Classification: Internal Status: Draft

Building the CO2 Value Chain – Is it Possible?

Olav Kårstad

Special Advisor CO2

British – Norwegian Workshop on CCS

London 23rd April 2008

Classification: Internal Status: Draft

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StatoilHydro’s growth challenge is a climate gas emission challengeMore CO2 intensive production in the pipeline – CCS necessary to reach targets

Build new international growth platforms

Maximise value creation from the NCS

Norway Global prod. avg.

Re-fining

LNG Extra heavy oil

GTLExtra heavy oil incl. upgrad.

CO2 emission [kg/tonne product]

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Data source: IPCC SRCCS (2005) and IPIECA

Large Stationary Sources of CO2 – Global ViewGreater than 100 kt CO2/yr per facility

Coal power

Gas power

Oil power

Cement

Iron/steel

Refin

eriesP

etroch

emical

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- Global number of CO2-point sources* (green)

- Million tonnes of CO2/yr (black)

4942

1175639

269 470

7495

10539

932 798 646 379

13294

0

2000

4000

6000

8000

10000

12000

14000

Power Cement Refineries Iron & steel Petrochemical Sum total

Number of sources or

millions of tonnes/year

* Larger than 0,1 million tonnes of CO2/yr from one source

Data source: IPCC Special Report on CO2-capture and -storage

This is about 56% of fossil fuel related

CO2

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StatoilHydro’s CCS projects Part-owner of 3 of 4* large-scale CCS project

* The 4th project is Weyburn – Midale in Canada

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Sleipner – 11 years of large scale CCS demo

• Started in 1996

• CO2 from natural gas (Approx. 1 mill. tons CO2 annually)

• Stored in saline aquifer – sandstone formation with water

• Driver: CO2-tax (340 NOK/ton – $60/ton), corporate environmental strategy

• Learning and confidence building through a series of large EU-wide R&D programmes

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Snøhvit LNG; CO2-pipeline reel-out

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The In Salah gas processing plant with CO2-capture facilities

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Proof of concept through monitoring and R&D

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What does it take?Simple economic rules will decide speed and volume of CCS roll-out

Cost of removing/injecting

Time

Cost

Cost of emitting•Low hanging fruits•Direct governm. investment•Technology development•CO2-EOR•Kyoto mechanisms

•Environmental taxes•Under-supply of credits•Emission limitation

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The low hanging fruits in CO2- capture

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The low hanging fruits in CO2-transport and -storage

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CCS low-hanging fruits – “cheap”, already concentrated CO2 more than 200 sites globally with CO2 > 100 000 tonnes/yr

Ammonia plants

Natural gas purification

Coal gasification plants

Hydrogen production

LNG production

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In Norway two low-hanging fruits has passed the point of profitability due to the high CO2 tax on petroleum activity

•Environmental taxes•Under-supply of credits•Emission limitation

Sleipner Snøhvit LNG

•Low hanging fruits•Direct governm. investment•Technology development•CO2-EOR•Kyoto mechanisms

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And two “high hanging” CCS-fruits (in connection with gas fired power plants) are planned to be built with state funding

•Environmental taxes•Under-supply of credits•Emission limitation

MongstadKårstø

•Low hanging fruits•Direct governm. investment•Technology development•CO2-EOR•Kyoto mechanisms

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CO2-EOR – profits from CO2 injection

• Income from extra oil production to pay for CO2 infrastructure

• Onshore applications to happen first

• Free up natural gas resources by using CO2 as injection gas

• Coexistence with storage necessary

• Sensible natural resource exploitation

Graphics : EnCana

CO2

EOR

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Regulation and acceptance – perception of riskWhat does it all come down to?

TODAY – certain emission TOMORROW – safe storage

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Summary: Building the CO2 Value Chain – Is it Possible?

• Climate change is happening – CCS one of five important solutions

• Making CCS happen is difficult under any circumstances, but in particular in today’s high cost construction market and uncertain long term cost of emitting CO2 to the atmosphere

• Low-hanging CCS fruits are there to be picked useful to prove storage and CO2-EOR as well as for gaining public enthusiasm

• Power plant CO2-capture A number of demo-projects must proceed to avoid delay in 2. and 3. generation deployment (technology lock-in of long life plants)

• In the shorter time frame carrot and stick incentives are necessary to initiate industrial scale projects without which technology and frameworks will not develop