SPE 139669

A Survey of CO2-EOR and CO2 Storage Project Costs

C. Jablonowski, SPE, A. Singh, The University of Texas at Austin

Copyright 2010, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE International Conference on CO2 Capture, Storage, and Utilization held in New Orleans, Louisiana, USA, 1012 November 2010.
This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been
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Abstract
For CO2 enhanced oil recovery (CO2-EOR) and CO2 storage projects, cost estimates have wide-ranging impacts on site
screening and feasibility studies, concept selection, development planning, and production optimization. Good cost
estimating practice requires technical knowledge about the project, a comprehensive scope, and a systematic approach.
However, the quality of a cost estimate is probably most dependent on the quality of the data on which it is based. In the case
of CO2-EOR and CO2 storage projects (CO2 projects), cost estimators face significant challenges regarding the availability
and quality of data. The purpose of this paper is to organize and consolidate information on capital and operational costs for
CO2 projects. A review was undertaken to identify and describe sources for cost data by major project components. There are
sections for drilling, surface facility capital cost, and operation and maintenance cost. This survey can serve as a departure
point for CO2 project cost estimators.
Introduction
For CO2 enhanced oil recovery (CO2-EOR) and CO2 storage projects, cost estimates have wide-ranging impacts on site
screening and feasibility studies, concept selection, development planning, and production optimization. Inaccurate cost
estimates can lead to sub-optimal decisions and the destruction of portfolio and project value. Good cost estimating practice
requires technical knowledge about the project, a comprehensive scope, and a systematic approach. However, the quality of a
cost estimate is probably most dependent on the quality of the data on which it is based.
In the case of CO2-EOR and CO2 storage projects (CO2 projects), cost estimators face significant challenges regarding the
availability and quality of data. First, there is a relatively small population of projects from which to obtain cost data. These
projects are unevenly distributed among ~20 companies, and each project exhibits idiosyncrasies which complicate cost
normalization and definition of standard metrics. Also, cost data is often treated as proprietary and not shared among
companies nor with the public. Thus, cost estimating for CO2 projects can be a complicated and costly undertaking.
The range of experience with CO2 projects among oil and gas companies covers a wide spectrum. Some oil and gas
companies operate several projects and hold ample cost data on which to base cost estimates. But even within experienced
companies, data may be highly concentrated in one region and in some cases may not translate easily to other regions. Other
companies have no experience and no internal basis for estimating. In between these two extremes are companies who have
some experience in CO2 projects, or other general operational experience that can be leveraged (e.g. a company with
considerable drilling experience but no experience in CO2 projects).
While CO2-EOR projects have historically been the domain of oil and gas companies, other parties are now interested in
these projects, and in the prospect for large scale CO2 storage projects. In this category are academic researchers, nongovernmental organizations, federal and state agencies, and private landowners. These parties are unlikely to have experience
with CO2 projects and thus possess a very limited basis for cost estimating.
The purpose of this paper is to organize and consolidate information on capital and operational costs for CO2 projects. A
review was undertaken to identify and describe sources for cost data by major project components. There are sections for
drilling, surface facility capital cost, and operation and maintenance cost. This survey can serve as a departure point for CO2
project cost estimators.

SPE 139669

Drilling, Completion, and Workovers

Drilling and completion costs can comprise a significant share of capital investment for a CO2-EOR or CO2 storage project.
The costs depend on the number of wells to be drilled, sidetracked, or reworked. Other important factors include the
overburden, depth, well design, and region. When many wells are going to be drilled, it is also important to account for a
learning curve. Accurate cost estimates are important, especially in the site screening and selection stages where decisions are
made that are often costly to reverse.
Internal Data and Bids. The best basis for estimating drilling performance is the operators own drilling experience in the
region. Detailed information will be available on cost, schedule, and emerging trends in technology and operations. This data
can be supplemented with estimates and/or bids from contractors and service companies. If the operator has no direct
experience in the region, estimates can be based on analogs if the necessary location adjustments are made. Internal data
should provide the most reliable basis for estimating drilling performance.
External Data. In cases where the operator has no direct experience in the region, or where there are no appropriate analogs,
the operator can access other sources of data. Some data is held by operators, either solely or jointly, and some data is held by
third parties. Other data is available from published research studies or from government databases.
Benchmarking and Consulting Firms. There are companies that specialize in data collection, analysis, and related
consulting. In the drilling arena, Dodson, Independent Project Analysis, Rushmore, and others offer drilling and completion
benchmarking services and studies. Benchmarking can take many forms. Typically, operators contribute proprietary data and
in exchange receive expert analysis and access to aggregated performance data from other operators. Thus, operators can
obtain data and analysis in regions where they have limited or no experience. This information can be used as a basis for
estimates and/or to validate estimates.
Joint Association Survey (JAS). The JAS is an annual survey of drilling and completion costs in the United States. The
survey began in 1954 and is published by the American Petroleum Institute (API). It is available to API members and nonmembers for an annual subscription fee. The response rate of the survey varies from year to year, but is typically between 4050%. Data is collected at the individual well level and major cost-relevant technical attributes are captured. The data is also
organized geographically.
The data does not include re-entries, workovers, or conversions (e.g. producer to injector). When workovers or
conversions are anticipated, they can be estimated by using a ratio of a complete well (e.g. a workover costs X% of a
complete well). Advanced Resources International (2006) specify equations for workovers and conversions that can be used
as a reference case if the estimator does not possess sufficient information to specify the ratio. While there are design
differences between production and injection wells, the JAS production can be used to estimate the cost of injectors.
Additional details on the JAS database and analytical methods are provided in Kaiser (2007).
The JAS is used widely in research because of its availability. For examples, see Lewin & Associates Inc. (L&A) (1981),
Heddle, Herzog, and Klett (2003), Bock et al. (2003), Advanced Resources International (ARI) (2006), McCoy (2008),
McCoy and Rubin (2009), and Biglarbigi, Killen, and Carolus (2009). These studies also demonstrate various methods for
cost adjustment.
Public Sources. The list of published studies using actual drilling costs and schedule is short, and is focused primarily on
methods. The main reason for this is the proprietary nature of cost data. Examples from exploration and production include Brett and
Millheim (1986), Noerager et al. (1987), Kaiser and Pulsipher (2007), and Jablonowski and MacEachern (2009).
There are public databases that contain information about drilling and completion. For example, the Texas Railroad
Commission collects well data as part of its permitting and regulatory process. However, these sources do not collect cost
data. If such databases are used to specify and estimate cost models, then a proxy for cost must be defined. Clearly, the
accuracy of models produced from such an exercise would not be as accurate as models based on JAS data, and thus should
only be used when no other options are available.
Cost Adjustment. Nominal well construction costs fluctuate over time based on changes in real costs and inflation.
Therefore, historical cost data and/or models must be adjusted to a common year to reflect these changes for prospective
projects. There is no exact method to make these adjustments because indices do not exist for every cost item. In most cases,
it is sufficient to account for the major categories such as rig rental rate, steel, labor, and services. Whatever indices are used,
they should be well-documented and employed in a systematic manner.

Surface Facilities
Surface facilities comprise the other major share of capital investment for a CO2 projects. The costs depend on the number of
production and injection wells and their depth, the capacities and complexity of equipment, location and spatial distribution
of wells, and the degree to which existing infrastructure can be employed directly or converted, rather than replaced.
Accurate cost estimates are important, especially in the early project stages where decisions are made that can be costly to
change.

SPE 139669

Internal Data and Bids. The best basis for estimating surface facility costs is the operators own experience in the region.
This data can be supplemented with estimates and/or bids from contractors and service companies. If the operator has no
direct experience in the region, estimates can be based on analogs if the necessary location adjustments are made.
External Data. In cases where the operator has no direct experience in the region, or where there are no appropriate analogs,
the operator must access other sources of data. For surface facility costs, there is no analog to the JAS survey. Therefore,
estimators must rely on public databases or published studies.
Databases. The Energy Information Administration (EIA), a part of the US Department of Energy, periodically publishes
a report on costs for domestic oil and gas equipment and production operations (EIA, 2007). The report contains estimates for
oil and gas equipment and operating costs for six different regions (California, Oklahoma, South Louisiana, South Texas,
West Texas, and Rocky Mountains). The cost information is further classified by well depth, and for some cases by
production rates.
The EIA database uses representative lease operations with equipment and operating procedures defined by EIA. The
representative lease operations differ from each other by the assumption on well count, but these costs can be prorated by the
well count without introducing significant error. The cases are modified for each region to model the predominant production
methods in that region. Individual items of equipment are priced using price lists and through consultation with regional
manufacturers and/or suppliers. In most cases, drilling and completion costs are not included in this report, but there are
exceptions. Therefore, one must exercise caution when using this database to avoid double-counting of drilling and
completion costs.
Published Studies. There are a large number of published studies on all aspects of CO2 projects. Many of the studies that
include cost analysis rely heavily on the EIA database. Based on a survey of this literature, the following studies were
observed to be the most comprehensive and detailed in their treatment of cost information on surface facilities: L&A (1981),
Heddle, Herzog, and Klett (2003), Bock et al. (2003), ARI (2006), McCoy (2008), McCoy and Rubin (2009).
Capital and Operating Costs. Many studies employ the EIA data, but each study uses different subsets of the data, and
authors differ in how they manipulate the data. In areas where the EIA data is lacking, authors resort to other sources and/or
develop original estimates. In some cases the assumptions are well-documented while in other cases there is insufficient
specificity to reproduce results.
Here, a framework of cost categories is defined to coordinate with publicly available data sources, specifically the EIA
database. The following categories are organized based on the assumption of an existing oilfield development using artificial
lift. For the case of CO2 storage projects, only a subset of these categories would be used, and other modifications would be
required as noted below.
Equipping a New Producer. This category captures capital costs for surface equipment needed for production wells using
artificial lift. The EIA database provides sufficient information to estimate these costs. The EIA data includes a line item for
tubing; if the JAS data is used for estimating drilling and completion costs, then this line item should be excluded because the
tubing cost is already accounted for in the drilling and completion estimate (Kaiser, 2007). ARI (2006) use the EIA data to
estimate equations for these costs that account for the distribution of fixed and variable costs.
Equipping a New Injector. This category captures capital costs for surface equipment needed for injection wells and
incremental impacts to production equipment costs. The EIA database provides sufficient information to estimate these costs.
The EIA data includes line items for water supply wells and injection wells which should be estimated separately for
improved accuracy. The EIA data also contains a line item for tubing replacement which is assumed to represent a typical
cost to remediate a portion of the production wells in preparation for the initiation of injection. ARI (2006) use the EIA data
to estimate equations for these costs that account for the distribution of fixed and variable costs.
For CO2 storage projects, the line item impacts to production equipment can be ignored. As McCoy (2008) observes, the
EIA injection equipment cost estimates are incremental to costs in an existing field. For a greenfield CO2 storage project, the
methods proposed here would generate estimates that are on average too small.
CO2 Separation, Treatment, and Re-Injection. These facilities are itemized separately because they are unique to CO2EOR projects, and because their sizing and timing of investment will be unique to the prospective project. L&A (1981)
estimate this as a lump sum cost. McCoy (2008) specifies and estimates a cost function based on point estimates observed in
the literature. ARI (2006) uses a cost of $700,000 per MMcf/d of capacity. This last approach is probably the most
convenient (assumed to be $US2006).
For CO2 storage projects, this category captures the on-site compression equipment that is required to supplement pipeline
pressure for injection. Compression capacity is often estimated in units of capital investment per horsepower (HP). This is the
method employed by Smith et al. (2001) using a value of $1060 per HP. Ettehadtavakkol, Jablonowski, and Lake (2009)
report a range of $1500-$3000 per HP in $US2009, and also provide the equations to estimate the HP requirements. McCoy
(2008) employs an equation that relates cost to power requirements in MW.
Operating and Maintenance Costs. This category captures operating and maintenance costs (O&M). The EIA database
provides sufficient information to estimate these costs for secondary recovery, although the costs are specific to a waterflood.
Adjustments can be made to account for the specific recovery technology. For example, ARI (2006) propose two
modifications to the EIA data to account for incremental costs of CO2-EOR versus a waterflood. First, they increase (double)

SPE 139669

the estimate for workovers. Second, they subtract the lifting cost portion of O&M and add back line items for CO2 separation,
treatment and recycling (at 1% of prevailing oil price per Mcf), and for liquid lifting costs tied directly to throughput (at
$0.25 per barrel). Other estimates for CO2 recycle costs and lifting costs are available in the oil and gas literature (for
example, see Ghomian et al., 2008), although most authors do not itemize these costs.
For CO2 storage projects, the EIA database can be used to estimate O&M costs. One strategy is to subtract O&M
estimates for primary production from those for secondary production. This difference approximates the O&M cost of an
injection-only facility. The incremental cost of compressing and injecting CO2 versus injecting water should be accounted
for. For CO2-EOR, ARI (2006) specify an O&M cost for CO2 separation, treatment and recycling (at 1% of prevailing oil
price per Mcf). The O&M cost for compression in a storage project can be assumed to be a similar magnitude.
Surveillance. Monitoring and verification costs for CO2 storage projects have been investigated by Benson et al. (2004).
The per unit costs are strongly dependent on the regulatory requirements and other assumptions. For the cases studied, these
costs ranged from $0.04-0.09 per ton of CO2 stored.
Cost Adjustment. Like drilling, nominal facility costs fluctuate over time based on changes in real costs and inflation.
Historical cost data and/or models must be adjusted to a common year to reflect these changes for prospective projects. The
EIA database provides indices and other information to make these adjustments.

Conclusion
This paper organizes and consolidates information on capital and operational costs for CO2 projects. A review was
undertaken to identify and describe sources for cost data by major project components. This survey can serve as a departure
point for CO2 project cost estimators. Future analysis is planned to provide additional detail, to provide templates and
examples of computations for both CO2-EOR and CO2 storage projects, and to investigate costs for site screening.
Acknowledgements
We are grateful to the sponsors of the Geologic CO2 Storage Industrial Associates Project at The University of Texas at
Austin: BP, Chevron, ConocoPhillips, ExxonMobil, Foundation CMG, Halliburton/Landmark Graphics, Luminant, Shell,
and Statoil.

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