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Carbon Capture and Storage: The race is on
It is not well known outside the energy industry but Carbon Capture and Storage ("CCS") is, put simply, the capture of CO2 from emissions followed by storage, thereby preventing "green house gas" from entering the atmosphere. In its 2007 Energy White Paper[1], the UK government announced a national CCS competition, to launch in November 2007, aimed at having a demonstration plant operating in the next decade. The CO2 capture process is best applied to large stationary sources such as power stations and industrial plants, where CO2 can be separated from the flue gases at some stage of the process. Technology for capturing CO2 is already commercially available for large CO2 emitters. However, capture is meaningless without storage.
The 2007 White paper announcement was shortly followed by news that British Petroleum (BP) was reluctantly ditching its advanced £600 million proposal for a CCS plant in Peterhead, Scotland. BP and Hydro Electric owners, Scottish and Southern Electricity (SSE), wanted to convert natural gas to hydrogen and CO2 then burn the hydrogen in Peterhead power station to give low CO2 electricity and inject the CO2 into BP's Miller oil field to allow Enhanced Oil Recovery (EOR). This EOR could potentially extend the life of the Miller oil field by up to 20 years, not only delaying the costly decommissioning process but allowing access to an estimated 57 million barrels of oil which are currently unrecoverable.
The decarbonised fuels project at Peterhead would have been the first industrial scale project in the world to combine three separate technologies - hydrogen production, power generation and CCS - to generate electricity using hydrogen from natural gas. BP had offered to deal with the technological development and the fiscal risk of Peterhead, provided they were guaranteed a subsidised rate of return similar to that which renewable power currently receives. BP even postponed its Miller oil field closure twice, in the hope of receiving government support. Government support failed to materialise, however, and BP is currently submitting formal plans to dispose of the Miller platform and associated structures. Although the UK government appears to have missed a great industrial and environmental opportunity, at least a condition of the decommissioning process will be that the pipeline to the Miller oil field be maintained in case the prospects of a CCS project at Peterhead are revived. BP is now concentrating on similar schemes in California (USA) and Perth (Western Australia).
The BP proposal to build the CCS plant in Peterhead could have put the UK, or more specifically Scotland, at the forefront of the clean electricity revolution, leading the world's fight against climate change. SSE, which was previously in partnership with BP, has suggested it may still revive the Peterhead project and will decide next year whether to go ahead with a £150 million combined gas turbine plant. So, although there are still about seven other companies in the running for the UK's CCS competition, including Conoco Philips, RWE nPower and now SSE, it looks like the world's first integrated plant to capture and store CO2 will be built in Australia, Canada or the USA and not the UK. So the race is on; as one thing is perfectly clear the nations and companies that develop CCS first will have a major advantage over those that follow.
Further developments are already under development around the world, the largest of which is Gorgon in Australia, a joint initiative between ChevronTexaco, Shell and ExxonMobil. The Gorgon Project will store around 2-3 Mt (mega tonnes) of CO2 per year and plans to be operational by 2010. There are also projects in Saskatchewan (Canada) and Queensland (Australia), estimated for completion by 2012. Construction of a demonstration plant in the UK whether at the Peterhead site or elsewhere would take approximately 36 months; so if the UK government still wants to be one of the leaders in CCS it will have to move quickly or it may be left behind.
As a global leader on climate change, the UK government has set itself ambitious targets, most recently in its 2007 White paper, to reduce CO2 emissions by 20% below 1990 levels by 2020 and 60% by 2050. There are worries that the subsidisation of clean power plants could reduce the growing investment in the green energy market. However, as wind and solar are not expected to generate enough energy to power the UK for many years, alternative technologies need to be considered especially if the use of nuclear energy is avoided or minimised. Renewables must stay in the picture and be further developed but, for now, CCS offers a positive way forward for the UK to start meeting its ambitious emissions targets. The argument for CCS is further strengthened when consideration is given to the other advantages in relation to:
- The declining oil production from the NSCS;
- The future costly and complex decommissioning process; and
- The increasing dependence of the UK on energy imports, especially if nuclear is avoided.
Natural gas and CO2 have remained trapped in geological formations for millions of years, so there is good reason to believe that storage sites can be chosen to hold CO2 for at least the 10,000 years required for climate-change mitigation. There should be enough offshore geological formations around the UK to capture CO2 from power stations for at least the next 100 years. The UK North Sea oil fields have significant estimated storage capacity in terms of EOR (~ 700Mt CO2)[2]. However, with NSCS production peaking, most operators are already making strategic decisions regarding decommissioning over economic life extension. Operators know that CO2 will enable them to recover significant quantities of incremental oil, and the technology already exists to do this, but North Sea operators have no government incentives to encourage them to make the significant investments needed for CCS for EOR projects.
It definitely looks like Europe is taking CCS seriously as the last major regulatory hurdle for CCS in Europe is expected to be cleared by the end of the year, when the law of the sea relating to the north-east Atlantic is expected to be amended to allow storage under the sea bed. At the moment, storage under the sea is banned in the northeast Atlantic but the Ospar Commission, the intergovernmental body that protects the sea in this region, is expected to lift the prohibition by the end of 2007[3].
The UK government has also announced the submission of an Energy Bill 2007/2008[4], which will implement the legislative aspects of their 2007 White Paper. The Energy Bill is in the legislative programme for the third session of Parliament, with the aim of getting Royal Assent by summer 2008. In relation to CCS specifically, the Bill proposes to create a regulatory framework to enable private sector investment in CCS projects.
Although there are obviously still legal hurdles to overcome as well as several practical issues, which are beyond the scope of this article, the UK government needs to start implementing fiscal incentives to encourage CCS for EOR now before the decommissioning industry takes too strong a hold. In other words, although the UK government is moving in the right direction in relation to CCS it is just not moving fast enough.
[1] DTI White Paper: meeting the energy challenge, 23 May 2007
[2] DTI's Improved Oil Recovery Research Seminar, 25 June 2002
[3] The four governments with the most to gain (UK, Norway, France and the Netherlands) have proposed the change
[4] www.dti.gov.uk/energy/bill/page40931.html
07 November 2007