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TransAlta Corporation – Project Pioneer CCS in the Power Sector – Don Wharton - Global CCS Institute – Nov 2011 Regional Meeting


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As a part of the Institute's strategic focus on assisting CCS projects through knowledge sharing, three North American roadshow events will help the industry share project experiences and knowledge about CCS. Taking place in the US and Canada, the three events include:

• Austin, Texas on November 8, 2011;
• Calgary, Canada on 10 November, 2011; and
• Washington, D.C. on 19 January, 2012.

The first roadshow focused on sharing project experiences and knowledge from the projects in North America but also brought in projects from Europe (Don valley) and Australia (Callide) so that regionally diverse experiences could be shared amongst a global audience.
Attendance at the event was around 30 to 35 which allowed open and frank discussions around technical, management, and regulatory issues and how these challenges can impact on a project’s advancement and decision making processes.

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TransAlta Corporation – Project Pioneer CCS in the Power Sector – Don Wharton - Global CCS Institute – Nov 2011 Regional Meeting

  1. 1. Project PioneerCCS in the Power SectorGlobal CCS Institute / Carbon Management Canada Calgary Regional Meeting Calgary, Alberta Nov 10, 2011 Don Wharton VP Policy and Sustainability TransAlta Corporation
  2. 2. 2
  3. 3. Overview 1. Pioneer status & details 2. Some early lessons 3. Knowledge initiatives 4. Policy issues 3
  4. 4. Pioneer – A World-Scale CCS initiative About Project Pioneer  Post-combustion retrofit to new Keephills 3 coal-fired plant, 50 kms west of Edmonton  World-scale demonstration project operating by 2015  Captures 1 million tonnes/year of CO2  Delivery of CO2 to both enhanced oil recovery (EOR) and deep saline storage basinsKeephills 3, Summer 2011 A partnership of companies and governments with expertise across the CCS value chain. Knowledge transfer 4
  5. 5. Progress Project Goals Amine-based capture technology finalization imminent  Drive down capital and Front End Engineering Design work to be completed by Jan, 2012 operating costs through intense focus on systems integration Design and consultation for EOR transport pipeline underway and optimization across all Permit applications in process, work with regulators on filling regulatory CCS components gaps  Form strategic partnerships to Ongoing dialogue to advance CCS awareness via public build best-in-class CCS presentations, knowledge exchange and research projects Commercial negotiations with CO2 purchasers underway  Advance the regulatory Preparing for project sanction decision in Mar, 2012 framework for approving and permitting CCS Partnership Model projects, particularly CO2 • $1.3B - Project, capital and operating over 10 storage years, before revenues  Aggressively pursue • $340M – Federal investment knowledge exchange, both • $430M – Alberta investment outward from Project Pioneer to others, and inward from the • Industry partners cover rest and secure offsetting global effort. revenues from EOR and emission reductions 5
  6. 6. Transportation & Storage ConsiderationsTwo-pipelines are anticipated – one to aquifer storage and one to EOR injection.Why?Sequestration Enhanced Oil Recovery• Base-load power plants • Highly valuable revenue source need continuous from CO2 sale unconstrained storage • Tremendous opportunities within capacity mature oilfields of Western• Long term, capacity for Sedimentary basin EOR uptake could be • Additional return to Province in oil overwhelmed royalties• Experience with aquifer • Experience with CO2 management storage is important and recycling in EOR projects 6
  7. 7. Two Storage Options 7
  8. 8. Test Injection Well 8
  9. 9. Integration Work A focus of Pioneer is to drive down costs across the entire CCS system through optimization and integration with the existing power plant. This includes:  Steam cycle optimization for regeneration  CO2 pressure management optimized to pipeline requirements  CO2 purity optimization based on intended usage  Modularization of equipment  Process and component simplification  Supplier customization  Aquifer injection well scheme optimization  Water use reduction 9
  10. 10. Dealing with the Hard Financial Question Project must deliver a minimum return on industry cost of capital, cognizant of higher than normal risk. All income and cost components must work in order for projects to proceed. Impacts Costs Development + Construction Capital + CCS Operating + on business Emission- Revenues EOR sales + reduction value= Project financial evaluation 10
  11. 11. Partnership Discussions  Scope of involvement - full partners or limited?  Structure for decision making?  Return expectations?  Risk tolerances – how to accommodate variations?  Roles – who leads?  Transfer agreements – who owns what?  Work – done internally or externally?  Technology choices – handling preferences  Information and knowledge – how transparent? 11
  12. 12. Commercial Learnings (to date)Some commercial-related issues have become evident: 1. Government is an investor - As soon as possible seek out differences between industry and government objectives and resolve. 2. Partner portfolio approach addresses challenges – A diversity of expertise & risk tolerance helps overcome barriers. 3. Non-commerciality of CCS requires new thinking – Partners may have a variety of drivers for participating…project needs to accommodate them all. 4. The business case will be highly sensitive to policy – Small changes in policy can have potentially fatal impacts on project economics 5. Staged decision making is crucial – High learning curve on almost all project elements…frequent commercial re-evaluation is necessary. 12
  13. 13. Agreements with Governments Both governments and industry are learning about the commercial elements of prototype CCS projects. Funding agreements are evolving. Alberta and federal agreements are separate. Some important areas of negotiation:  Disbursements allocation – front end capital req’mts vs back end performance  Disbursements timing - schedules and termination dates  Risk of under-performance – who bears it  Project schedule risk  Knowledge transfer requirements and IP rights 13
  14. 14. Knowledge TransferProject Pioneer is undertaking an aggressive program of knowledge transfer, bothinwards and outwards. Knowledge Transfer ElementsCapacity Building Reputation Support Relationships EducationCase studies, factsheets, surveys, expert workshops, design & operational reports, economic assessments Partnership with the GCCSI  $5M AUS funding agreement signed in Dec, 2010  Facilitates delivery of some 15 public knowledge products in 2011-12  Products designed to encourage exchange 14
  15. 15. Public Research on CCSConducted a baseline CCS public opinionsurvey in 2010, again in 2011: 71% Awareness of CCS – 65% in Alberta Interested in Good support for CCS – 64% learning more about CCS Perceived value of CCS tied to positive economics and environmental impacts Perceived concerns of CCS tied to health and safety and cost to implement 76% see CCS having same level or less risk to other energy infrastructure 62% Support Focus by industry to reduce GHG’s seen as a top priority continued use of coal with 61% support for govt. funding to enable CCS CCS 15
  16. 16. Public Outreach Activities Public consultations and communication on Pioneer are ongoing, and include:  Open houses with neighbours  Land discussions along EOR pipeline route  Brochures and factsheets  Website  Media interviews and activityOpen Houses Most recent open house Tuesday, Nov 8/11 Factsheets 16
  17. 17. Work with the Institute 17
  18. 18. Dealing with Policy & Regulatory UncertaintyWill GHG policy create a fiscal environment in which CCS is Will the detailed regulatory requirements becomparable with other compliance alternatives – whether clear enough that CCS investment decisionsdriven by market mechanisms and a price on carbon, or by can be made.prescriptive regulation.  Proposed GHG policy for Cdn electricity sector  Bill 24 has helped Alberta projects regarding would provide no value to early GHG reductions, liability and pore space. or those beyond proposed standards.  Not clear yet how federal regulatory  EOR price untested. Policy driver will influence requirements will be dealt with future market prices.  Still lots of regulatory details to be tested –  Differentiated sector-based approaches could how much can existing regs be adapted and create illiquid CO2 markets if they exist at all. what needs to be built.  Future US/Canada alignment could mean two  Ultimately CCS investors need to be steps for policy clarity. convinced that they have a reasonable chance of permitting their project. Timing and predictability of policies will determine industry’s risk assessment and investment calls. 18
  19. 19. Thank YouContact:Don WhartonVP, Policy and SustainabilityTransAlta CorporationCalgary, Alberta,