Enhanced Decision-Making in CO2 Storage Projects: A Bayesian Networks Approach for Value of Information Analysis (Flexible Funding 2023)

Mohadeseh Motie, Heriot-Watt University, was awarded funding in the UKCCSRC’s Flexible Funding 2023 call to look at “Enhanced Decision-Making in CO2 Storage Projects: A Bayesian Networks Approach for Value of Information Analysis”.

Climate change mitigation strategies have become increasingly crucial in our efforts to limit global temperature rise. Among these strategies, Carbon Capture and Storage (CCS) has emerged as a promising technology to reduce greenhouse gas emissions. However, the implementation of CCS projects is fraught with uncertainties that can significantly impact their viability and effectiveness. This blog post explores how advanced analytical tools, specifically Bayesian networks and Value of Information (VOI) analysis, can enhance decision-making processes in CO₂ storage projects.

In our study, we constructed a Bayesian network to model the relationships between storage capacity, leakage risk, CO₂ prices and overall project viability. This approach allowed us to:

• Quantify the probabilistic dependencies between these factors
• Update our understanding of project viability as new data becomes available
• Perform scenario analyses to assess the impact of different variable states on project outcomes

Value of Information: Optimizing Data Acquisition

While Bayesian networks provide a robust framework for modelling uncertainties, the Value of Information (VOI) analysis offers a quantitative method for assessing the potential benefits of acquiring additional information before making investment decisions.

In our case study, we evaluated the VOI for conducting a detailed geological survey to better understand the storage capacity of a potential CO₂ storage site. The analysis revealed:

• Without additional information, the investment project of signing a 10-year contract to store 20mln ton CO₂ had a slightly negative expected Net Present Value (NPV) of -$6.83 million
• The VOI for the geological survey was calculated to be $12.55 million
• The cost of the survey was estimated at $2 million

These results indicate that acquiring this information would be highly beneficial, as the potential value gained significantly outweighs the cost of the survey.

Implications for Decision-Making in CCS Projects

The integration of Bayesian networks and VOI analysis in our decision-making framework led to several key insights:

• Improved risk assessment: By modelling the interdependencies between various uncertainties, we gained a more comprehensive understanding of project risks.
• Optimized information gathering: VOI analysis provided a quantitative basis for prioritizing data acquisition efforts, ensuring that resources are allocated efficiently.
• Enhanced decision support: The combined approach allowed for the development of more robust decision strategies, potentially increasing the expected NPV from -$6.83 million to $15.71 million in our case study.
• Dynamic updating: As new information becomes available throughout the project lifecycle, the Bayesian network can be updated, providing continual decision support.

Figure 1. Bayesian Network for a CO2 storage project in a synthetic simulated aquifer

Conclusion and Future Directions

While CCS technology presents a promising avenue for mitigating climate change, its successful implementation requires sophisticated approaches to managing uncertainties and optimizing decision-making processes. The combination of Bayesian networks and Value of Information analysis offers a powerful toolkit for addressing these challenges by generating insights for investment decisions.

Future research in this area could explore:

• Integration of additional uncertainties, such as regulatory risks and technological advancements
• Application of this methodology to real-world CCS projects to validate its effectiveness
• Development of user-friendly software tools to make these analytical techniques more accessible to project managers and policymakers

Read more on Motie’s Flexible Funding 2023 project page.