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Carbon Capture and Storage (CCS)Carbon Capture and Storage (CCS) in the United States: The Challenges Ahead in the United States: The Challenges Ahead
Presentation toNorth American Energy Standards Board
Houston, TexasJune 23, 2010
Robert W. Gee, PresidentGee Strategies Group, LLC
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What is Carbon Capture and Storage (CCS)What is Carbon Capture and Storage (CCS)a.k.a. “Carbon Sequestration”a.k.a. “Carbon Sequestration”
CO2 Capture(Separation & pressurization)
CO2 Capture(Separation & pressurization)
CO2 Transport(If necessary)
CO2 Transport(If necessary)
CO2 StorageCO2 Storage
Purpose: Reduce COPurpose: Reduce CO22 emissions to avoid climate change. emissions to avoid climate change.
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CaptureCapture
Source: CO2CRC
Natural Gas Separation Capture From Industrial Processes
Post-Combustion Capture Oxyfiring Pre-combustion Capture
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TransportTransport
Source: United States Department of Transportation
Current U.S. Carbon Dioxide Pipelines
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StorageStorage
EOREOR Source: CO2CRC
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Can CCS become commercial in the United States?Can CCS become commercial in the United States?
Yes, provided that challenges can be overcome:
Well-Recognized Challenges CO2 emissions reductions have value with reasonable certainty Costs are below the value of the reductions Storage is proven in a range of geologies An adequate legal-regulatory framework is in place The public supports CCS
A Less-Understood Challenge
Viable business models must be implemented for the full value chain
CaptureCapture TransportTransport StorageStorage
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Who are the players?Who are the players?
PowerCompanies
FinancialInstitutions
Equipment Vendors
Oil and GasIndustry
Pipeline Companies
ProcessIndustries
Challenge: Integrating Diverse Industries
OilfieldServices
Engineering/Service
CoalIndustry
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First commercial scale demos are being planned in First commercial scale demos are being planned in the United States and elsewhere. the United States and elsewhere.
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Source: Global Carbon Capture and Storage Institute
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How can the CCS value chain be assembled?How can the CCS value chain be assembled?
CaptureCaptureCaptureCapture TransportTransportTransportTransport StorageStorageStorageStorage
- Oxygen
- Gasification- Power Generation- Industrial Process
- Separation
- Compression
- Point-to-Point
- Network
- Site Selection- Site Characterization- Injection Operation- MVA- Remediation- Closure
Value ofEmissionsReduction
Financial Incentives
How are value, cost and risk allocated?How are value, cost and risk allocated?
What should be the role, if any, of economicWhat should be the role, if any, of economic regulation across the value chain?regulation across the value chain?
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Bluewave Resources/ Gee Strategies Group Bluewave Resources/ Gee Strategies Group Current Project Objectives and ProcessCurrent Project Objectives and Process
ObjectivesObjectives
Create a roadmap that points to opportunities and solutions.
Consider how CCS-related business models mesh or clash; and
Identify critical business issues that cut across the industries.
Ongoing ProcessOngoing Process Individual Interviews Facilitated Group Discussions Supporting Analyses
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ParticipantsParticipants
Trade Associations
Electric Power
Process Industry
Oil and Gas Majors
Independent Oil and Gas
Pipeline Companies
Equipment/Engineering/Service
Coal Producers
Financial Services
Utility Regulators
SponsorsSponsors
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Priority Issues for CCS BusinessesPriority Issues for CCS Businesses
Rank Question
1 How do we move from RD&D incentives to commercial investment?
2 Would a commercial entity be willing to do storage?
2 How do we address public acceptance?
4 What should be the role, if any, of economic regulation across value chain?
5 Can we learn from similar experiences in other industries or countries?
6 Should we move from individual projects to networks?
7 EOR or saline formations: Where should the emphasis be?
8 Would a commercial entity be willing to do transportation?
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Various industry structures have been proposed.Various industry structures have been proposed.
These include several types of stand-alone project and network structures.
Companies along value chain are evaluating business models for prospective industry structures.
– How do these mesh or clash?
Much is as yet uncertain.– Timing and value of CO2 reduction requirements– Evolution of the technology– Role of economic regulation
Industry structure will vary by region and change over time.
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From RD&D incentives to commercial investment… From RD&D incentives to commercial investment…
The TheoryThe Theory
Source: Bluewave Resources, LLC and CO2CRC
Commercial Investment
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From RD&D incentives to commercial investment… From RD&D incentives to commercial investment…
Today’s State of Play Today’s State of Play
TransitionalIncentives
EOR
Commercial InvestmentFirst mover advantageor disadvantage?
?
?
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Would a commercial entity be Would a commercial entity be willing to do storage?willing to do storage?
With apologies to Thomas Nast.
Can a viable business model be created?Can a viable business model be created?
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How do we address public acceptance?How do we address public acceptance?Cover of Dutch
Magazine NWT, April 2009
http://www.natutech.nl/00/nt/nl/47_58/artikel/order/200904/4_2009.html
CCS projects cancelledor in trouble due topublic opposition:
Barechdrecht, Netherlands Carson, California Greenville, Ohio Neutrebbin, Germany Stadum/Hörup, Germany
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Locational Differences in Storage OpportunitiesLocational Differences in Storage Opportunities
DistantStorage
AbundantLocalStorage
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Should we move from individual projects to Should we move from individual projects to networks?networks?
Initial CCS projects will have:- One source, - One storage reservoir - A dedicated pipeline.
As CCS expands, there may be advantages to sharing resources to develop regional networks.
Fleet AFleet B
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Regional CCS Networks Under DevelopmentRegional CCS Networks Under Development
Source: ICO2N
Source: Rotterdam Climate Initiative Source: SenterNovem
Rotterdam, Netherlands Northern Netherlands Alberta, Canada
Yorkshire and Humber, England
Source: Yorkshire Forward
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Would a commercial entity be willing to transport Would a commercial entity be willing to transport COCO22??
Is there a viable business model to incentivize capital formation?
- How will this be financed?
Who should perform this service?
How will it be regulated?
- By Whom?
New infrastructure is required for CO2 transport:
How real is this as a near-termHow real is this as a near-termbusiness opportunity?business opportunity?
Source: NETL
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EOR or saline formations:EOR or saline formations:Where should the emphasis be?Where should the emphasis be?
Enhanced Oil Recovery vs. Saline Formations
Revenues offset costs
LimitedCapacity
AbundantCapacity
JustCosts
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Two types of industry structures are viable today.Two types of industry structures are viable today.
Low-Hanging FruitLow-Hanging FruitPublic-Private Partnership (PPP)Public-Private Partnership (PPP) Government/industry share costs & risks Produces information, not profits Government sets the rules Information is shared Benefit: Early access to technology
High-Concentration CO2 Source
Short DistanceTransport
EOR
FutureGen Model Co-Investment ModelFutureGen Model Co-Investment Model
Best withexistingassets
Profits, but a small niche. Profits, but a small niche.
Participant Consortium Host Facility Projects
Not sustainable long termNot sustainable long term
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CCS will need to meet many standards for…CCS will need to meet many standards for…
Safe operation of capture, transport and storage facilities.
Storage capacity estimates
Risk assessment
Site selection and permitting
Monitoring, Verification and Accounting (MVA).– Monitoring of the injection and storage – Verification of performance– Accounting for CO2 emissions reduction incentives (e.g., cap-and-trade)
CO2 quality for pipeline transport and injection into storage
Site closure and post-closure stewardship
These standards and who will set them has mostly yet to be decided. . . These standards and who will set them has mostly yet to be decided. . . Could it be NAESB? Could it be NAESB?
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Needed: business & technical interface standards .Needed: business & technical interface standards .
CaptureCaptureCaptureCapture TransportTransportTransportTransport StorageStorageStorageStorage
- Oxygen
- Gasification- Power Generation- Industrial Process
- Separation
- Compression
- Point-to-Point
- Network
- Site Selection- Site Characterization- Injection Operation- MVA- Remediation- Closure
Value ofValue ofEmissionsEmissionsReductionReduction
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Questions?Questions?
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Robert W. Gee
President
Gee Strategies Group LLC
7609 Brittany Parc Court
Falls Church, VA 22304
U.S.A.
703.593.0116
703.698.2033 (fax)
www.geestrategies.com