EOR Economic Analysis - Midwestern Governors Association

Our financial modeling suggests positive economics but further
analysis is needed
• We chose Hall Gurney field for our economic analysis
– It is historically one of the most prolific fields in Kansas; both producing reservoirs in field
(Lansing-Kansas City and Arbuckle) are common throughout central Kansas
– DOE CO2 injection pilot test proved moderately successful – even if somewhat inconclusive
• Our reference case indicates after tax IRR of 22% - but need to test assumptions further
– Reference case $1.8B capital investment leads to an after tax profit of $140 M NPV@ 20%
– Economics could be better given the following:
• Reference capital investment (50% new wells) is on the high side due to relatively small
“pattern” size assumption (assumed 20 acres vs. 40 acre in West Texas). NPV impact
would be about $750M increase at 40 acre size pattern
• Production experience in W.Texas for similar lithology (carbonate) suggests stronger
performance that our Illinois simulations based assumptions indicate
– However, economics could turn marginal or very negative given the following:
• Capital investment (50% new wells) could be much higher if a 10 acre pattern size, typical
for water floods in central Kansas, was to be utilized (more than $1B decline in NPV)
• More conservative assumptions on OOIP would lead to NPV decline of $750M
– Such wide fluctuations clearly indicate need for further work to tighten the range of possibilities
• The studies currently underway in Kansas may provide some of this data
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CO2-EOR Potential in MGA Region – February 2012