Forest residues pose a fire risk as woody biomass remaining in forests after thinning or clear-felling. Instead of infield burning, forest residues can be converted into products such as bio-oil and biochar through pyrolysis. In situ catalytic pyrolysis can be implemented to upgrade bio-oil for co-processing with Vacuum Gas Oil (VGO). In this study, process simulations were developed in Aspen Plus (R) for non-catalytic and catalytic pyrolysis to investigate the economic feasibility of bio-oil production for co-processing 5 wt% crude or 10 wt% upgraded bio-oil, and considering 100, 200 and 300 km biomass collection radii. The Minimum Selling Price (MSP) of bio-oil (22% IRR) for co-processing was $1.09/L (crude) and $1.46/L (upgraded), respectively. However, economy-of-scale showed a clear benefit as the lowest MSP of bio-oil was $0.75/L (crude) and $1.35/L (upgraded) at 300 km. Furthermore, the MSP of bio-oil decreased to $0.71/L (crude) and $1.25/L (upgraded) at 300 km for improved bio-oil and biochar product recovery as evaluated through the process sensitivity analysis. Life Cycle Assessment results for Global Warming Potential (GWP(100)) of bio-oil production corresponded to -0.30 (crude) and -0.14 (upgraded) kg CO(2)eq/MJ, while GWP(100) of VGO production ranged from 0.0052 (crude-oil) to 0.013 (diesel) kg CO(2)eq/MJ.