Which Offers Greater Techno-Economic Potential: Oil or Hydrogen Production from Light Oil Reservoirs?

Abstract

The global emphasis on clean energy has increased interest in producing hydrogen from petroleum reservoirs through in situ combustion-based processes. While field practices have demonstrated the feasibility of co-producing hydrogen and oil, the question of which offers greater economic potential, oil, or hydrogen, remains central to ongoing discussions, especially as researchers explore ways to produce hydrogen exclusively from petroleum reservoirs. This study presents the first integrated techno-economic model comparing oil and hydrogen production under varying injection strategies, using CMG STARS for reservoir simulations and GoldSim for economic modeling. Key technical factors, including injection compositions, well configurations, reservoir heterogeneity, and formation damage (issues not addressed in previous studies), were analyzed for their impact on hydrogen yield and profitability. The results indicate that CO2-enriched injection strategies enhance hydrogen production but are economically constrained by the high costs of CO2 procurement and recycling. In contrast, air injection, although less efficient in hydrogen yield, provides a more cost-effective alternative. Despite the technological promise of hydrogen, oil revenue remains the dominant economic driver, with hydrogen co-production facing significant economic challenges unless supported by policy incentives or advancements in gas lifting, separation, and storage technologies. This study highlights the economic trade-offs and strategic considerations crucial for integrating hydrogen production into conventional petroleum extraction, offering valuable insights for optimizing hydrogen co-production in the context of a sustainable energy transition. Additionally, while the present work focuses on oil reservoirs, future research should extend the approach to natural gas and gas condensate reservoirs, which may offer more favorable conditions for hydrogen generation.