Surat Basin CCS Project (A CCS Flagship shortlisted project)

‘A carbon storage solution’ Case study – storage, stakeholder and

community learnings so far

• Based on Carbon Capture and Storage World Conference Presentation

• October 2011 - GCCSI

1

The CTSCo journey 2009 to 2011

• IGCC with CCS • 2.5 million tonnes CO2 per annum

driven by IGCC plant outcomes • Industrial scale storage by 2015

80%

10% 10%

What we thought...

Technical

Approvals

Stakeholder andcommunity

40%

30%

30%

What we have...

Technical

Approvals

Stakeholder andcommunity

2

• Standalone CCS demonstration project separated from industrial scale storage stage

• 1 million tonnes CO2 per annum goal driven by industrial scale requirement

• Demonstrable pathway to industrial scale storage by 2020

% of effort projected by activity type % of effort committed by activity type

• Suitable geological formations for CO2 storage in Surat Basin – GHG Storage Atlas potential of up to 2900 Mt

• Substantial amount of existing data and information – lots of well and seismic data

• A demonstration project not a commercial business – strong advantage

• CTSCo – special purpose subsidiary of Xstrata Coal Queensland – assessing CO2 storage in Surat Basin

• Collaborative information sharing with Geological Survey of Queensland’s CGI program

• Innovation (e.g. DCA) to speed up proving work and keep costs down

• Demonstration on Xstrata owned land with no overlapping tenement rights

Potential for CCS in the Surat Basin

3

Challenges for CCS in the Surat Basin

4

• 47 major regional resource projects by 2013 (Source: Western Downs Regional Council)

• Overlapping tenement rights and resource competition

• 6000 existing CSG wells growing to 40,000

• Explaining 5 or 6 CO2 storage wells with CO2 storage

• Strategic Cropping legislation

• Land Access regime now enacted

• Community – consultation fatigue

Brisbane

Xstrata/CTSCo goals

• Prove up 30 years of CO2 storage capacity at 1Mtpa for CCS Flagship project

• Demonstrate progressively that CO2 can be stored safely and effectively, at known cost and in predictable timeframes

• Deploy studies with carefully staged technical and financial commitment gates

– so that all funders, proponents, regulators get progressively more comfortable

• Provide information from this demonstration project so that all stakeholders can make informed decisions about CO2 storage

• Maintain the Social Licence to Operate

5

Stakeholder environment is complex and sensitive

• Concern over GAB water resource contamination

– GAB nomenclature not clear

• Consultation fatigue – so many regional projects

– CSG, ICG, mining, power stations etc

• Several well organised active lobby groups in the Surat

– Coal4breakfast – Lock the Gate etc.

• Need to differentiate as a demonstration project from extensive commercial business developments

– Funded by governments and associations

6

The picture we would like…versus the one we have…

Commercial in Confidence 7

Key issues presented in the identification of suitable storage sites for CO2 CCS World Australia 2011 September 1, 2011 Edward N. Steadman

• Water is a sensitive and critical resource

• Really like this pictorial • Freshwater supplies

very close to the surface

• Structure and depth separates fresh from non-potable aquifers

• Aquifers are very salty > 10,000 ppm salt

Storage target is Precipice Sandstone part of the GAB

8

• Regional livelihood’s depend on water drawn from the GAB

• 1000 km circumference • Lots of near-surface

water data • Almost no deep-water

data • Oil and gas region that

is well explored • Distance and depth

separates fresh from non potable water supplies

Balance is changing

Commercial in Confidence 9

Key issues presented in the identification of suitable storage sites for CO2 CCS World Australia 2011 September 1, 2011 Edward N. Steadman

Extracting geological trends

10

Outcrops, existing data and Digital Core Analysis……….

Chinchilla- 4

Innovation CAT Scan of core (well) samples

to help communicate the science

Commercial in Confidence 11

Cat scan of void

Stakeholder benchmarking important

Commercial in Confidence 12

• On shore and offshore, urban and rural projects are different • Australia

– Gorgon – ZeroGen – Otway – Callide Oxyfuel

• Overseas – Canada

• Weyburn

– USA • Futuregen in Illinois

– Germany • Vattenfall’s Schweinrich to Schwarze

– France • Total at Lacq

– Holland • Shell's Barendrecht project, near Rotterdam

– Other • In Salah Algeria • Longannet

• Working with CSIRO to establish local benchmarks

Learnings Summary • All skills for deploying CO2 storage exist in the oil and gas industry

• Storage feasibility and viability is site specific, but examples of deployment include:

- Sleipner, Norway

- In-Salah, Algeria

- Weyburn, Canada

- Otway, Australia

- Decatur, Illinois – imminent at 1Mt

• Innovation such as Digital Core Analysis has a significant part to play in reducing, cost, timeframes, risk and communicating ‘pore space’ concept

• We ignore the Social Licence to Operate at our peril

• Independent assessments from say CSIRO to maintain credibility - Social research

- Environmental baselining

13

Project support

• Projects of this kind need support and the project wishes to acknowledge the following parties:

The project has received pre-feasibility funding from the Australian Government (as part of the Clean Energy Initiative), the

Queensland Government and the Australian Coal Association Coal 21 fund. The views expressed in this presentation are not necessarily the views of these parties.

Project support – CO2CRC – CSIRO – Xstrata Coal

Commercial in Confidence 14