Client Background:
A North America–focused independent upstream oil & gas operator with significant acreage exposure in the Bakken shale, seeking to evaluate CO₂-based Enhanced Oil Recovery (EOR) as both a production uplift strategy and a decarbonization lever under emerging 45Q and carbon credit frameworks.
Challenges:
- Declining Baseline Production: The production from most primary as well as secondary wells in mature Bakken assets is declining, demanding a reliable tertiary recovery pathway to sustain output.
- Oil Price and Capital Discipline: Tighter capital discipline constraints and a fluctuating oil price outlook are restricting tolerance for projects with uncertain returns.
- CO2 Transport and Sourcing Uncertainties: CO2 infrastructure build-out requirements, sourcing costs, and transport tariffs remain unclear, affecting project economics directly.
- Evolving Incentive Structure: The U.S. 45Q tax credit structure and carbon credit monetization pathways are evolving and generating uncertainties over realizable value.
Engagement Objective:
The client aimed to assess the technical feasibility and economic viability of CO₂-EOR deployment in mature Bakken shale assets. They needed to quantify production uplift potential, model CO2 transport and sourcing economics, incorporate 45Q credit value into project returns, and establish breakeven CO2 and oil price thresholds across different scenarios.
Approach:
Our team:
- Compiled available Bakken reservoir characteristics, well performance data, and recovery factors to establish a production modeling baseline for mature assets
- Mapped regional CO2 sources, tariff structures, capture volumes, and transport routes along with pipeline build-out and utilization considerations related to Bakken acreage.
- Assessed the U.S. 45Q tax credit structure as well as adjacent carbon credit monetization pathways.
- Benchmarked OPEX and CAPEX components for CO2-EOR deployment, including well conversion, injection infrastructure, and operating costs.
- Defined a layered modeling architecture that spanned reservoir and production, CO2 supply chain, incentive incorporation, calculation of returns, and sensitivity analysis.
- Established three unique scenarios including recovery factor, oil price, and CO2 procurement assumptions.
Solutions Offered:
The Stellarix team delivered a structured techno-economic modeling framework under 3 different scenarios:
Reservoir & Production Modeling Layer
Developed high-level models to assess recovery uplift potential and production profiles across Bakken assets.
CO₂ Supply Chain Modeling
Modeled CO₂ procurement costs, infrastructure requirements, and supply chain considerations to evaluate their impact on project economics.
CAPEX and OPEX Modeling
Developed a comprehensive cost build-up covering injection infrastructure, well conversion, and ongoing operational expenses.
Incorporation of 45Q Credits
Integrated the value of 45Q tax credits and potential carbon credit monetization pathways directly into project cash flow models.
NPV and IRR Calculations
Calculated NPV and IRR across individual scenarios to enable like-for-like comparisons of capital deployment options.
Sensitivity Analysis
Evaluated key variables to identify the primary drivers influencing project viability and assess their impact on overall economics.
Client Impact:
- Capital Allocation Clarity: Enabled the client to compare different oil price and recovery factor scenarios, supporting disciplined capital deployment.
- Monetization of Decarbonization: Demonstrated how 45Q credits materially shift project IRR, positioning CO₂-EOR as both a production and decarbonization strategy.
- Infrastructure Strategy Optimization: Identified cluster-based development to improve pipeline utilization
- Breakeven Transparency: Clarified oil price and CO₂ price breakpoints required for commercial viability under multiple scenarios.
- Risk Mitigation: Provided early visibility into regulatory, commodity, and infrastructure risks impacting project bankability.
Outcome Snapshot:
