Koch

I would like to welcome our subscribers to the January 2012 issue of SPE Economics & Management. SPE E&M covers a wide range of topics of interest to petroleum engineers, managers and others involved in the energy business, including resource and reserve evaluation, portfolio and asset management, project valuation, strategic decision-making and processes, uncertainty/risk assessment and mitigation, systems modeling and forecasting, benchmarking and performance indicators, information and knowledge management, digital energy, and petroleum economics.

In this issue are papers focusing on CO₂ management and I have asked Sean McCoy of the International Energy Agency (IEA) to act as editor for this special issue. McCoy is an analyst in the carbon capture and storage (CCS) unit of the IEA and holds a PhD degree in engineering and public policy from Carnegie Mellon University, where he is also an adjunct assistant professor. McCoy has worked hard to pull together an interesting collection of four papers, which he describes in his executive summary below.

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Several options can be applied to reduce CO₂ emissions in the near-term from oil and gas operations and fossil-fuel power generation, such as increasing energy efficiency and switching from higher to lower carbon-intensity fuels. However, the most promising tool to reduce emissions in the coming decades is CCS. Analysis from the IEA concludes that, by 2050, CCS could contribute approximately one-fifth of a 50% emissions reduction from 2005 levels across all sectors. While it is expected that CCS will be used heavily in power generation, it is perhaps most critical to the oil and gas sector where there are limited alternatives to make deep emissions reductions. However, it is also the oil and gas sector that holds the keys to successful development of CCS projects.

The four papers collected in this special edition consider aspects across the entire CCS chain. The first two papers consider capture of CO₂ in power and industrial applications, the third examines storage in saline aquifers, and the final paper looks at development of CO₂-storage networks:

Decision Criteria for Climate Projects by Petter Osmundsen and Magne Emhjellen examines several different approaches to assess the commercial viability of CCS projects using a proposed Norwegian project as an example. The authors point out several important factors that should be considered when performing economic assessments of CCS projects in the power sector.

Perspectives on CCS Cost and Economics by Haroon S. Kheshgi, Hans Thomann, Nazeer Bhore, Robert Hirsch, Michael Parker, and Gary Teletzke explores the cost competitiveness of CCS applied to fossil-fuelled power generation and application of CCS in oil and gas operations. The authors conclude that, while uncertain, the cost of carbon capture must be lowered through technology development if CCS is to be competitive. However, they also note that, when coupled with EOR, CCS in gas processing may present near-term economic opportunities.

Geologic Heterogeneity and Economic Uncertainty of Subsurface Carbon Dioxide Storage by Jason E. Heath, Peter H. Kobos, Jesse D. Roach, Thomas A. Dewers, and Sean A. McKenna develops an integrated cost and performance model that allows the authors to assess the impact of porosity and permeability heterogeneity on the cost of CO₂ injection for storage. The results show that relatively small changes in the average permeability of the system can result in large changes in CO₂-injection cost.

Unique CO₂-Injection Experience in the Bati Raman Field May Lead to a Proposal of EOR/Sequestration CO₂ Network in the Middle East by Secaeddin Sahin, Ulker Kalfa, and Demet Celebioglu presents a successful example of immiscible-CO₂-flood EOR in a carbonate reservoir and examines how this experience could be extended to others in Turkey and the wider Middle East. While the authors highlight the enormous technical potential in the region, they also identify barriers to large-scale application of CO₂-flooding.

I would like to thank all of the authors who responded to the call for papers for this special issue and also the many reviewers who provided thorough and insightful comments that improved each of these papers.

It is my hope that these papers encourage the readers of SPE E&M to consider how they can bring their knowledge and experience to bear on CCS and other CO₂-management options. – Sean McCoy

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In addition, I have included two papers that do not deal with CO₂ management, but I chose to include them in the January issue because it is our goal to publish accepted papers in as timely a manner as possible and I saw no benefit in deferring these until the April issue. These two papers are:

• How Significant Is the P90 Value as a Measure of the Reserves’ Downside?, by Sandeep Gupta, Ritu Gupta, Jan F. van Elk, and Kaipillil Vijayan highlights the appropriateness and limitations of using the P90-reserves estimate as a measure of the reserves’ downside. The paper examines alternative risk measures for the reserves’ downside and compares it with the P90 measure in cases where independent fields are aggregated in a portfolio.
• Implementing i-field-Integrated Solutions for Reservoir Management: A San Joaquin Valley Case Study, by Andrei Popa and Steve Cassidy describes Chevron’s implementation of an integrated reservoir management tool in a steamflood-enhanced-oil-recovery project in the San Joaquin Valley. The paper describes how the integrated solution improved decision making, fostered ingenuity and creativity, and increased efficiency of workflows.

As always, I would like to thank and acknowledge our editorial review committee for their continuing hard work. This group is made up of a distinguished group of seven associate editors: Dr. Steve Begg (University of Adelaide), Dr. Reidar Bratvold (University of Stavanger), Gary Citron (Rose & Associates), James Crompton (Chevron), John Howell (Portfolio Decisions Incorporated), Dr. Wumi Iledare (Louisiana State University), and Dr. Chris Jablonowski (The University of Texas at Austin).

I am happy to hear your comments and suggestions about SPE E&M, please feel free to contact me at frank@kochdecisions.com. – Frank Koch