CCS in Australia – the storage challenge – Dick Wells, Global CCS Institute Members’ Meeting Rotterdam, May 2011


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  • In Australia, coal provides around 80 percent of our electricity and is forecast to continue to provide most of Australia's electricity well into the future. 32 percent of Australia's emissions come from coal-fired electricity and we are home to other emissions-intensive industries, such as LNG production, cement and steel manufacturing. Meeting our emission targets requires exploiting the potential of CCS and being proactive in terms of initiatives, policies and regulations to help make CCS a reality. In meeting our own requirements for CCS, Australia is also playing a leadership role in proving that these technologies are ready for world-wide deployment.
  • This slide outlines the significant initiatives that the Australian Government is undertaking in relation to development of CCS in Australia Of particular note is the $1.8 billion CCS Flagships program
  • (Talking points as per slide) The Terms of Reference for the National CCS Council include: CCS is the only technology available to significantly reduce emissions from large-scale fossil fuel use. It can be applied to coal and gas-fired power generation; LNG processing; liquid fuel technologies; and emission-intensive industrial processing such as iron and steel, chemical and cement.
  • mainly in undepleted gas fields off NW Australia, far from emission sources in SW & E Australia
  • National Carbon Mapping & Infrastructure Plan. The National Carbon Storage Taskforce, established under the NLECI, has developed the National Carbon Mapping and Infrastructure Plan to drive the prioritisation of, and access to, a national geological storage capacity. The Plan also considers the infrastructure requirements around pipelines for CO2 transport, such as the standards for construction as well as approaches for addressing possible community concerns around pipeline transport. The Taskforce has modelled ten emission hubs around Australia out to 2050 (the coloured columns on the map) and linked these emission hubs to priority geological storage basins (the grey shaded areas, representing suitable basins identified). This source-sink matching exercise identified injection and transport infrastructure requirements, and also prioritised future geological mapping requirements. The storage potential identified can help meet emissions reduction targets, putting CCS centre stage as one of a suite of options to help Australia reduce CO2 emissions. The plan was released publicly on 8 December 2009 and is available on RET’s website at
  • The first stage of the CCS Flagships evaluation shortlisted four projects and these were announced by the Minister for Resources, Energy and Tourism on 8 December 2009. The four projects are: The Wandoan power project located north-west of Brisbane, Queensland, an Integrated Gasification Combined Cycle (IGCC) coal fired power project. The ZeroGen project located west of Gladstone in Queensland; also an IGCC project. The Collie South West Hub located south of Perth in Western Australia in close proximity to the industrial centres of Kwinana and Collie and based around an integrated multi-user capture, transport and storage infrastructure project. The CarbonNet proposal in Victoria’s La Trobe valley, another integrated multi-user capture, transport and storage infrastructure project, with sources of CO2 from electricity generating plants in that area. The Government agreed that the short-listed projects would receive funding up to a total of $120 million for pre-feasibility studies of the project to further define technology, costs and commercial aspects of the projects. If raised: CCS FLAGSHIPS CHALLENGES In November 2010 the Minister for Resources and Energy, Martin Ferguson, publicly stated that time frame for the government to make an announcement on the selection of CCS Flagships projects has been delayed from the second half of 2010 to the first half of 2011. In December 2010 the Queensland Government announced that is was withdrawing its funding support for the ZeroGen project – stating that the early research to date had shown that the project would not be viable at commercial scale by 2015. Identifying storage locations was highlighted as the critical first step, and the Qld gov will work with the coal industry to do this.
  • The Gorgon LNG project off Australia’s north west coast now entering construction first gas planned for 2014 15 million tonnes per annum of LNG Gorgon Joint Venture participants: Chevron (50 percent), ExxonMobil (25 percent), Shell (25 percent) Will inject and store around 3 million tonnes per annum of captured CO2 reservoir gas claimed to be 4 times more CO2 injected than any other project in geological formations approx 2 km under Barrow Island 120 million tonnes total over the project’s life Long term liability arising from Gorgon’s storage of CO2 Australian and Western Australian Governments have jointly accepted
  • The CCS Flagships IAP, NLEC Council and Carbon Storage Taskforce have all identified the following risks and barriers impacting commercial deployment of CCS in Australia, the need for further geological storage exploration; The Australian Government is expected to make an announcement in this regard very shortly; funding support for demonstration projects and transitional support measures where commercial funding gaps arise for commercial projects; advantageous policy and fiscal settings; and community acceptance. Storage Viability of CCS depends on finding suitable long term secure storage sites within reasonable distance of major energy and production sources. This makes the identification of storage reservoirs the first step in the critical path for deployment of CCS. Financial Support A major barrier facing both commercial deployment of CCS is the limited financial support available from both the Commonwealth and State governments, as well as the difficulties in attracting industry support without greater certainty of the implementation of the carbon pricing mechanism. Policy Settings A further risk facing commercial deployment of CCS is the inconsistency between state and Commonwealth regulatory frameworks Community Acceptance Risks: Community acceptance is a risk for project approvals at the local level, and is a risk for public funding support at a wider community level These risks and barriers facing are not unique to Australia. Projects around the world are facing major technical, commercial and financial challenges. Many countries and organisations such as the IEA and Carbon Sequestration Leadership Forum (CSLF) are doing a lot of work to reduce these risks, and with work, Australia has the potential to overcome a lot of barriers.
  • This diagram illustrates one type of hypothetical CCS project that investors in Australia could be considering in the next few years, namely: a new, large scale coal-fired power plant with high levels of CO2 capture (plant >400 Megawatt electric, gross output) coupled with development of a geological storage site sufficient to store the captured emissions (indicatively 1 Million tonnes per annum). The top section of the diagram focuses on power plant timelines and costs; the middle section focuses on storage timelines and costs (closely informed by the work of the Carbon Storage Taskforce); and the bottom section covers permitting issues across power plant and storage aspects. I just want to use this diagram today to broadly illustrate 3 points: 1.The “gated” nature of industry decisions on investments of this size, given the large risks involved. A strong enough case must be established at each stage, on the basis of the information to that stage, to justify proceeding to the next stage of investigation and, if successful, final commitment. 2. This leads to long project lead times . For both capture and storage aspects of such a project, a minimum of 8 years would typically be needed to proceed from early conceptual stages to commissioning. 3. There are strong interdependencies between the component project timelines . In particular, final site selection and FEED studies for the power plant will depend on, and may be delayed by, final site selection for the storage facility. Notes 1. Times for feasibility and FEED could be significantly lower for mature “off the shelf” technologies. 2. For smaller demonstrations (20-50 MW), times are about half of those shown. 3. Times could be shorter for depleted oil and gas fields where data is already held, assuming access available for data & storage.
  • Capture lead time at least 8 years, transport ~6 years, storage 11-13 years Spatial & other data be captured in a database Pipelines, storage efficiency factor, monitoring
  • For Australia, because of distance, transport & storage costs are higher than published for Europe/US
  • Particularly pipeline transport & storage
  • In order to meet these demonstration and deployment timelines, a range of actions are needed to take place within the next two years: The legislative and regulatory framework for the geological storage of CO2 must be in place at the national and at the State level. A full assessment of Australia's geological potential for CO2 storage to the pre-competitive (tenement release) stage must be undertaken. The operating and regulatory regimes for the national electricity markets need to be examined, in the context of energy security, for the adjustments required to encourage establishment of CCS energy projects. Community education and engagement activities must be undertaken to ensure high levels of community understanding and acceptance of the need for CCS coal fired power as part of Australia’s low-emissions energy future. The commercial framework for funding of low emissions projects, particularly issues associated with CPRS, risk and finance, must be developed in the next few years to enable investment certainty in projects with long lead times. A clear understanding of regulatory approval pathways for capture, transport and storage is required within each jurisdiction and nationally. Capacity building for regulators is required to project development applications are assessed in a timely fashion and in a manner that provides reassurance for governments and the community that operations will be conducted safely.
  • CCS in Australia – the storage challenge – Dick Wells, Global CCS Institute Members’ Meeting Rotterdam, May 2011

    1. 1. CCS in Australia- the Storage Challenge Dick Wells Chair CCS Council Global CCS Members’ Meeting Rotterdam 9 -10 May 2011
    2. 2. Key Messages: <ul><li>Australia potentially has sufficient storage capacity, but costs vary substantially with location </li></ul><ul><li>There are multiple resources in the basins with pre-existing resource property rights </li></ul><ul><li>Establishing storage is the “rate determining step” in most cases for CCS projects </li></ul><ul><li>Need to invest in commercial scale demonstration projects </li></ul><ul><li>Need to consider further policy incentives if CCS is to be available for commercial deployment from 2020 </li></ul>
    3. 3. Why CCS in Australia ? <ul><li>Target: 60% reduction of emissions by 2050 </li></ul><ul><li>Coal provides 80% of electricity supply </li></ul><ul><li>32% of Australia's emissions come from coal-fired electricity </li></ul><ul><li>Australia also has emissions-intensive industries which underpin Australia’s economy </li></ul><ul><li>Offshore and onshore storage capacity </li></ul><ul><li>Other initiatives to meet emissions reduction targets </li></ul>Demonstration of post-combustion capture – Victoria
    4. 4. CCS Policy and Programs Australian Government investing $2.2 billion <ul><ul><li>Clean Energy Initiative – CCS Flagships </li></ul></ul><ul><ul><li>Release of the world's first greenhouse-gas acreage for commercial exploration </li></ul></ul><ul><ul><li>National CCS Council </li></ul></ul><ul><ul><li>A Cleaner Future for Power Stations </li></ul></ul><ul><ul><li>Research, Development & Demonstration activity </li></ul></ul><ul><ul><ul><ul><li>Australian National Low Emissions Coal R&D Limited (ANLEC R&D) Agency </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Small to medium scale pilots </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Large scale demonstration projects - CCS Flagships Program </li></ul></ul></ul></ul><ul><ul><li>International collaboration - Global CCS Institute </li></ul></ul>
    5. 5. Australia’s CCS Council <ul><li>Announced November 2010 by Minister for Resources & Energy </li></ul><ul><li>Commercially-oriented advice to the Australian Government on accelerating availability of CCS in Australia </li></ul><ul><li>Includes: power generators (coal-fired and gas-fired), coal industry, upstream oil and gas industries, research sector, Federal and State governments </li></ul><ul><li>Builds on previous work in Australia: </li></ul><ul><li>CCS for coal-fired power </li></ul><ul><ul><li>- former National Low Emissions Coal Council </li></ul></ul><ul><li>Multi-user hubs </li></ul><ul><ul><li>former Carbon Storage Taskforce </li></ul></ul><ul><ul><li> </li></ul></ul>
    6. 6. “ Australian Carbon Storage Task Force” (2009) There is storage capacity for >70 years of emissions.... <ul><li>Storage of CO 2 in saline formations, depleted oil & gas fields are proven & safe </li></ul><ul><li>About 40% of saline aquifer storage capacity is located in the east, where CO 2 emissions are highest </li></ul><ul><li>High confidence of storage capacity for at least 70 and 260 years of emissions respectively in the east and west </li></ul><ul><li>The carbon storage capacity of gas&oil fields is 16.5gigatonne </li></ul><ul><li>Potential resource conflicts are manageable – fresh water aquifer, existing petroleum production operations, geothermal, CSM etc </li></ul>06/10/11 Ranking of Australia’s basins for storage suitability
    7. 7. National Carbon Mapping & Infrastructure Plan Australia Distribution of emissions by industry estimated for 2020. Source: Carbon Storage Taskforce (2009)
    8. 8. Commercial scale demonstration: CCS Flagships Program – Stage 1 Shortlisted Projects Collie South West Hub To sequester 2.4 MT per year with potential to 7 MT per year ZeroGen * 400MW IGCC sequestering 3.0 MT per year Wandoan 330MW IGCC sequestering 2.5 MT per year CarbonNet hub to sequester 3 – 5 MT per year * Now being suspended and documented due to withdrawal of investors
    9. 9. ZeroGen- Lessons Learned <ul><ul><ul><li>Sequential project development path needed </li></ul></ul></ul><ul><ul><ul><li>Need to diversify storage appraisal (eg more than one option) </li></ul></ul></ul><ul><ul><ul><li>Work on Northern Denison Trough and pre-feasibility work across the integrated project will be valuable </li></ul></ul></ul><ul><ul><ul><li>Learnings will be documented and shared </li></ul></ul></ul>
    10. 10. Gorgon LNG project <ul><li>Gorgon LNG project off Australia’s north west coast </li></ul><ul><ul><li>first gas planned for 2014 </li></ul></ul><ul><ul><li>15 million tpa LNG </li></ul></ul><ul><li>Gorgon Joint Venture participants: </li></ul><ul><ul><li>Chevron (50%), ExxonMobil (25%), Shell (25%) </li></ul></ul><ul><li>Gorgon CO2 Injection Project will inject and geologically store around 3.5 million tonnes per annum of captured CO2 reservoir gas </li></ul><ul><ul><li>world’s largest CCS project </li></ul></ul><ul><ul><li>project cost approx AUD $2 billion </li></ul></ul><ul><ul><li>project recognised by the international Carbon Sequestration Leadership Forum (CSLF) </li></ul></ul><ul><ul><li>will share information from the monitoring program </li></ul></ul><ul><li>Long term liability arising from Gorgon’s storage of CO2 </li></ul><ul><ul><li>Australian and WA Governments jointly accepted </li></ul></ul>
    11. 11. Challenges for CCS Deployment <ul><li>Greater levels of certainty needed for prospective geological storage </li></ul><ul><ul><li>More prospective areas often have pre-existing resource property rights </li></ul></ul><ul><ul><li>Areas without significant resource competition are less prospective and less understood </li></ul></ul><ul><ul><li>Screening, characterisation and selection take 5-10 years with development a further 3-5 years – especially in Australia where exploration seismic, rigs are less numerous and widely dispersed. </li></ul></ul><ul><li>Carbon price uncertainties </li></ul><ul><li>Need for whole of CCS project integration of risk management and dependencies </li></ul><ul><li>Certainty over policy settings for treatment of pre-existing resource rights and long-term storage liability </li></ul><ul><li>Community acceptance </li></ul>
    12. 12. CCS project lead times are long- especially storage evaluation
    13. 13. Exploration & development lead time is on the critical path <ul><li>Storage is now recognised to be critical path </li></ul><ul><li>First capture hub could be commercially viable by 2020. Exploration needs to start immediately to meet this timeline </li></ul><ul><li>Few or no commercial drivers for investment today & transitional incentives are needed </li></ul><ul><li>The expected level of activity is manageable </li></ul><ul><li>CO 2 transport & storage has many parallels with oil & gas, but it poses challenges that require a different approach and mix of skills & knowledge for industry & authorities </li></ul><ul><li>A targeted pre-competitive data acquisition program is needed </li></ul><ul><li>Significant further R&D needed </li></ul>06/10/11 Storage exploration, appraisal & development schedule Australia's Carbon Storage Capacity - Carbon Storage Taskforce
    14. 14. Cost of transport & storage <ul><li>Transport & storage tariffs vary widely for hub/basin combinations </li></ul><ul><li>Impact on electricity prices is 1-10 cents/kWhr depending on location </li></ul><ul><li>Total capital cost of transport & storage $25-35 billion </li></ul><ul><ul><li>Phased over period 2020 to 2035 </li></ul></ul><ul><ul><li>Does not include LNG projects </li></ul></ul><ul><ul><li>Does not include exploration, appraisal & development (further ~$6 billion) </li></ul></ul><ul><li>Taking exploration risk into account could increase tariffs by ~40% </li></ul>06/10/11 Australia's Carbon Storage Capacity - Carbon Storage Taskforce Insert variable tariffs here $/tonne CO 2 avoided for hub/storage basins Mid depth case CO 2 tariff Range of tariffs for shallow, mid & deep basin locations Transport and storage cost per MWh For mid depth case CO 2 tariff
    15. 15. Public acceptance is essential for deployment, particularly onshore, & particularly for pipelines <ul><li>Community need assurance that CCS deployment will be safe & secure </li></ul><ul><li>Community perceptions </li></ul><ul><ul><li>Disproportionate funding of coal technologies; solar/renewables as a solution; impact of low emissions technologies on power costs; NIMBY </li></ul></ul><ul><li>Need to engage with influential stakeholders, & examine actions to address community concerns more widely </li></ul><ul><li>Industry stakeholders to be consulted on the most effective structure to enhance communications for CCS deployment </li></ul><ul><ul><li>Develop credible, verified, consistent messages, & create a reference source to avoid duplication </li></ul></ul><ul><ul><li>Develop CCS messages in the context of the whole portfolio of responses to climate change </li></ul></ul>06/10/11 Australia's Carbon Storage Capacity - Carbon Storage Taskforce Map of Key Stakeholders
    16. 16. Demonstration projects are important for investor confidence <ul><li>Commercial investment unlikely until a carbon market is established </li></ul><ul><li>Project financiers see high risk in untested integration of process & in scale-up </li></ul><ul><li>Demonstrations should be of significant scale (greater than 1 Mtpa) </li></ul><ul><ul><li>Gorgon LNG project will be the world’s largest CCS project (3.5 Mtpa) when sanctioned </li></ul></ul><ul><li>Demonstrations need to link capture, transport& storage elements - crucial for investor confidence </li></ul><ul><li>Proposals for significant-scale, linked demonstration projects in the Gippsland, Surat&Perth basins should have funding priority </li></ul><ul><li>Preferable that demonstrations evolve into demonstration hubs, to show viability and to capture economies of scale </li></ul>06/10/11 Australia's Carbon Storage Capacity - Carbon Storage Taskforce Reservoir Simulation Modeling – Plume 500 years Light grey – low concentration CO 2 Dark grey – high concentrationCO 2 Red-reservoir Blue – seals Figures courtesy Chevron Storage risk & consequence
    17. 17. What needs to be done … <ul><li>In the next two years: </li></ul><ul><li>Complete national legislative and regulatory framework for storage </li></ul><ul><ul><li>Passed in key jurisdictions onshore and offshore </li></ul></ul><ul><ul><li>Establish clear licensing pathways across key agencies </li></ul></ul><ul><li>Continue to assess storage potential </li></ul><ul><li>Storage communications strategy </li></ul><ul><li>Progress capture projects </li></ul><ul><li>Develop commercial framework to enable investment certainty </li></ul><ul><li>A price for carbon </li></ul>
    18. 18. Key Messages: <ul><li>Australia potentially has sufficient storage capacity, but costs vary substantially with location </li></ul><ul><li>There are multiple resources in the basins with pre-existing resource property rights </li></ul><ul><li>Establishing storage is the “rate determining step” in most cases for CCS projects </li></ul><ul><li>Need to invest in commercial scale demonstration projects </li></ul><ul><li>Need to reconsider policy incentives if CCS is to be available for commercial deployment from 2020 </li></ul><ul><li>So- we’re like much of the rest of the world </li></ul>