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The Economics of Enhanced Oil Recovery: Estimating Incremental Oil Supply and CO2 Demand in the Powder River Basin

Expanding the use of CO2-enhanced oil recovery (EOR) promises to both significantly increase recovery from existing U.S. oil reserves and possibly form a bridge to large-scale CO2 capture and sequestration. An important input into planning for such expansion are estimates of how both the supply of incremental oil and the derived CO2 demand from EOR are likely to vary with the prices of oil and CO2. We demonstrate how the �analog� method of predicting oil and CO2 flows can be used to readily generate such estimates, and apply the method to Wyoming�s Powder River Basin.

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Energy Specializations: Petroleum – Exploration and Production; Petroleum – Markets and Prices for Crude Oil and Products; Energy Investment and Finance – Project Finance

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
L13 - Oligopoly and Other Imperfect Markets
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

Keywords: Enhanced oil recovery, Oil production, Incremental oil supply, Powder River Basin, US

DOI: 10.5547/ISSN0195-6574-EJ-Vol31-No4-2

Published in Volume 31, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.