Latest on Carbon Capture and Storage

Latest on Carbon Capture and Storage

Carbon Capture and Storage: from Theory to Practice

one hundred delegates gathered at A breakfast briefing in London to hear about the exciting role the UK oil and gas industry can play in carbon capture and storage (CCS), which is emerging as one of the most important technologies for reducing the release of carbon dioxide into the atmosphere. WE take readers through the latest developments in the drive to implement CCS on a commercial scale, and highlights the barriers that still need to be addressed.

Helping to meet emissions reductions targets

The UK Government has identified CCS as a key technology to help meet UK and global carbon dioxide emissions reduction targets. As part of its plan to get early CCS demonstration projects up and running, the Government has earmarked up to 9 billion of funding for the development of up to four CCS projects in the UK.

The Government recently announced that funding for CCS will no longer be restricted to coalfired projects but will also be open to gasfired schemes. In addition, funding could also be available from the EU in future, which has agreed to part-finance a number of projects across Europe.

At the time of writing, the only contender for this funding is the Longannet power station project in Fife which is being developed by a consortium that includes Scottish Power, National Grid and Shell. The project would involve retrofitting post-combustion carbon capture technology to 300 megawatts of plant at the existing coal-fired power station. Captured carbon dioxide could then be transported via an existing pipeline to St Fergus and subsequently out to a depleted hydrocarbon storage site in the UK continental shelf (UKCS).

Industry interaction with carbon storage

With more than 40 years experience of working in the UKCS building up geological, engineering, commercial and legal expertise, many member companies are well positioned to take advantage of the new business opportunities that CCS could present, especially around the transport and storage aspects of CCS. In addition, the injection of carbon dioxide into hydrocarbon reservoirs may offer a method of improving recovery rates from maturing oil fields through enhanced oil recovery (EOR) processes. The potential was recently estimated to be in the order of an extra billion barrels of oil and gas equivalent from the UKCS.

Financial barriers to overcome

Despite this positive outlook, there remain potential barriers to the commercial development of CCS in the UK. The greatest of these is undoubtedly viable project economics and securing the finance needed to fund large scale, commercial projects. Ultimately the long term economic driver for CCS will be the price of EU allowances (EUAs) under the EU Emissions Trading Scheme (ETS), i.e. the price of carbon. It is generally accepted that the current price will have to rise considerably if CCS (and/or CCS-EOR) projects are to become economic without subsidy. In addition, to expedite the development of projects and in order to avoid any conflict with members core business interests in oil and gas exploration and production, it is imperative that the legislative and regulatory frameworks for offshore carbon storage are very carefully formulated.

Practical details to be ironed out

Despite the publication of the Governments Storage of Carbon Dioxide Regulations which came into force on 1 October 2010, a number of practical details around implementation of the carbon storage licensing regime still remain unresolved. These include how the Government will facilitate third party access to infrastructure, the re-use of existing offshore oil and gas infrastructure for carbon storage and the requirements for site monitoring and eventual hand-over to the State after injection operations have ceased.