Oil and Gas Supply Module of the National Energy Modeling System: Model Documentation 2020 May 2020 Independent Statistics & Analysis U.S. Department of Energy www.eia.gov Washington, DC 20585 This report was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA’s data, analyses, and forecasts are independent of approval by any other officer or employee of the United States Government. The views in this report therefore should not be construed as representing those of the U.S. Department of Energy or other federal agencies. U.S. Energy Information Administration | NEMS Model Documentation 2020: Oil and Gas Supply Module i May 2020 Update Information This edition of the Oil and Gas Supply Module (OGSM) of the National Energy Modeling System (NEMS): Model Documentation reflects changes made to the OGSM over the past couple of years for the Annual Energy Outlook (AEO). The major revisions to the previous version of documentation include the following: • Increased the number of OGSM Lower 48 onshore regions—moved Montana, North Dakota, and South Dakota out of the Rocky Mountain region and grouped them as the Northern Great Plains region • Updated the carbon dioxide (CO2) enhanced oil recovery (EOR) production profiles to represent projects with a hydrocarbon pore volume (HCPV) of 1.0 instead of 0.4 because HCPV of 0.4 is no longer the standard • Moved county-level estimates of ultimate recovery per well for tight and shale formations (Appendix 2.C) to the AEO footer • Added description of the implementation of the Section 45Q sequestration tax credit that was amended and expanded in the Furthering Carbon Capture, Utilization, Technology, Underground Storage, and Reduced Emissions Act in 2018 • Updated assumptions for the announced/nonproducing offshore discoveries (Table 3-8) U.S. Energy Information Administration | NEMS Model Documentation 2020: Oil and Gas Supply Module ii May 2020 Table of Contents Update Information ...................................................................................................................................... ii 1. Introduction .............................................................................................................................................. 1 Model purpose ........................................................................................................................................ 2 Model structure ....................................................................................................................................... 5 2. Onshore Lower 48 Oil and Gas Supply Submodule................................................................................... 7 Introduction ............................................................................................................................................. 7 Model purpose ........................................................................................................................................ 7 Resources modeled ........................................................................................................................... 7 Processes modeled ............................................................................................................................ 9 Major enhancements ........................................................................................................................ 9 Model structure ..................................................................................................................................... 10 Overall system logic ........................................................................................................................ 10 Known fields .................................................................................................................................... 12 Economics ....................................................................................................................................... 13 Timing .............................................................................................................................................. 49 Project selection .............................................................................................................................. 51 Constraints ...................................................................................................................................... 55 Technology ...................................................................................................................................... 62 Appendix 2.A: Onshore Lower 48 Data Inventory ...................................................................................... 63 Appendix 2.B: Cost and Constraint Estimation ........................................................................................... 92 Appendix 2.C: Decline Curve Analysis ....................................................................................................... 162 Appendix 2.D: Representation of Power Plant and xTL Captured CO2 in EOR ......................................... 163 Integration of EMM into CO2 EOR process ......................................................................................... 166 Mathematical description of EMM-CTUS constraints ......................................................................... 166 Integration of LFMM into CO2 EOR process ........................................................................................ 167 Mathematical description of LFMM-CTUS constraints ........................................................................ 168 Implementation of 45Q legislation ...................................................................................................... 169 Modifications to the EMM ............................................................................................................ 170 Electricity Capacity Planning (ECP) changes ........................................................................... 170 Electricity Fuel Dispatch (EFD) changes .................................................................................. 171 Modifications to the OGSM........................................................................................................... 173 U.S. Energy Information Administration | NEMS Model Documentation 2020: Oil and Gas Supply Module iii May 2020 3. Offshore Oil and Gas Supply Submodule .............................................................................................. 174 Introduction ......................................................................................................................................... 174 Undiscovered fields component .......................................................................................................... 174 Discovered undeveloped fields component ........................................................................................ 190 Producing fields component ................................................................................................................ 192 Generation of supply curves ................................................................................................................ 194 Advanced technology impacts ............................................................................................................. 195 Appendix 3.A. Offshore data inventory .................................................................................................... 196 4. Alaska Oil and Gas Supply Submodule .................................................................................................. 206 AOGSS overview .................................................................................................................................. 206 Calculation of costs ....................................................................................................................... 208 Discounted cash flow analysis ............................................................................................................. 211 New field discovery .............................................................................................................................. 213 Development projects ......................................................................................................................... 215 Producing fields ................................................................................................................................... 216 Appendix 4.A. Alaskan Data Inventory ..................................................................................................... 219 5. Oil Shale Supply Submodule ................................................................................................................. 221 Oil shale facility cost and operating parameter assumptions ............................................................. 225 6. Canadian Natural Gas Supply Submodule............................................................................................. 236 Introduction ......................................................................................................................................... 236 Western Canada .................................................................................................................................. 236 Drilling