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March 04, 2024Navigating the world of CCS and CCUS technologies
Navigating the world of CCS and CCUS Technologies
Globally, most of the world's major economies have legally binding targets to reach “Net Zero”, with the pathway to achieving such targets passionately debated amongst scientists, industry, and politicians. Currently for some specific industries, simply switching to operating on intermittent renewable energy sources does not resolve the issue of CO2 emissions created in their processes. For other industries, the vast amount of energy input for their processes require a reliable, stable, and resilient base load supply of power that variable renewable electricity generation in its current state cannot provide. In parts of the world where energy sources are scarce, and a reliable electric utility grid cannot be taken for granted, electrification can only go so far. This Blog Post investigates the segment of carbon capture-based technologies and reviews the merits, potential issues, and use cases of the technologies.
Background of Enhancing Oil Recovery
Carbon Capture, Utilization and Storage (CCUS) can trace its origins back to the 1970’s under the guise of a mechanism for enhanced oil recovery (EOR). Simply drilling a well and allowing the differential pressure of the reservoir compared to the ambient air pressure to extract the oil, leaves between 85 to 95 percent of the oil in the reservoir. If you were to drill an injection well which pumps water or compressed gasses into the well, around 20 to 50 percent of the crude oil in the reservoir is recovered. Based on geological reservoir’s subsurface permeability and porosity, EOR is used to increase the life and profitability of a crude oil reservoir by injecting CO2 into the reservoir, with the aim of it mixing with the crude oil, to reduce the viscosity of the crude oil allowing it to flow more easily, increasing production to up to 80 percent of total possible reservoir volume.
Currently EOR is the most common form of Carbon Capture and Utilisation “CCU” in the industry. From a CO2 management perspective, this process is using the CO2 gas to produce more crude oil which will also be enriched with CO2 from the aforementioned EOR process. Whilst a small amount of CO2 will remain in the reservoir rock and be permanently stored during the process, the aim of EOR is to extract more hydrocarbons and thus creates more emissions than a reservoir drilled conventionally. As a result, this is not currently a process that can be counted on to help to achieve NetZero Targets.
From Natural Gas extraction to Carbon Sequestration
CCUS plays a crucial role and offers a competitive advantage in the extraction of natural gas from CO2-rich reservoirs, as these reservoirs are inherently abundant in CO2. The steel grades used during the initial well construction are already designed to withstand prolonged CO2 exposure. Assuming the production wells in one of these reservoirs maintain full integrity, a viable project could extract the CO2 from the produced natural gas at a field processing facility and reinject it back into the reservoir. From a project perspective, this approach would enhance reservoir pressure and increase the total available resource volume. Simultaneously, from a CO2 standpoint, it would allow the project to minimize CO2 emissions via the sequestration into the reservoir while meeting the natural gas demand where such extraction is feasible. Once the field is depleted of natural gas, or the CO2 content becomes too rich to be economically viable, it could be fully repressurized by capturing CO2 from nearby sources of emitters and also storing it. Alternatively, if the reservoir is sufficiently large, it could serve as a CCS (Carbon Capture and Storage) hub, receiving CO2 shipments from emitters via tanker, offering new revenue streams for the storage hub owners.
Today there are many existing, brownfield, and greenfield projects that aim to use this well-developed process of injecting CO2 into a reservoir, purely to store the carbon without any intention of extracting hydrocarbons. These are referred to as CCS projects, normally drilled into reservoirs that were concluded to be low pressure and not of commercial volumes of hydrocarbon or aquifers. Such projects are being planned next to industrial clusters with hard to abate CO2 emission sources such as chemicals, cement, and steel. With these industries not expected to develop truly renewable production methods in the short- to medium-term, there is a strong argument that CCS allows the world to rapidly reduce emissions from said industries where currently no commercial alternatives exist. Another argument for CCS is to allow the developing world access to cost effective energy in the form of coal or natural gas, then capturing the CO2 from the power plants and storing in a CCS project, as mentioned as a main aim in COP 28, the transition needs to be “just and equitable”.
Main challenges facing the adoption of CCS
The primary obstacle to the widespread adoption of CCS is the inherent requirement for fiscal and financial incentives to reduce carbon emissions. A well-structured, cross-border carbon tax or subsidy scheme for abatement could provide the necessary incentive for industries to invest in this technology in the short-term. Based on favourable economic conditions, a carefully executed carbon pricing mechanism or subsidy could facilitate the conversion of existing EOR projects to CCUS. By intending to restore reservoirs to near-virgin pressures with CO2 storage, this approach could be employed during the current transition to cleaner energy sources. The main goal would be to achieve a “Net” carbon balance of zero or even negative with regards to crude oil extraction. However, this is dependent on the geological subsurface properties of the reservoir formation and the integrity of the current wells and cannot be assumed to be technically feasible or economically viable for every project without detailed evaluation, assessment, and due diligence.
In addition to the cost barriers to CCS, there are other potential barriers, challenges, and hurdles to overcome. One such barrier is the discrepancy between the scale of a CCS project’s ability to sequester CO2 and the CO2 emitted by a single industrial emitter. This discrepancy necessitates the creation of a “hub” for multiple sources of emissions, requiring collaboration and cooperation between different industries that may have differing attitudes towards intercompany partnerships in the past.
A second key issue is the ongoing storage liabilities once the CO2 is stored. While the risk of leakage is potentially low, ongoing reservoir basin monitoring will be required for decades after the final molecules of CO2 are sequestered and the reservoir reaches storage capacity. Governments, policymakers along with robust regulations will need to play an overarching role in determining how insurance and reinsurance will be underwritten for these projects.
The Author...
Connor Dobson, Senior Analyst
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