Economic Limit of CCUS Enhanced Oil/gas Recovery Projects

This study investigates the economic limit of Carbon Capture, Utilization, and Storage (CCUS) projects applied to enhanced oil/gas recovery (EOR/EGR), aiming to identify the optimal point at which these projects should transition to pure Carbon Capture and Storage (CCS) operations to maximize long-term economic returns. The scope of this research encompasses key influencing parameters, such as carbon trading price trends, incremental oil production, and CO2 storage efficiency over time. A quantitative model is developed to assess the economic performance of CCUS-EOR/EGR projects by calculating the Net Present Value (NPV) of transitioning to pure CCS at different operational years. The method includes constructing future prediction functions for carbon trading prices (using a Sigmoid growth function), incremental oil production (using exponential decay), and storage efficiency (using a decaying function with a minimum asymptote). Annual cash flows are derived from oil production revenue and carbon sequestration benefits, offset by operational costs. The economic limit point is defined as the year when the NPV of the project reaches its maximum if the operation is converted to CCS from that point onward. Results indicate that after a certain operational period, the oil production benefit declines due to CO2 breakthrough and reduced displacement efficiency, while the carbon sequestration benefit increases due to rising carbon prices and cumulative injection. For example, under a baseline scenario with an initial oil increment of 50,000 tons and a carbon price reaching 600 CNY/ton in the long term, the optimal transition year is the 14th year, yielding an NPV peak of approximately 700 million CNY. Sensitivity analysis shows that earlier carbon price surges, higher initial oil yields, and better minimum storage efficiency can significantly alter the optimal transition time and overall project viability. The novelty of this study lies in defining the “economic limit point” of CCUS-EOR/EGR projects using dynamic NPV modeling and scenario simulation, which offers a practical decision-making tool for maximizing lifecycle economic benefits. The research contributes a structured framework for evaluating when to cease oil production and shift to CCS based on evolving market and reservoir conditions. These findings have important implications for the strategic planning and financial sustainability of CCUS projects in China and other regions pursuing low-carbon transitions.