical University Mohammed AlShaikh, Saudi Aramco June 2016

Outline Motivations Workflow and Objectives Methodology Reservoir Simulation Model Dynamic Optimization Model Results Conclusions Future Work 2

Motivation CO2-EOR’s commercial viability as a sequestration option: Industry’s Expertise Existing Infrastructure Technical estimates of CO2 sequestration potential Opportunity for development of CO2 Market Carbon Capture Facilities = Suppliers CO2-EOR Projects = Demanders How CO2-EOR producer’s will co-optimize: Oil Recovery & CO2 Sequestration 3

Motivation Leach, Mason and van’t Veld, 2011 Co-Optimization of Enhanced Oil Recovery and Carbon Sequestration. Only study found that uses a dynamic optimization model to address the co-optimization issue. Analysis is limited to the productive life of the field. van’t Veld, K, Wang, X, Alvarado, V, 2014 Economic Co-optimization of Enhanced Oil Recovery and CO2 Sequestration. Make use of dynamic reservoir simulation model to enhance technical assumptions. 4

Stage-2: CO2 Sequestration Reservoir Simulation Maximizing NPV of the producer during CO2 sequestration activities subject to resource constraints. Reservoir Simulation Dynamic Reservoir Simulation Model was built to mimic CO2-EOR process using WAG injection and estimate sequestration capacity. Stage-1: CO2-EOR Maximize NPV of the producer during CO2-EOR subject to resource constraints and tax policy. δ(c(t)) Equations Reservoir simulation model output was used to construct equations used in the dynamic optimization model. Sim: http://greenzyme.btprocessing.com/greenzymewag.html Decline: http://www.usmineralresources.com/index.php?id=4 Opt: Dynamic Optimization A 2-stage dynamic optimization model was developed to track total carbon movements during the CO2-EOR and beyond oil production activities.

Optimal Control: Stage 1 CO2-EOR 𝒎𝒂𝒙 𝝅= 𝟎 𝑻 𝒆 −𝒓𝒕 𝒑−𝜷𝝉 𝒒 𝒑 𝒐 𝒕 + 𝝉 𝒒 𝒔 𝒄 (𝒕) −[ 𝒘 𝑵𝑹 +𝝉 𝒒 𝑵𝑹 𝒄 (𝒕) − 𝒘 𝑪𝑨𝑷 𝒒 𝑪𝑨𝑷 𝒄 (𝒕) − 𝒘 𝒓 𝒒 𝒓 𝒄 (𝒕) −𝑭 𝒅𝒕 𝑝−𝛽𝜏 𝑞 𝑝 𝑜 ( 𝑡) – Revenues from Oil Production 𝜏 𝑞 𝑠 𝑐 (𝑡) – Revenues From Sequestration 𝑤 𝑁𝑅 +𝜏 𝑞 𝑁𝑅 𝑐 (𝑡)– Costs of Natural CO2 Usage 𝑤 𝐶𝐴𝑃 𝑞 𝐶𝐴𝑃 𝑐 (𝑡) – Costs of Captured CO2 Usage 𝑤 𝑟 𝑞 𝑟 𝑐 𝑡 – Costs of Recycling CO2 𝐹 – Costs not related to CO2 purchase and handling 6

Optimal Control: Stage 1 CO2-EOR 𝒎𝒂𝒙 𝝅= 𝟎 𝑻 𝒆 −𝒓𝒕 𝒑−𝜷𝝉 𝒒 𝒑 𝒐 𝒕 + 𝝉 𝒒 𝒔 𝒄 (𝒕) −[ 𝒘 𝑵𝑹 +𝝉 𝒒 𝑵𝑹 𝒄 (𝒕) − 𝒘 𝑪𝑨𝑷 𝒒 𝑪𝑨𝑷 𝒄 (𝒕) − 𝒘 𝒓 𝒒 𝒓 𝒄 (𝒕) −𝑭 𝒅𝒕 Constraints: 𝑶𝒊𝒍(𝒕) =− 𝒒 𝒑 𝒐 𝒕 𝑵𝒂𝒕𝒖𝒓𝒂𝒍 𝑪𝑶𝟐(𝒕) =− 𝒒 𝑵𝑹 𝒄 𝒕 𝑺𝒆𝒒𝒖𝒆𝒔𝒕𝒓𝒂𝒕𝒊𝒐𝒏(𝒕) = 𝒒 𝒔 𝒄 𝒕 7

Optimal Control: Stage 2 CO2 Seq. 𝒎𝒂𝒙 𝝅 = 𝒕 𝟏 𝑻 𝒆 −𝒓𝒕 ( 𝒑 𝒑 ) 𝒒 𝒔 𝒄 𝒄 𝒕 −𝑭𝒄 𝒕 𝒅𝒕 ( 𝒑 𝒑 ) 𝒒 𝒔 𝒄 𝒄 𝒕 – Revenues from Selling Pore Space 𝑭𝒄 𝒕 – costs for CO2 purchase and handling Constraint: 𝑺𝒆𝒒𝒖𝒆𝒔𝒕𝒓𝒂𝒕𝒊𝒐𝒏(𝒕) = 𝒒 𝒔 𝒄 𝒄 𝒕 𝑺𝒆𝒒𝒖𝒆𝒔𝒕𝒓𝒂𝒕𝒊𝒐𝒏 𝑻 ≤𝟏.𝟐∗ 𝟎 𝒕 𝟏 𝒒 𝒑 𝒐 𝒕 8

Results Using various combinations of oil price (P) and tax levels (𝜏) to solve for the optimal time paths of: CO2 usage from each source 𝑞 𝑁𝑅 𝑐 (𝑡) & 𝑞 𝐶𝐴𝑃 𝑐 𝑡 CO2 injection rate 𝑐 𝑡 CO2 sequestration 𝑞 𝑠 𝑐 (𝑡) Oil production 𝑞 𝑝 𝑜 (𝑡) Timing of the switch from Stage 1 to 2 Termination Time Tax Threshold = 𝑤 𝐶𝐴𝑃 − 𝑤 𝑁𝑅 = $20 𝑡𝐶𝑂 2 (Stage 1) 9

If Tax < $20 𝑡𝐶𝑂 2 , tax on 𝑞 𝑁𝑅 𝑐 (𝑡) usage negates the credit received from 𝑞 𝑆 𝑐 (𝑡). If Tax > $20 𝑡𝐶𝑂 2 , observe the benefits of the credit received from 𝑞 𝑆 𝑐 (𝑡).

Stage 2: Total Profits Over Both Stages in Millions of Dollars Tax Level Price Level 50 100 150 200 42 90 138 187 19 38 86 133 182 20 37 85 181 21 134 40 33 80 128 176 68 117 165 120 10 57 106 155

Conclusions Our model assists in Tracking total carbon movements under a tax policy. We observe Transition from usage of natural to captured CO2. Incentive to continue CO2 sequestration beyond oil production. Reduce net CO2 emissions resulting from oil production. Minimal Impact on Oil Production 14

ENHANCED OIL RECOVERY (EOR) AS A STEPPING STONE TO CARBON CAPTURE AND SEQUESTRATION (CCS) Dana M Abdulbaqi, Saudi Aramco Carol Dahl, Colorado School of Mines & Luleo Technical University Mohammed AlShaikh, Saudi Aramco June 2016

Future Work Co-manage of oil production and pore volume capacity while varying: Market Parameters Reservoir Parameters Upscale to regional modeling effort Allocation of natural and captured CO2 volumes across a portfolio of producing assets Impacts on co-management of pore volume & oil production Mechanics of supply and demand of CO2 16

How CO2-EOR Works? 18