The effect of hydrocarbon prices and CO₂ emission taxes on drainage strategies

Secondary recovery methods, such as water and gas injection, are effective and cost-efficient techniques for enhancing hydrocarbon recovery; however, they are highly energy-intensive, leading to a large environmental footprint. This study provides insights into the challenge of balancing high hydrocarbon demand with the imperative to reduce CO₂ emissions from production by estimating how drainage strategies change under varying economic parameters and CO₂ tax levels. An operator’s choice of drainage strategy is assumed to be the drainage strategy yielding the highest net present value (NPV). This paper simulates the drainage strategy of an under-saturated oil reservoir, utilizing reservoir simulations and incorporating a mathematical model that represents the production processing plant. This yields hydrocarbon production, the energy required, and the resulting CO₂ emissions, all incorporated into an NPV based on hydrocarbon prices and CO₂ emission taxes. The drainage strategy is then optimized to maximize NPV for various hydrocarbon prices and several levels of CO₂ tax on associated emissions. The findings of this study indicate that increasing gas prices favor reducing reservoir pressure below the bubble point pressure, thereby releasing solution gas and leaving oil in the reservoir. Although lower reservoir pressure reduces the energy required for injection, the resulting increase in gas production necessitates more energy for gas compression, ultimately leading to higher emissions when gas prices rise relative to oil prices. Additionally, this study reveals that for facilities well designed for the present injection and production volumes (greenfield scenarios), the impact of CO₂ tax is limited, leading to a single optimal drainage strategy. In contrast, less energy-efficient facilities (brownfield scenarios) exhibit a more pronounced need to optimize drainage strategies in response to variation in CO₂ tax, and oil and gas prices. This study indicates that for fields with efficient production facilities, the ratio of gas to oil prices is more important for the drainage strategy than CO₂ tax levels, as income from production tends to dominate emission taxes. This implies that hydrocarbon prices are more important for CO₂ intensity than CO₂ taxes, e.g., a gas price increase relative to oil price promotes higher CO₂ intensity due to a shift towards more energy-intensive gas production whereas realistic tax levels for CO₂ emissions have only a minor impact. Thus, increasing CO₂ tax levels is mainly a measure impacting emissions from fields with inefficient production facilities.