Commercial Structures for Integrated CCS-EOR Projects
Name
Agarwal-2011-Commercial Structure.pdf
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238.31 KB
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Adobe PDF
Checksum (MD5)
12c2fc58a4f881b36a2eedb1fd2a8c79
Author(s)
Agarwal, Anna
Parsons, John E.
Date Issued
April 2011
Journal
Energy Procedia
Publisher
Elsevier
Citation
Agarwal, Anna, and John Parsons. “Commercial Structures for Integrated CCS-EOR Projects.” Energy Procedia 4 (2011): 5786–5793.
Version
Final published version
Abstract
In this paper, we evaluate alternate commercial structures for an integrated CCS-EOR project where the source of CO[subscript 2] is a coal-fired power plant, and the CO[subscript 2] is transported via a dedicated pipeline to an oil field where the CO[subscript 2] is injected for EOR. We evaluate alternative contract types that link the involved entities in light of exogenous market risks, such as the fluctuating price of oil recovered. The choice of the contract type determines who would bear the risks along the value chain, and the incentives that the risk allocation produces fixes the total project value. We see that the fixed price contracts have weaknesses in terms of ex-post insolvencies and poor incentive structures that result in a sub-optimal decision-making by the involved entities. The risk-sharing offered by the indexed price contracts reduces the likelihood of ex-post insolvency and provides incentives to each entity to optimize the total project value.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution
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DOI of Published Version
https://doi.org/10.1016/j.egypro.2011.02.575
