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SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan
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SBC Energy Institute - Factbook: Bringing CCS to Market - webinar 30 Jan

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On 30 January 2013, Olivier Soupa and Bruno Lajoie from the Schlumberger Business Consulting (SBC) Energy Institute presented the findings and insights from the SBC Energy Institute’s Factbook on …

On 30 January 2013, Olivier Soupa and Bruno Lajoie from the Schlumberger Business Consulting (SBC) Energy Institute presented the findings and insights from the SBC Energy Institute’s Factbook on Bringing CCS to Market.

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  • 1. LEADING THE ENERGY TRANSITIONCarbon Captureand StorageBringing Carbon Capture and Storage to MarketWebinar presentation hosted by the Global CCS InstituteSBC Energy Institute30 January 2013
  • 2. Agenda  TECHNOLOGY  PROJECTS  ECONOMICS  PERSPECTIVES 1 © 2012 SBC Energy Institute. All Rights Reserved.
  • 3. INTRODUCTION CCS is expected to play an important role in achieving the lowest-cost pathway to mitigating CO2 emissions CO2 ABATEMENT LEVERS IN THE IEA‟S 450 SCENARIO RELATIVE TO NEW POLICIES SCENARIO Annual energy-related CO2 emissions (Gt) Energy Efficiency Notes: The 450 scenario is the lowest cost pathway to mitigate CO2 concentration level below 450ppm in the future and gives a 50% chance to limit global warming below 2°C, the UNFCCC target. The New Policy Scenario is IEA‟s central case. Activity describes changes in the demand for energy services, such as lighting or transport services, due to price responses. Power plant efficiency includes emissions savings from coal-to-gas switching Source: IEA, World Energy Outlook 2012 2 © 2012 SBC Energy Institute. All Rights Reserved.
  • 4. INTRODUCTION In power generation alone, it offers significant CO2 abatement potential at a reasonable cost CURRENT COSTS OF CO2 AVOIDED BY LOW-CARBON POWER TECHNOLOGY* VERSUS RESPECTIVE SHARES OF CO2 EMISSIONS-REDUCTION IN 2050 IN IEA 2DS SCENARIO** $/tCO2 avoided 250 239 Range of cost of CO2 avoided relative to coal 213 200 176 Share of emissions-reduction potential 11% 11% among low-carbon power technologies (%) 150 8% 106 139 100 92 4% 115 17% 90 49 50 67 18 11% 53 8 20% 11% 0 3% 6% 9 100% -7 -8 -27 -50 -37 Geoth Hydro Nuclear Wind Biomass CCS CCS Wind Solar Solar (onshore) (heat & power) (Coal) (gas) (offshore) (PV) (CSP) Notes: * Cost of CO2 avoided with current technologies in the US relative to coal, except for CCS (gas), which is compared with a gas-fired power plant. Coal is taken as the reference plant because it emits the highest level of CO2 of all power-generation technologies. The cost of CO2 avoided can be negative, implying that the technology is more cost-effective than coal even without considering the emissions impact. This is the case for hydropower and conventional geothermal power. ** Economic potential of each technology to contribute – at the global level – to the lowest-cost pathway to limiting global warming to 2°C compared with business-as- usual projection by 2050 (IEA‟s 2DS and 6DS scenario in Energy Technology Perspective, 2012) Source: SBC Energy Institute. Costs derive from 19 international studies gathered by the Global CCS Institute in “The costs of CCS and other low-carbon technologies – issues brief 2011, No.2”. One figure gave an abatement cost of only $23/t for coal CCS and has been voluntarily excluded from this dataset. Other sources include: Bloomberg New Energy Finance for Wind and Solar; IEA, “Industrial Roadmap for CCS”, 2011; © 2012 SBC Energy Institute. All Rights Reserved. 3
  • 5. 1. Technologies CCS technologies are now proven © Bloomberg LP. 4
  • 6. TECHNOLOGIES Individual technologies required to build large-scale integrated projects are available INVESTMENT-RISK CURVE OF INDIVIDUAL CCS TECHNOLOGIES CO2 geological sequestration and monitoring Technologies required for first in aquifer demonstration projects Capital requirement * Technology risk Technologies in the making CO2 geological sequestration and CO2 shipping monitoring in oil and gas fields Oxycombustion boiler 2nd Generation separation technologies 1st generation membranes (for CO2/CH4 separation at Enhanced coal bed methane (solvents, sorbents, membranes) wellheads) Mineralization 1st generation sorbents (for coal-to-liquid plants) Algae biosequestration 1st generation solvents (for gas processing Oxygen chemical looping plants) CO2 injection for EOR Atmospheric capture CO2 pipelines for EOR Air separation unit Technological „Valley of Death‟ Large/Commercial-scale projects Lab work Bench scale Pilot Scale with ongoing optimization Widely-deployed commercial scale projects Research Development Demonstration Deployment Mature Technology Maturity Notes: EOR stands for Enhanced Oil Recovery with CO2-injectino in mature oil fields. Source: SBC Energy Institute © 2012 SBC Energy Institute. All Rights Reserved. 5 5
  • 7. TECHNOLOGIES CO2 capture induces energy and water penalty ILLUSTRATION OF A 20% ENERGY PENALTY ON A WATER CONSUMPTION OF VARIOUS PLANT TYPES 500MWe COAL PLANT L/MWh CO2 stored Base plant water consumption CO2 emitted With CCS MtCO2/year +20% 4.0 Hydro 17,010 3.6 3.5 Geothermal 5,200 3.0 3.0 Soalr thermal 3,156 2.5 2.0 3.2 Nuclear 2,116 -2.6 CO2 avoided 1.5 Coal (PC) 1,474 2,697 1.0 Coal (IGCC) 756 907 0.5 0.4 0.0 Natural Gas 680 1,265 500 MWe net 500 MWe net (without CCS) (with CCS)  Energy penalty currently ranges between 16% and  Water penalty currently ranges between 10% and 43%, depending on the capture process 80%, depending on the capture process Source: World Policy Institute (2011), The Water-Energy Nexus; and NETL (2010), Cost and Performance Baseline for Fossil Energy Power Plants © 2012 SBC Energy Institute. All Rights Reserved. 6 6
  • 8. 2. Projects Only oil and gas related projects are moving forward © Bloomberg LP. 7
  • 9. PROJECTS CCS entered the demonstration phase in 2008 STAGE OF CCS DEVELOPMENT Future: “Generation 2” Current: Commercialization Full CCS scale Demonstration phase commercialization “Generation 1” Gov. commitments: 27 new Large Projects Testing components IEA target: 100 Large Projects 7 Large Projects  Testing and commercializing  Demonstration Projects  Commercial CCS projects components in separate industries  Integrate “gen 1” technology  Demand pull  Capture: CO2/Gas separation used in  Direct public funding  Process covered by warrantees upstream O&G and hydrogen industries  Demonstrate various combinations of CCS  Incorporate new technologies  Transport: CO2 pipelines for EOR  Define and reduce system costs  Storage: Commercial EOR and aquifer trials  “Low hanging fruit” CCS projects  R&D for “generation 2”  Build common infrastructure  Commercial scale in gas processing  Cost improvements  Transport trunk lines  Pilot scale in power generation  Focused on capture  Common storage sites  No direct public funding Basic comprehension 1980 First Large Project First Large Project 2007 2014: First Large Project for 2020 CCS competitive with other low- 2030+ (Shute Creek) in aquifer (Sleipner) power generation carbon energy technologies Funding Price of CO2 increases progressively hypothesis Direct subsidies temporarily fill the gap Companies can raise project financing Notes: „Large Projects‟ refers to integrated CCS projects larger than 0.6MtCO2/year Source: SBC Energy Institute © 2012 SBC Energy Institute. All Rights Reserved. 8
  • 10. PROJECTS So far, CCS has been advancing at two speeds: O&G-related projects are making progress but CCS in power or industrial plants without EOR has stagnated DISTRIBUTION OF THE 16 LARGE PROJECTS* IN OPERATION OR PAST FINAL INVESTMENT DECISION (FID) As of October 2012 Oil & Gas related projects Non-EOR EOR Lower costs 5 Large Projects 4 Large Projects O&G Decrease of capture costs 2 past FID 1 past FID PROCESSING** 3 operating 3 operating 4 Large Projects INDUSTRIAL 1 Large Project 2 past FID HYDROGEN*** past FID 2 operating POWER OR 2 Large Projects 0 Large Project HEAVY INDUSTRY past FID High costs _ No storage revenues Storage revenues + Note: * “Large Projects” refers to integrated CCS projects above 0.6MtCO2/year. ** Natural gas processing plant or oil sand upgrader *** hydrogen production plant for chemical or fertilizer, including steam methane reforming and coal gasification plants FID: Final Investment Decision Source: SBC Energy Institute based on GCCSI database 9 © 2012 SBC Energy Institute. All Rights Reserved.
  • 11. PROJECTS All integrated projects in operation are associated with the oil and gas industry Val Verde Snøhvit (Sharon Ridge) Statoil Shute Creek (Labarge) ExxonMobil Val Verde North Sea Snøhvit Enid Fertilizer • ExxonMobil, Chevron, Texas • ExxonMobil Aquifer • Statoil • Koch Nitrogen, Anadarko EOREOR • • MtCO2 0.7Aquifer /year Anadarko • EOR • 1.3 MtCO2 1.3 MtCO2/year/year • EOR • 0.7 MtCO Carbon Tax 2/year • 7 MtCO2/year • revenues EOREOR revenues • 0.68 MtCO2/year • Carbon Tax • EOR revenues • EOR revenues 1986 1999 2003 2007 1985 1990 1995 1996 2000 2000 2004 2005 2010 Project Name Sleipner Great Plains Synfuel In Salah Century plant • Statoil • Dakota gasification, • BP, Sonatrach, • Occidental • Owner • Aquifer Cenovus, Apache Statoil petroleum, • Storage type • 1 MtCO2/year • EOR • Onshore Sandridge • CO2 storage rate • Carbon Tax • 3 MtCO2/year • Aquifer • EOR • Rationale for investment • EOR revenues • 1 MtCO2/year • 5 MtCO2/year • CERs* • EOR revenues* Aquifer storage O&G processing plant Industrial hydrogen production & use Notes: *Certified Emissions Reductions (Kyoto Protocol) Source: SBC Energy Institute. © 2012 SBC Energy Institute. All Rights Reserved. 10
  • 12. PROJECTS Projects for CCS power plants without EOR revenues are facing difficulties Scottish Power NINE PROMISING CCS POWER PLANTS HAVE BEEN CANCELLED Longannet In red when abandoned mainly due to local public opposition $1,500 million granted Economic reasons TransAlta Project Pioneer Grant proved insufficient to $782 million granted retrofit this old and inefficient Economic reasons plant Horizontal multi-frac well technology is delaying the needs for CO2-EOR in Hunterston Alberta’s mature oil fields. The CCS project Underlying plant cancelled without EOR revenues became non- Overwhelming local opposition commercial to the construction of the coal FutureGen power plant $700 million granted Economic reasons RWE Eemshaven Dates back 2004, was cancelled due to Storage opposition rising costs. A new project, FutureGen2.0, Dutch government banned smaller in size, is still struggling to pass onshore CO2 storage FID and is not expected to be built before 2016 Shell Barendrecht AEP Mountaineer $40 million granted $334 million granted Storage opposition Economic reasons Dutch government banned Uncertain climate policy had weakened the strategic case onshore CO2 storage for the project, but cost-sharing issues with West Virginia commissioners eventually derailed it Vattenfall Jänschwalde ZeroGen $180 million granted $300 million granted Storage opposition Economics reasons Lack of political will to Abandoned by the Queensland provide legislation needed government, due to escalating costs for CCS in Germany, especially on storage Source: SBC Energy Institute © 2012 SBC Energy Institute. All Rights Reserved. 11
  • 13. PROJECTS ‒ INVESTMENTS AND KEY PLAYERS Overall investments in CCS are still much lower than in renewables, and public money allocated to CCS projects has not yet been spent TOTAL INVESTMENTS IN CCS (2006-2011) TOTAL INVESTMENTS IN RENEWABLES AND CCS $ billion (2011) $ billion Allocated Grants Public Markets VC/PE 9.2 Solar 147.4 Asset Finance 8.0 Wind 83.8 Biomass 10.6 6.0 5.1 Biofuels 6.8 Small hydro 5.8 3.3 2.7 Geothermal 2.9 1.0 1.4 CCS 2.3 2.9 3.1 0.7 2.3 1.2 Marine 0.2 0.3 2007 2008 2009 2010 2011 Notes: Private investments include project financing, equipment manufacturing scale-up, R&D and small distributed capacity (below 1MW). The data only include completed deals that have not been cancelled or postponed. Source: UNEP (2012) “Global Trend in renewable Investment” and Bloomberg New Energy Finance, extracted from database July 27 2012 © 2012 SBC Energy Institute. All Rights Reserved. 12
  • 14. PROJECTS ‒ INVESTMENTS AND KEY PLAYERS As a result, CCS development is not seeing the necessary growth rate recommended by the IEA for its demonstration phase GAP IN ANNUAL GROWTH RATE REQUIRED IN IEA‟S 450 SCENARIO % of growth rate in installed capacity (GW for power, MtCO2/year for CCS) 60% 60% Current growth rate (5 year average) 55% Required growth rate in the 450 scenario (until 2020) 50% 45% 40% 35% 30% 27% 25% 20% 18% 15% 10% 4% 7% 8% 5% 6% 5% 3% 0% Nuclear Geothermal Hydro CCS Biomass CSP Biofuels Wind Solar PV Power power Notes: Growth rates are a function of installed generation capacity (GW) or installed storage rate capacity (MtCO2/year) for CCS. The current rate for wind and biofuels is the annual average growth rate from 2005 -2010. For solar PV, biomass, geothermal, and CSP, this period is 2004-2009. The current rate and status of nuclear includes capacity under construction. Required growth rate in the 450 scenario is for the period 2010-2020 Source: IEA (2011), “Clean Energy Progress Report” and IEA(2009), “Technology Roadmap, Carbon capture and storage” © 2012 SBC Energy Institute. All Rights Reserved. 13
  • 15. 3. Economics Only EOR revenues compensate for the lack of carbon-pricing mechanisms © Bloomberg LP. 14
  • 16. ECONOMICS Despite greatly increasing the levelized costs of production… INCREASE IN LEVELIZED COST OF PRODUCTION FOR CCS PLANTS Based on current technologies in the US, with storage site at 100 km by pipeline in an identified aquifer max Power plants (first-of-a-kind) AVERAGE 100 min 90 82% 80 Heavy industries (first-of-a-kind) 69% 70 65% 60 50 47% 45% 40 Industries emitting high-purity CO2 30 streams (CCS is mature technology) 20 12% 10 3% 1% 0 Coal post- Coal oxy- Natural gas Coal pre- Cement Steel Ammonia Natural gas combustion combustion post- combustion Plant processing combustion Notes: Natural gas plant uses combined cycle technology (NGCC). Post-combustion and oxy-combustion base plant are supercritical pulverized coal. Pre- combustion base plant is an integrated gasification combined-cycle unit. Source: Global CCS Institute, “Economic Assessment of Carbon Capture and Storage Technologies” 2011 update; Bloomberg NEW Energy Finance 2012 © 2012 SBC Energy Institute. All Rights Reserved. 15
  • 17. ECONOMICS …CCS electricity could be competitive with other decarbonized options, while providing baseload power capacity RANGE OF LEVELIZED COST OF ELECTRICITY (LCOE) IN THE US WITH CURRENT TECHNOLOGIES $ per MWh 300 300 Baseload or dispatchable capacity 265 265 250 Intermittent capacity 215 200 175 185 150 166 119 146 113 100 94 107 86 100 89 Conventional thermal power plants (coal, natural gas) 61 60 81 50 67 68 43 52 0 Geothermal Hydro Wind Nuclear Biomass CCS CCS Wind Solar Solar Geothermal (onshore) (coal) (gas) (offshore) (PV) (Thermal) EGS Notes: Levelized costs of electricity do not include back-up capacity needs and grid-integration costs incurred by the intermittency of variable renewable output Source: Estimates are ranges of LCOE in the United States with current available technologies, and derive from 19 international studies gathered by the Global CCS Institute in “The costs of CCS and other low-carbon technologies – issues brief 2011, No.2”. Estimates for EGS are highly hypothetical and derive from models from MIT, 2006; and Huenges and Frick, 2010. © 2012 SBC Energy Institute. All Rights Reserved. 16
  • 18. ECONOMICS – COST STRUCTURE The main hurdle are the substantial up-front costs required for the capture system 500MW POST-COMBUSTION SYSTEM LEVELIZED COST OF ELECTRICITY $/MWh Distribution the 124.3 increase of LCOE Transport & storage 5.5 11% Fuel 19.6 11% Plant opex Plant capex +72% 7.2 12% 66% 72.4 13.7 1.0 92.0 57.7 Investment cost 500 - 1,000 million USD Coal without CCS Coal with CCS* (post-combustion) Notes: *First-of-a-kind supercritical pulverized coal power plant with amine-based post-combustion capture and onshore aquifer storage at 100 km by pipeline Source: BP (picture); Bloomberg New Energy Finance (2012) for the levelized cost of electricity. © 2012 SBC Energy Institute. All Rights Reserved. 17
  • 19. ECONOMICS High up front costs make it difficult for governments to allocate funds COSTS OF CO2 AVOIDED IN THE US BY VARIOUS TECHNOLOGIES, RELATIVE TO COAL $/tCO2 avoided 530 Global average subsidy for Solar PV in 2010 (implicit carbon price) 250 200 150 Feed-in-tariff for offshore wind in the UK in 2012 (implicit carbon price) 100 50 Average grant allocated to Large Projects * EU ETS carbon market prices 0 Geoth. Geoth Hydro Wind Nuclear Biomass CCS (all Wind Solar PV Solar onshore types) offshore Thermal -50 Notes: * Sum of all allocated grants over the cumulated CO2 abatement of all Large Projects subsidized For CCS, costs of CO2 avoided are for first-of-a-kind plants, relative to the same plant without CCS. Estimated costs in the United States with current available technologies. Source: SBC Energy Institute. Global average subsidy for Solar PV are from IEA (2011). Offshore wind feed-in tariffs in UK is from UK Department of Climate Change. CO2 market price for EOR is from Bloomberg New Energy Finance (2012). Costs in are derived from 19 international studies gathered by the Global CCS Institute in “The costs of CCS and other low-carbon technologies – issues brief 2011, No.2”. Other dataset includes Bloomberg New Energy Finance; IEA “Industrial Roadmap for CCS”, 2011; Global CCS Institute, “Economic assessment of CCS technologies” © 2012 SBC Energy Institute. All Rights Reserved. 18
  • 20. ECONOMICS CCS-EOR projects benefits from high CO2 contract prices in the US, while being less affected by planning and coordination difficulties ESTIMATED CO2 CONTRACT PRICE IN THE US, Q1 2010-Q4 2012 $/tCO2  In the US, CO2 prices are likely to be 120 above $30/t when oil price is above $100/bbl 100  EOR reduces transport and storage WTI price costs 80  EOR reduces storage risks 60  PR and liability issues  EOR simplify CCS business models 40  No needs for complex joint venture $/tCO2  Technically speaking, EOR could 20 allow to store huge amount of CO2 globally 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12  Economically speaking, multi-frac horizontal wells have become easier to implement than CO2-injections to enhance field‟s recovery factors Note: Costs are based on 250 MWe base plant and capture. In the IGCC case, plant includes gasification and SO 2 removal. Capture systems refer to all additional equipment needed for CCS at the plant (air-separation units, gas-separation systems, solvents, oxy-combustion boilers, purifiers, compressors…). Source: Carbon capture & storage – Research note, Bloomberg New Energy Finance 2011 © 2012 SBC Energy Institute. All Rights Reserved. 19
  • 21. 4. Perspectives The pipeline of CCS projects remains encouraging © Bloomberg LP. 20
  • 22. PERSPECTIVES On paper, the list of project is encouraging, mostly for power generation and located in OECD countries NUMBER OF REALISTIC LARGE PROJECTS CURRENTLY IN THE PIPELINE As of October 2012 Industrial Hydrogen  Many power projects have been proposed Natural Gas processing (and oil upgrading) Power generation 8 35 2  Proposed plants would mainly be located in US, 8 Europe, Canada and Australia 6 8 3  Steel and cement are currently missing in the 3 19 11 panel of CCS projects 2 3 2  A growing number of companies are considering CCS-EOR, but projects are 16 confidential until contracts are signed and many 14 are missing in this list Planned Under Operating TOTAL construction Final Investment Decision (FID) Notes: “Realistic” project: at a sufficiently advanced stage of planning to stand some chance of being built and operating before the end of the decade Source: SBC Energy Institute analysis, based on Bloomberg New Energy Finance database (March 2012) © 2012 SBC Energy Institute. All Rights Reserved. 21
  • 23. PERSPECTIVES Governments have committed billions to demonstrate CCS but are struggling to allocate money to specific projects GLOBAL PUBLIC FUNDS COMMITTED TO CCS $ billion, at Q1 2012 7.5 0.1 0.8 Total = $21 billion committed Withdrawn in 2012 Uncertain Unallocated 4.6 Allocated: $11 billion 0.3 4.3 1.5? 0.6 6.6 (NER 3.1 300) 1.0 1.6 3.2 1.7 1.7 2.1 0.8 1.2 0.3 0.5 0.2 0.1 US European Australia Canada UK Norway South Korea China Union Note: Allocated category includes only funds for specific projects, and unallocated category includes all funds promised by governments, minus the funds that are uncertain. Source: Global CCS Institute (2013) © 2012 SBC Energy Institute. All Rights Reserved. 22
  • 24. PERSPECTIVES By 2017, 22 projects should be operating, with more than 90% of the installed capacity related to oil & gas operations CCS LARGE PROJECTS DEPLOYMENT FORECAST, 2012-2017 MtCO2/year CO2 SOURCES MtCO2/year CO2 STORAGE 55 55 Power plant Depleted oil and gas reservoir 50 Industrial hydrogen 50 Aquifer 45 Gas processing 45 EOR 40 40 22 (3GWe) 35 35 30 30 25 25 20 20 15 15 10 10 19 5 5 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Power plants account for 30% of the operating EOR account for 80% of the operating capacity in capacity in 2017 2017 Source: SBC Energy Institute analysis, based on Bloomberg New Energy Finance database (March 2012) © 2012 SBC Energy Institute. All Rights Reserved. 23
  • 25. PERSPECTIVES Conclusions 1. Meeting international CO2 emissions-reduction targets will be extremely difficult to achieve without CCS 2. CCS projects are technically feasible at large scale and with moderate abatement costs per ton of CO2 avoided. There is no need to wait for building demonstration projects 3. Demonstration projects are necessary to refine understanding of CO2 sequestration mechanisms 4. R&D‟s priority is reducing the cost of CO2 capture 5. Projects associated with oil & gas production can be commercial. It will remain the main driver in the CCS industry in the current decade 6. Projects remain at a standstill for power generation and heavy industry when targeting passive CO2 storage 7. Despite governments promises, demonstration is has been far slower than what was projected 8. IEA has just renewed its call for action to develop CCS, listing it in its 2013 priorities 9. Public stakeholders needs increase support for CCS and private-sector needs to develop overall awareness of the benefits of CCS © 2012 SBC Energy Institute. All Rights Reserved. 24
  • 26.  Annexes 25 © 2012 SBC Energy Institute. All Rights Reserved.
  • 27. ANNEXES CCS refers to a set of CO2 capture, transport and storage technologies that are put together to abate emissions from various stationary CO2 sources CCS VALUE CHAIN Capture Transport Storage CO2 Sources Upstream O&G Gas sweetening Underground geological • Natural Gas Processing • CO2/CH4 separation storage • Deep saline aquifers • Depleted oil and gas fields Heavy industries Post-combustion • Unmineable coal seams • Steel • CO2/N2 separation • Cement Pipelines Beneficial reuse of CO2 Oxy-fuel combustion • Enhanced oil/gas recovery • O2/N2 air separation unit • Enhanced coal bed methane Power generation • Oxy-fuels boiler • Synthetic fuels • Coal Ship – Algae biofuels • Gas – Formic acid • Petroleum coke – Synthetic natural gas • Biomass Pre-combustion • Urea yield boosting • Gasification or reformers Networks & hubs • Mineralization Industrial hydrogen • CO2/H2 separation • Polymer processing production and use • Chemicals (ammonia) • Synthetic fuels Other options in R&D – Coal-to-liquid • Storage in basaltic formations – Steam methane • Ocean storage reforming Additional equipment • Working fluid for enhanced – Biomass-to-liquid • Compression geothermal systems • Refineries (fuel upgrading) • Dehydration © 2012 SBC Energy Institute. All Rights Reserved. 26
  • 28. ANNEXES Power and industry CCS projects incur planning and coordination difficulties that do not affect O&G-related CCS projects BUSINESS MODELS FOR INTEGRATED PROJECTS Project owner (potentially eligible for CAPTURE TRANSPORT STORAGE emissions reductions) Secondary stakeholder • Single integrated project owner: high level of Self-built model O&G majors___________________________________________ Govt control, no coordination issues (integration) • Limited to Oil & Gas majors or very large utilities only • Several project owners share costs and risks Partnership Transport Power utility operator O&G companies • Risk of cancellation if a partner pulls out (JV, consortium) • Difficulties in managing differing industrial cultures, paperwork… EOR contractual EOR producer 1 Transport • Limited to EOR agreement Emitter operator EOR producer 2 (pay-at-the-gate) EOR producer 3 • Shared infrastructures for transport and Emitter 1 storage reduce up-front capex New models - cluster Emitter 2 Publicly supervised common venture • Involvement of public authorities facilitates approach public acceptance Emitter 3 • Not for early demonstration phaseSource: SBC Energy Institute © 2012 SBC Energy Institute. All Rights Reserved. 27
  • 29. ANNEXES CO2-EOR is mainstream commercial technology in the US US CO2-EOR PRODUCTION US CO2-EOR VS. OTHER EOR k bbl/d, 1986-2010 %, 1986-2010 Other EOR processes CO2-EOR 300 250 57% 200 64% 61% 72% 70% 81% 77% 77% 76% 75% 90% 85% 150 95% 100 43% 50 36% 39% 28% 30% 19% 23% 23% 24% 25% 10% 15% 0 1986 1990 1998 2002 2006 2010 1986 1990 1994 1998 2002 2006 2010 Note: CO2-EOR refers to enhanced oil recovery through CO2 injection. Other EOR processes include thermal EOR, natural gas EOR, water EOR etc… Source: Oil & Gas Journal 2010, Bloomberg New Energy Finance Note other states includes Oklahoma, Utah, Pennsylvania, Michigan, California, Montana, Alabama and Louisiana; Oil & Gas Journal 2010, Bloomberg New Energy Finance. © 2012 SBC Energy Institute. All Rights Reserved. 28
  • 30. ANNEXES Growing demand for beneficial reuse of CO2 should support several CCS projects during the next decade CONSERVATIVE ESTIMATE OF THE GLOBAL INDUSTRIAL DEMAND FOR CO2 IN 2020 MtCO2/year  Anthropogenic CO2 demand in 2020: 60Mt/year 120 118  ~10GW of CCS coal power 6 110 CAGR+5%  Mostly for EOR in North America 100  Assumes no increase in natural CO2 90 ~60 Mt/year supply 57 ~10GW of CCS • Already close to its maximum capacity 80 73 coal power plants 70 1 • Stricter regulation needed 17 60 50 40 30 55 55 20 CCS-Other reuse CCS-EOR 10 EOR from natural CO2 sources (assuming no increase) 0 2011 2020Note: CO2-EOR refers to enhanced oil recovery through CO2 injection. Other EOR processes include thermal EOR, natural gas EOR, water EOR etc…Source: Oil & Gas Journal 2010, Bloomberg New Energy Finance Note other states includes Oklahoma, Utah, Pennsylvania, Michigan, California, Montana, Alabama and Louisiana; Oil & Gas Journal 2010, Bloomberg New Energy Finance. © 2012 SBC Energy Institute. All Rights Reserved. 29
  • 31. ANNEXES Over the long run, optimistic studies estimate EOR to be technically capable of storing twice the volume specified in the IEA‟s roadmap for CCS GLOBAL LONG-TERM POTENTIAL FOR CO2-EOR GtCO2 stored Cumulated CO2 storage required by 2050 in IEAs Roadmap 145 Global technical* potential 318 (within 800 km of existing CO2 sources) 65 US economic** potential at $85/bbl 20 Middle East / North Africa technical potential 125 North America technical potential 43 Former Soviet Union technical potential 42 South America technical potential 20 South Africa/Antartica technical potential 15 Asia Pacific technical potential 8 Europe technical potential 8 Undiscovered basins‟ technical potential 57 Notes: * With next-generation CO2-EOR technologies ** At an oil price of $85/bbl, a CO2 market price of $40/Mt, and a 20% ROR before tax Source: Advanced Resources International, 2011 © 2012 SBC Energy Institute. All Rights Reserved. 30
  • 32. ANNEXES 22 Large Projects are likely operate by 2017 CCS LARGE PROJECTS DEPLOYMENT FORECAST (2012-2017) MtCO2/year 22 Large Projects Eight Large Projects in gas Injection rate capacity (Power Plant) 50 52MtCO2/year processing and hydrogen Injection rate capacity (Oil/Gas Processing) 45 Injection rate capacity (Hydrogen plant) 40 35 30 25 20 15 ADM Illinois ConocoPhillips SaskPower Leucadia Lake Shell Chevron Summit Endesa 10 CCS Lost Cabin Boundary Dam Charles Quest Gorgon TCEP OXICFB300 Gasification 5 0 2013 2014 2015 2016 2017 Air Products ACTL Mississippi Power E.ON Swan Hills Tenaska Port Arthur Agrium Kemper ROAD Sagitawah Trailblazer Source: SBC Energy Institute analysis © 2012 SBC Energy Institute. All Rights Reserved. 31

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