The economics of an integrated CO2 capture and sequestration system: Texas Gulf Coast case study

Using a power generation dispatch model of the Electric Reliability Council of Texas (ERCOT) to estimate CO2 capture from retrofitting an existing coal power plant, this paper estimates the system cost and revenue associated with handling CO2 input and output mismatch in an integrated source-sink pipeline by installing more injection wells into a saline reservoir to handle peak CO2 capture rates. The fluctuations in CO2 capture (e.g. supply) are assumed to come from an existing coal-fired power plant in Texas operating according to a merit-order dispatch model with an imposed CO2 price. We analyze a 20-year cash flow with CO2 demand for enhanced oil recovery (EOR) based upon a nominal purchase schedule over an 11-year lifespan of a high-quality candidate oil field, Conroe, along the Gulf Coast of Texas. With an assumed structured and inflexible use of CO2 for EOR, the deeper saline reservoir can sequester captured CO2 that is not injected for EOR. By performing a cash flow analysis with and without the EOR field and saline reservoirs included, the economic costs and benefits of coupling EOR and saline storage to a single coal generator are determined for a specific Texas case study. At low CO2 prices, the EOR reservoir contributes more value than the saline reservoir, but the opposite is true at high CO2 prices. This answer can be partly explained because as CO2 price increases, the analysis assumes constant demand of electricity and endogenously increases electricity prices but uses an exogenous constant oil price. The method can be generalized to include additional coal-based plants as well as EOR and saline reservoirs in Texas to envision an entire carbon capture and sequestration network in a region with high EOR potential. (C) 2011 Published by Elsevier Ltd.