There are a lot of challenges to carbon capture and storage (CCS) projects but they can all be overcome, a Petroleum Technology Alliance Canada-organized (PTAC) industry gathering heard last week.
"The importance is to recognize them up front as we're working towards developing policies and moving forward with these types of projects," Doug Lammie, director of Alberta Energy's Carbon Capture and Sequestration Development Branch, told the meeting.
CCS projects "are in their infancy in development and as we get more and more commercial-scale projects developed we will see cost reductions and understand how they can be developed more efficiently and effectively," he predicted.
Closing the economic gap between costs and benefits -- including corporate tax savings, avoiding compliance costs and potential enhanced oil recovery (EOR) revenue -- will be the single biggest challenge to CCS in Alberta, he said.
For costs to come down a significant number of projects will need to be implemented globally to understand the differences between projects and to understand their costs, and technology will have to be widely understood and shared around the world, Lammie told the group.
Carbon dioxide capture capital and operating costs are large while pipeline capital and operating costs are relatively small components in an integrated CCS project, said Lammie, adding there is some uncertainty as to what those actual costs might be.
With the aim of reducing greenhouse gas emissions by five megatonnes annually starting in 2015, the Alberta government has earmarked $2 billion to support three to five commercial-scale integrated CCS projects. The province has allocated almost $1.2 billion of that amount to two such projects: one an electricity project (DOB, Oct. 14, 2009) and another that will upgrade oilsands production (DOB, Oct. 9, 2009). Together they will sequester 2.2 megatonnes of carbon dioxide per year.
Asked about the absence of oilsands production from that list, Lammie noted the province has not yet spent all $2 billion and said, "Stay tuned."
The provincial government received 54 expressions of interest for a share of that funding then 20 participants were invited to submit fully integrated projects and 11 highly regarded projects were received, he said. Letters of intent negotiations are now taking place and the province hopes to have final agreements established by March 31, 2010.
Alberta plans to contribute incremental costs up to 75% to ensure it is sharing industry's risk but "industry will still have some skin in the game." Reimbursements of 40% will be paid during the construction and engineering, 20% paid upon commercial operation of the project and another 40% over a 10-year period to ensure that tonnes of CO2 actually do get stored in the ground, he said.
Lammie noted the United States has committed $3.4 billion towards CCS projects, the United Kingdom is supporting a large-scale demonstration competition and is proposing to further fund four projects while Australia has promised $500 million towards that country's Global Carbon Capture and Storage Institute as well as $2 billion for commercial-scale demonstration.
The Alberta Research Council has conducted a detailed reservoir and development analysis to quantify potential for incremental recovery and associated CO2 storage in light and medium pools in the province, Blaine Hawkins, technical manager for ARC's enhanced oil and gas recovery program, told the meeting.
Detailed development plans were formulated for five prototype CO2 EOR target pools. Results were extrapolated to another 32 pools. For the areas investigated, incremental CO2 EOR was estimated to be 1.08 billion bbls, with an average net CO2 utilization of 4.5 mcf of gas per bbl, he said.
There at least 12 more horizontal displacement pool types to investigate. Vertical miscible targets still have to be addressed, as do matching CO2 sources with targets, and considerations regarding a CO2 delivery infrastructure to make large-scale CO2 EOR a reality in Alberta, said Hawkins.
Integrated CO2 Network (ICO2N), in partnership with PTAC and others are undertaking a $500,000 study of CO2 purity for the use of CCS. The project will define, quantify and provide recommendations to stakeholders for purity standards in an Alberta context. Laboratory work, computer simulations, physical experiments and an economic review are scheduled to begin in May 2010 and the work is to be summed up in a report starting in December.
The project is still in its formative stages and is looking for partners. An industry technical information session is scheduled for Nov. 27. Funding will come from ICO2N, pipeline companies, PTAC and CCP3, a collaboration of international energy companies (operated by BP), government, NGOs, national labs and academic institutions.
Purity is only one of about 150 things that need to be figured out to prepare for large-scale CCS, said Robert Craig, director of strategy and technology at ICO2N. Timing is critical, as purity must be defined in advance of design and construction of CCS infrastructure, he noted.
The project is organized into four components of the CCS chain: capture, pipeline, EOR and sequestration. Each component study area will be lead by company experts and coordinated by industry consortia. "What we need is a comprehensive approach and a mechanism to bring expertise together, and we think the Alberta CO2 purity project is the solution," he noted.
The group has indentified about 12 to 14 contaminants and it will try to understand how those contaminants result from different capture processes and how they impact pipeline safety and EOR, said Craig.
Surindar Singh, program director for CO2 and emissions at the Alberta Energy Research Institute, pointed to an Alberta Environment chart that illustrated the province's largest final emitters, whose emissions totalled 114.4 megatonnes in 2007. Electricity at 49.9 megatonnes was the biggest culprit, followed by oilsands mining projects (26.5 megatonnes); in situ projects (8.9 megatonnes); chemicals (10.5 megatonnes); oil and gas (7.7 megatonnes); refining (4.3 megatonnes) and other (6.6 megatonnes).
He said a study by the International Energy Association found that without CCS, the world's overall costs to reduce emissions to 2005 levels by 2050 increase by 70%. Total investment in CCS needs to be $3.5 trillion to $4 trillion to 2050, according to the study. It also said global collaboration is required to reduce CCS costs through research and development, map CO2 storage formations, develop CO2 source clusters and pipeline networks, and address the legitimate concerns of local communities.
Singh said he studied Alberta's power sector alternatives to reducing greenhouse gas emissions such as energy efficiency, phasing out coal and replacing it with natural gas and wind or nuclear but he is convinced CCS is the answer and the lowest-cost option. "If you really want to cut down on emissions at coal-fired power plants you really have to go with CCS," he said.
Factors affecting carbon dioxide capture costs include concentration, economy of scale and site specifics. The lower the concentration, the smaller the power plant and the more remote the site, the higher the cost, said Singh. There is also vendor risk, as untested technologies have greater risk, he noted. Process optimization can lower cost while the solvents chosen are usually proprietary and high cost. Cost of capital is another concern.
"People say CCS is expensive. Well it is. But what other options do you have?" said Singh. Costs will eventually be reduced by the types of projects being funded by the CCS fund, he added.
He said Alberta is perfectly suited for CCS. It has large CO2 storage capacity; a proactive industry; potential for enhanced oil recovery; the best scientists, geologists and engineers; excellent infrastructure; a supportive government and knowledgeable non-government organizations and public. The province has the necessary policies and incentives in place to encourage widespread CCS in the coming decade, he said.
AERI is also working on other options: gasification, energy efficiency, renewable, biofuels, geothermal and hydrogen however fuel cells are a distant possibility, he said.