Feasibility of Danish CCS Scheme Comprised of Capture at Power Plants, Ship Transport and CO 2 EOR

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1 Feasibility of Danish CCS Scheme Comprised of Capture at Power Plants, Ship Transport and CO 2 EOR Magnus Melin Lloyd s Register May 16, 2011 LLOYD S REGISTER ODS Engineering Dynamics a member of the Lloyd s Register Group

2 Overview of project Scope of work: carry out a feasibility study to illustrate how collection and transport of CO 2 from multiple Danish heavy industry sources by small ships, not necessary dedicated for CO 2 only, can be used in enhanced oil recovery schemes within the Danish North Sea Primary objectives is to give high-level insight into whether the CCS scheme could work and, consequently, if a more extensive study is worth considering The project has received financial support from the Danish Maritime Fund Project timeline: October 2010 April 2011 Project manager: Magnus Melin, Lloyd s Register All results will be public ( Example of power plants in DK (source: DONG)

3 Carbon Capture and Storage (CCS) Illustrations: The Bellona Foundation and IEA

4 Capture of CO 2 : sources of CO 2 The heaviest CO 2 emitters are mainly fossil-fuel fired power plants. Other large emitters include steel, cement and refineries. CCS is generally considered feasible for large point sources that emit more than 100,000 tonnes CO 2 /year Globally, there are around 8,000 plants emitting above this level and in total these sources emit approximately 50% of the global man-made CO 2 emissions A typical coal plant of 800 MWe emits in the order of 3-4 million tonnes CO 2 /year European CO2 emissions Source: McKinsey

5 Capture of CO 2 : technology Three main technologies; post-combustion, pre-combustion and oxy-fuel Technology is well-understood but remains to be demonstrated at full-scale Large number of demonstration and research projects around the world, including in Denmark: - Esbjerg (DONG) - Nordjyllandsverket (VATTENFALL) - CERE institute at DTU Illustration: Vattenfall

6 Capture of CO 2 : economy Two main costs: cost of equipment + reduced efficiency Directly into air: CO /tonne CO /tonne CO 2 Current ETS price for CO 2 is 15/tonne CO 2 The annual cost for a 800 MWe plant emitting 3.5 Mt CO 2 /year will be > 100 million

7 Transport of CO 2 : technology Two main alternatives: pipeline and/or ship > 30 years experience in North America of CO 2 pipelines (>6,000 km in U.S.) Pipeline option + simple + large capacity + economical (especially onshore) - long lead-time, less flexibility Ship option + flexibility + economical (long distances) + quick mobilisation - irregular supply - cost for liquefaction, loading, unloading, pressurisation Illustration: Anthony Veder

8 Transport of CO 2 : existing ships! CO 2 is transported in liquid phase close to triple point (-56.5 degc, 5.2 bara) Liquefaction necessary Similar to LPG carriers A handful of ships transport CO 2 currently, primarily small quantities for the food industry Example: Coral Carbonic, Anthony Veder Phase diagram for CO 2 LOA Speed Tank capacity Tank temp. Tank pressure 79 m 12.5 kn 1,240 m 3 CO 2-40 degc 18 barg

9 Transport of CO 2 : new ships (by conversion?) Conversion of LPG carriers would allow quick mobilisation and give flexibility The LPG market is well developed with >1,000 LPG tankers in traffic of various size Semi-refrigerated type with capacity 5,000-20,000 m 3 seems to be most feasible Possibility for conversion depends on many factors and it is likely that only a small portion of all existing LPG carriers are suitable Discussions with Lauritzen Kosan indicate that existing LPG tankers of semi-ref type potentially can be modified (see example Isabella Kosan below) Necessary modifications would as a minimum include modified pumps and discharge arrangements. Depending on offshore unloading scheme additional equipment might be necessary (DP, compression to injection pressure, heater etc) Further detailed analysis needed LOA Speed Tank capacity Tank temp. Tank pressure 115 m 16 kn 6,500 m 3 CO 2 minimum -104 degc max 6 barg

10 Transport of CO 2 : new ships! New design concepts published (DSME, Maersk, TGE, OMT, Anthony Veder...) Many concepts similar to existing LPG carriers using cylindrical or bi-lobe type tanks. Dual-type LPG/CO 2 designs published by several ship builders Alternative concepts include DSME s very large CO 2 carrier using 100 vertical tubeshaped tanks and TGE s barge container concept Tank capacity 10, ,000 m 3 CO 2 (near triple point; degc, 5.2 bara) Example of designs for offshore unloading and processing are Floating Storage and Injection Units (FSIU) and Floating Liquefaction Storage and Offloading (FLSO) Lead time for new CO 2 carrier in the order of 2-3 years LOA Speed Tank capacity Tank temperature Tank pressure 173 m 16 kn 20,000 m 3 CO 2-50 degc Max 6.9 barg

11 Transport of CO 2 : new ships! TGE DSME Maersk Tankers / HHI TGE

12 Transport of CO 2 : economy Cost is estimated to 10-25/tCO 2 depending on many factors Ship based transport give rise to additional costs at the injection site, e.g. pressurisation to bar. These are not believed to be included in the estimates below. Overall, cost for transport is relatively small compared to cost for capture Source of information MHI report Ship transport of CO 2 from 2004 Study by Panaware from 2010 IPCC special report on CCS from 2005 Bario et al Ship-based transport of CO 2 from 2006 Comment - Distance <1,000 km - Ship size 30,000-50,000 tonnes - Liquefaction from atmospheric pressure - Distances 180 km, 750 km - Ship size 20,000-30,000 m 3 - all in scenario, including liquefaction - US$13/tCO2 for 1,000 km distance - 6 Mt CO 2 per year - Cost include storage facilities, harbour fees, fuel costs, loading, unloading activities and liquefaction NOK/tonne for volumes larger than 2 million tonnes/year and distances limited to the North Sea Cost ( /tco 2 )

13 EOR using CO 2 : introduction Large scale injection of CO 2 for Enhanced Oil Recovery (EOR) has been done for more than 30 years in North America Lot of experience onshore but not yet proven commercially feasible offshore Example from Denver onshore field in Texas:

14 EOR using CO 2 : relevance to CCS CO 2 for EOR is increasingly seen as a potentially favourable option to help growing the CCS industry. Some of the reasons for this are: 1. Injection of CO 2 in oil reservoirs mobilizes additional oil, thereby offsetting some of the costs with demonstrating CCS. 2. Several oil fields in the North Sea are near end of commercial field life. CO 2 EOR would in most cases unlock additional reserves to potentially delay abandonment. This would in turn enhance the security of supply which is valuable for many reasons. 3. An EOR project is regarded as a CO 2 storage site and receives ETS credits for the stored CO 2.

15 EOR using CO 2 : cost Economy for offshore CO 2 EOR is challenging to estimate due to combination of complex technology, limited experience and dependence of incremental oil obtained (volume as well as future oil price uncertain) Example of additional costs include adaptation of existing platform, well upgrades, systems for monitoring reporting and verification of injected CO 2 The incremental oil production is very difficult to estimate. Numbers in the order of 10% OOIP (Original Oil In Place) are generally found in publicly available information. Simulations made by DTU/GEUS/DONG indicate that significantly higher values, maybe up to 30%, can be achieved for Danish conditions (needs to be verified for real case scenario, likely that these numbers are too optimistic). Several studies (DTI, Senergy and others) indicate that CO 2 needs to be supplied at neutral cost (no cost to obtain, no storage credit) to the reservoir to make CO 2 EOR financially viable. If the reservoir is used as a long-term storage site, there will be a storage credit e.g. NER300 and/or CDM that could reduce the cost for CO 2 EOR

16 Concluding remarks CCS All aspects of CCS have been proven to work technically but further work remains to demonstrate feasibility at commercial scale Work is being done to progress with the ambition to have large demo projects go live by 2015 and start of commercial scale projects by 2020 Billion funding available from governments and EU Challenges to overcome for large-scale deployment: - Regulatory uncertainty - Cost, cost, cost - Significant financial risk from large investments and long return period - Public perception (safety) IEA roadmap for expansion of CCS

17 Danish situation: plenty of CO 2! Approximately 80% of Denmark s energy comes from fossil fuels (coal, gas, oil) Fossil power plants key to provide base load and manage variations in energy demand GESTCO study estimate CO 2 available from large industrial sources to 29 Mt/year Variation of energy demand Source: Dansk elforsyning statistik 2008

18 Danish situation: available shipping option! Expertize in place (ship operators, naval architects, authorities, yards) Ships available for conversion (example: Isabella Kosan) Easy to access majority of large CO 2 emitters with ship Danish oil reservoirs (DUC fields) located west of Esbjerg

19 Danish situation: window of opportunity for EOR! Some Danish oil fields are rapidly approaching a time where new measures are needed to ensure feasibility of continued production (security of supply) CO 2 EOR / CCS can be a bridging technology to a low-carbon society Not all fields may be suitable for CO 2 EOR other technologies need to be explored (IOR, exploration, cost reduction) Source: Maersk / DEA

20 Danish situation: political support? Danish government announced Energistrategi 2050 late Feb CCS is not a key element in the strategy but it is mentioned as it can potentially play an important role, especially in the long-term. Klimakommissionen Grøn energi vejen mod et dansk energisystem uden fossile brændsler (September 2010) CCS teknologien er primært tænkt til opsamling af CO 2 fra kul og gasfyrede kraftværker, og kul og gas indgår ikke i Klimakommissionens billede for et Danmark uafhængigt af fossile brændsler. CCS kan potentielt bidrage til drivhusgasreduktioner, men anvendelse i Danmark vil dog kræve, at teknologien bliver konkurrencedygtig samt, at der sker opførelse af nye kraftværker eller levetidsforlængelse af de eksisterende kulfyrede kraftværker Risø Non-fossil energy technologies in 2050 and beyond (November 2010) Proven fossil fuel reserves, especially coal, will last far beyond this century. With CCS we can continue to burn fossil fuels even in a carbon-neutral future. Later, CCS can even be used with biomass-fired power plants to create net negative CO 2 emissions. Denmark still has a good chance of exploiting CCS, with plenty of geological storage capacity both onshore and offshore. With an increase in wind energy, Danish coal-fired power plants will provide the baseload and can operate flexibly even with CCS.

21 Danish situation: feasibility of Danish CCS scheme Injection Offloading Economics Logistics Technical Transport Overall ship concept New build vs. conversion Flexibility (routes, cargo etc) Cost Regulations Industry network in DK Ship owners Plant operators Community Authorities Capture Economics Volume Technology Equipment suppliers Community engagement Engagement mechanisms Ship vs pipeline

22 Danish situation: feasibility of Danish CCS scheme Approach Limited initial study. The attempt with the feasibility study is to give a high-level insight into whether the proposed Danish CCS scheme could potentially work and, consequently, if it is worth considering moving forward with a more extensive study to determine the detailed approach Overview of key concepts of storage, transportation, EOR, public engagement and necessary political support with focus on Danish conditions Simplistic analysis of two potential scenarios based on ship-transport (route A and route B ) DUC fields Route B Route A

23 Danish situation: feasibility of Danish CCS scheme Route A Capture at power plant in Esbjerg Route B 387 MW e, approximately 1.7MtCO 2 /year Two(2) ships of Isabella Kosan type (6,500 m 3 each, 16 knots) necessary (conversion) DUC fields 1 ship/day: 8 hrs loading, 2x12 hrs transit, 12 hrs unloading (needs to be verified) Route A Route B Capture at power plant in Copenhagen or Kalundborg region 1,000 MW e, approximately 4.5 MtCO 2 /year Three(3) ships of CO 2 carrier type (20,000 m 3 each, 16 knots) necessary (new-build) Route A B Distance (one way) 150 nm (280 km) 450 nm (830 km) Travelling time (12 knots) 13 hours 40 hours 1 ship/day: 8 hrs loading, 2x36 hrs transit, 16 hrs unloading (needs to be verified) Further analysis is required

24 CONCLUSIONS The studied CCS scheme is technically feasible but needs to be demonstrated at commercial scale. Capture of CO 2 at Danish power plants could provide a bridge to a low-carbon society. The window of opportunity for EOR in the Danish oil sector is now. The combination of significant technical uncertainty and financial risk may become a blocker for widespread implementation of CO 2 EOR. Danish organisations, corporations and universities have extensive and in-depth expertise that is relevant to a future CCS / CO 2 EOR project as discussed. It is foreseen that a future project could be delivered using primarily domestic resources and skills The Danish shipping and oil & gas industry can play an active role in the pursuit of a low-carbon society. CO 2 transport by ship is a flexible option with comparably short start-up time. Analysis of two different scenarios demonstrates that the transportation logistics can be solved by two small (5,000 m 3 each) CO 2 carriers in Scenario #1 and by three larger (15,000 m 3 each) CO 2 carriers in Scenario #2. Conversion of existing, potentially Danish, LPG carriers could be option in the short term. The key challenges are financial, regulatory and the political will. CO 2 EOR can offset some of the costs with traditional CCS. Significant public funding is necessary to get the studied CCS project off the ground.

25 Recommendations Carry out a more detailed study of the studied CCS scheme to ensure that enough detailed information is at hand to be able to make a rational investment decision. Promote wider public discussion of CCS to ensure that the public is as well-informed as possible. Carry out a detailed assessment of the impact (to the Danish society) of various long-term strategies for a low-carbon society.

26 For more information, please contact: Magnus Melin Global Thermal Power Leader Lloyd s Register Energy T (direct), (mobile) E magnus.melin@lr.org W Services are provided by members of the Lloyd's Register Group. For further information visit