For Petrofac, the international energy services company with Engineering, Procurement, Construction (EPC) projects across the world, carbon capture is a logical and increasingly urgent step in global efforts to decarbonise.
To the uninitiated, the concept of carbon capture and storage (CCS) can be hard to understand, complex, and remote even though it has been used effectively in the US energy business since the 1970s and in Norway since 1996 at the Sleipner field.
According to the Global CCS Institute, there are 41 CCS facilities in operation globally today at sites including gas power plants and chemical refineries manufacturing products such as ethanol and ammonia. And there are more than 350 new CCS facilities under development across the world, many of which are due to come online over the next few years.
And uptake is set to grow because “it’s an obvious thing to do,” John Pearson, Chief Operating Officer of Energy Transition Projects at Petrofac says. “Many sectors need CCS, but to different degrees and at a different pace, depending on what is economically viable. But if you can capture carbon at source, particularly for those hard-to-abate sectors such as cement manufacturing and waste to energy facilities, it’s a very positive process.
Middle East oil producers
The US may have been a pioneer in CCS half a century ago, but the technology is being adopted across the world, notably by oil producing nations in the Middle East presently operating 3 facilities in the region. Last October, for example, Petrofac won a contract worth more than $600 million from Abu Dhabi National Oil Company (ADNOC) to deploy CCS infrastructure at the Habshan gas processing plant.
It is the latest in a series of CCS projects in which Petrofac is involved and will triple ADNOC’s carbon capture capacity to 2.3 million tonnes a year. The energy major has committed $15 billion to decarbonisation projects as it aims for net zero by 2045. Petrofac is also engaged in various other CCS projects globally, at different stages of engineering, such as for a cement facility in the UK, a waste to energy plant in Finland and a gas plant in Oman.
CCS projects vary widely in terms of complexity. The early circular systems in the US, for example, were relatively easy: oil and gas were piped to a gas processing plant where carbon dioxide was separated, pumped back along the parallel pipelines, and injected back into the oil and gas field to enhance oil & gas production.
However, not all projects are as straightforward. In the UK, there are plans to capture 20-30 million tonnes of carbon dioxide by 2030 and 50 million by 2035. This could rise to as much as 180 million tonnes by 2050. There is close to 80 billion tonnes of storage capacity on the UK Continental Shelf, sufficient to store hundreds of years’ worth of carbon dioxide but there are challenges as some of the subsea aquifers are located offshore and relatively far away from the industrial clusters where the carbon dioxide is collected and sequestered before going offshore for storage. For this, transport is required, either by pipeline or ship. And this combination of requirements, Pearson says, is where the economics become complicated.
EU ETS a key driver
For a successful project, a series of unlinked but interdependent organisations and companies must do their own sums and establish a sound and profitable business model for capturing and sequestering carbon dioxide. Only then can a final investment decision be taken. And of course, the simpler the chain, the easier the projects are to progress. The cost of carbon is a prime factor too and in Europe, the EU Emissions Trading System will play a key role.
Dr Chet Biliyok, Petrofac’s Technical Director, Energy Transition Projects, compares the backdrop in Europe with that of the US. There, he says, for industries with highly concentrated carbon dioxide streams, coupled with a short distance from the carbon capture facility to the subterranean storage site (typically a depleted oil and gas reservoir), a carbon dioxide cost as low as $25 a tonne can be realised. In Europe, however, where carbon dioxide will mostly be stripped from sources where it is more diffuse, the distances to storage sites are greater and there is no existing infrastructure, the challenge is starting from scratch. The cost could be as much as $200 a tonne.
“So, in this case, we need the Emissions Trading System, with meaningful emissions allowance prices, to make the economics work,” he adds.
Shipping potential
Biliyok notes a range of exciting opportunities in shipping. There has been some talk around deploying carbon capture units on vessels to strip out carbon dioxide from exhaust gases during transit, which can then be offloaded at ports. Yet, daunting hurdles such as the limitation of space onboard exist, along with the results of a recent study from SINTEF in Norway showing that ship fuel consumption will double to accommodate the weight of the additional capture system. This limits the deployment of onboard carbon capture to a non-competitive slugfest with low carbon or zero emission fuels.
However, one undeniable opportunity is the merchant transport of carbon dioxide by sea and inland waterway, which will be a key element of decarbonisation in Europe. There’s little technical challenge here, he says, because there is already a wide body of knowledge in cryogenics and the sea transport of gases in liquid form.
LNG, for example, is shipped by sea at -162°C. LPG carriers, on the other hand, use a combination of pressure and temperatures to carry cargoes typically at about -45°C to -30°C. A similar arrangement would be required to ship carbon dioxide at scale, with gas carriers transporting carbon dioxide at slightly elevated pressure but similarly low temperature, to keep it in liquid form and prevent it converting from a gas into a solid as it expands – dry ice.
In the Northern Lights CCS project in Norway, for example, which is due to start operating this year, three 7,500 m3 gas carriers currently under construction at Dalian Shipbuilding Offshore will deliver liquid carbon dioxide to a receiving terminal in on Norway’s west coast. It will be stored there and piped to an aquifer 2,600 metres below the seabed of the North Sea.
In another context – this time focusing on utilisation rather than storage – Biliyok highlights the scope for manufacturing methanol which, he points out, is becoming a favoured fuel for shipping. Initially, CCS can be implemented on grey methanol facilities, converting it to blue or low-carbon methanol, producing shipping fuel with significantly reduced emissions. Ultimately, green hydrogen can be combined with bioenergy with carbon capture and storage (BECCS) – where carbon dioxide is captured from biomass – to produce green methanol, a near-zero emission shipping fuel.
Summing up, Pearson explains: “I look at the energy transition as one of the best business opportunities I can ever remember. It’s not a threat. It’s the best moral imperative too because we’re looking after the planet and we’re providing energy security and affordability for society. But we do need to find ways to collectively accelerate our progress”.
Quantifying the costs and sizing up the opportunity
Shipping of CO2 affords an important opportunity to rapidly build CO2 transport networks and accelerate the development of carbon dioxide storage to enable the decarbonisation at-scale of large carbon intensive industries such as cement and steel production.
According to Philippa Parmiter, CEO of NECCUS, an industry alliance that promotes and champions industrial decarbonisation across Scotland through co-operation and collaboration, the estimated costs of offshore storage in Europe ranges from Euro2-Euro20 (according to the EU Zero Emission Platform) depending on the type of store – saline aquifer, or depleted oil and gas field and the ability to reuse existing O&G infrastructure.
When transport costs are included, these costs will be higher if there is no adjacent storage with onshore storage being generally cheaper. Costs of carbon capture and storage rise when capture is factored in as costs depend on the percentage of CO2 in the gas stream, and can vary between Euro20-Euro100 or more.
Europe is exploring various policy measures to enable CCS development including the ETS, carbon storage obligations, and a Carbon Border Adjustment Mechanism (CBAM) – to reduce the import of high carbon footprint, cheap goods; and has found ways to enable shipping between individual countries, despite the lack of signatories to the London Protocol, Parmiter explains.
For the UK to avail itself of this opportunity, the UK and EU ETS need to be aligned. The UK is developing business models to enable the decarbonisation of industrial clusters through CCUS, whereas in the USA, CCUS development is being driven by tax credits for capture, utilisation and storage – under section 45Q – which has been enhanced recently through the Inflation Reduction Act (IRA).
CO2 shipping offers a great opportunity, providing resilience (if one store is not operating you can ship to another, whereas pipelines are point-to-point fixed transport), rapid access to storage (whilst pipelines are being built), and equitable access to stores for those who don’t have them, enabling the growth of CO2 storage markets, she concludes.
Source: Lloyd’s Register
