The financial implications of injectivity risk in compartmentalized storage formations for geologic carbon sequestration

Abstract

Maintaining injectivity over the planned duration is a major driver of risk in CO${}_2$ storage projects. Current insurance considerations are largely focused on leakage and well remediation, while operational issues from past carbon storage projects have shown injectivity issues due to unanticipated formation compartmentalization is a real risk. The financial penalty due to the disruption of injection operations is large for a site operator. This study explores the effect of storage compartment size and geologic boundary condition on injectivity, and the subsequent financial implications. Risk profiles of injectivity are generated through reservoir simulations constrained by statistics from a CO${}_2$ storage prospect on the Gulf Coast. A financial tool is built to understand the impact on project value when an injectivity issue occurs and an offset well needs to be drilled. We observe that even in relatively closed boundary conditions, pressure arising from the CO${}_2$ injection can dissipate in the formation to allow injection over the project life. The economic feasibility of a storage project that does face an injectivity issue depends on the year of the injection issue occurrence. This study helps understand the injectivity risk, project contingency, and the financial feasibility of mitigation options required to establish robust assurance against this risk.