Matching CCS with gas processing
Natural gas processing is gaining momentum as one of the best emissions-intensive sectors to deploy carbon capture and storage (CCS) at scale within heavy industry, as proponents look to overcome scepticism by firstly proving out the controversial technology in plants that emit high-purity CO2 streams.
CCS have been touted as an important tool for mitigating climate change but the technology has been derided as too expensive and technically challenging to be relied on. While the long-term prognosis is that CCS will mostly be used in cement, petrochemicals and steelmaking, the hunt has been on to identify industries that could deploy CCS immediately and economically, resulting in a near-term impact on CO2 emission reductions. Gas processing fits the bill and interest is consequently building in the sector as one of the best proving grounds for the CCS market.
Gas processing plants remove impurities such as CO2, sulphur and water to produce methane-rich gas that meets specifications for transport and combustion. Such facilities represent a significant opportunity for CCS to prove itself as a decarbonisation route, as it would require relatively little investment in these plants to deliver significant reductions in emissions. Minimising costs is key to the technology’s successful deployment, so using CCS in gas processing requires high utilisation rates, increased plant sizes and renewable power.
Straight to the source
Gas processing plants are a high-concentration point source of CO2 emissions, as the flue gas from the production process has a CO2 concentration of more than 90%. The high purity enables a lower capture cost as there is no need to use chemical solvents to concentrate it further, so the CO2 can already meet pipeline requirements for enhanced oil recovery (EOR) or dedicated geological storage.
Some 74mn metric tons CO2e/year could be abated in high-concentration point sources including gas processing, ethanol and ammonia by the end of this decade, according to the International Energy Agency. Today, gas processing is the dominant point source in the global CCS market, with around 60% market share. This stems from oil majors taking advantage of the low cost of carbon capture and the potential to use the gas for EOR.
There are already a number of 18 operational CCS projects worldwide that capture CO2 from gas processing, according to the Global CCS Institute. These include Chevron’s Gorgon LNG project in Western Australia, Equinor’s Snohvit gas field in the Barents Sea that supplies the Hammerfest LNG complex, and the Petrobras-operated Lula oil and gas field offshore Rio de Janeiro.
By offering a simpler – and cheaper – transformation than other carbon capture systems, capturing high-concentration carbon is the low-hanging fruit when it comes to sequestering CO2. While the cost of capture in high-concentration sources is low, CCS has not yet been implemented widely because it is an added cost in most cases.
However, the policy landscape for carbon capture has changed dramatically in the last two years. Carbon permits in the EU’s Emissions Trading System have more than tripled since the start of 2020 to €88/mt at the end of June, while the US and Canada have increased tax credits for CCS projects. A number of governments including the US, UK, Norway and Australia have also announced specific funds to develop CCS projects.
Stepping on the gas
The potential market for CCS in gas processing is sizable given that gas is used widely to produce electricity and heat, and as a feedstock in industry. Global gas consumption last year edged down by 3.1% from 2021’s all-time high to 3.94 trillion m³, according to the latest Statistical Review of World Energy released by the Energy Institute in late June.
But the IEA’s Stated Policies Scenario – based on today’s policy settings – anticipates gas will fare reasonably well for the rest of this decade, with consumption rising to 4.37 trillion m³ by 2030 and then remaining thereabouts through to 2050. Even under the agency’s Announced Policies Scenario, which assumes the world achieves all aspirational climate targets on time and in full, global gas demand will remain robust at 3.87 trillion m³ in 2030 and 2.66 trillion m³ in 2050.
In any case, if gas is to be used as a transition fuel in the efforts to reach net zero, it will be imperative to implement carbon capture in gas processing operations as soon as possible.
Projects building CCS into gas processing after 2030-2035 are likely to have a poorer business case than those that incorporate CCS today, as they may not be operating by 2050 and would have to recover the upfront investment in a shorter amount of time.
Estimating the total CO2 emissions that could be avoided if CCS were implemented in all the gas processing plants in the world is difficult, as this depends on the CO2 content of each gas field – which can range from near-zero to as high as 70%. However, assuming an average CO2 concentration of 10%, around 400mn t CO2e/yr could be avoided today if all processing facilities worldwide were retrofitted with CCS.
CCS capacity in gas processing could double from 27mn mt/yr today to 53mn mt/yr by 2030 if all announced projects are commissioned, which would be equivalent to capturing 0.2% of global emissions, according to analysis from research firm BloombergNEF. Given the potential for CCS, it is clear the gas industry has considerable space for growing CCS capacity.
Most of this growth is expected to come from established gas producers like the US and Australia, although ambitious projects pioneering CCS in countries like Malaysia are also getting into the game.
Gas processing plants are adding the most capture capacity, likely thanks to the large scale of its plants – which pushes down costs – and the expertise built up over decades of use in this industry. New CCS projects are increasingly focused on storage rather than EOR, which could help oil majors build credibility in their plans to decarbonise.
Not cheap in North America
Gas processing historically has the largest CCS plants of any sector with high-concentration point sources of CO2, reducing the cost per ton of captured CO2 thanks to economies of scale. For an average-sized gas processing plant in the US that can process 330mn ft³/day (9.24mn m³/day), equipped with a renewables-powered system that can capture 500,000 mt CO2e/yr, the capture cost would presently stand at $19.6/mt CO2e, according to analysis from the National Energy Technology Laboratory. This would comprise $9.2/mt for capex, $1.7/mt and $3.6/mt for the variable opex and fixed opex respectively, and $5.1/mt for electricity.
This compares with a capture cost of $18.9/mt CO2e for an equivalent plant in Canada, $15.9/mt in China, $15.6/mt in India and $15.2/mt in Brazil. Lower costs of capture for gas processing CCS in Brazil, China and India reflect how these countries can access cheaper renewable energy and lower labour costs. However, total CCS costs may be higher in China and India when factoring in higher transport and storage costs. On the other hand the US has cheap, existing infrastructure for CO2 transport and storage.
Capex and fixed opex are the variables most sensitive to location, due to regional variations in labour costs. The difference in cost could be even larger if using coal-fired power to run the CCS system, which is cheaper in China and India. If using renewables, Canada and Brazil have the lowest electricity prices, reducing levelised costs by as much as 6%.
Gorgon an underwhelming case study
Most of the CCS projects in gas processing have been developed by oil majors such as ExxonMobil and Occidental Petroleum for their own plants. The projects are used in facilities at fields with relatively high CO2 concentrations – many of which are located in Australia.
Exxon in particular has already deployed CCS at scale and touted the technology’s potential to decarbonise oil and gas operations to keep fossil fuels in play longer – the IOC has captured 120mn mt CO2e since 1970, equivalent to 40% of the total. Last year the company predicted the global CCS market would be worth $4 trillion by 2050.
The companies invested in CCS technology for their processing plants so they could use the captured carbon for EOR. This has been the primary driver of building CCS in gas processing operations in the past, but storage is now becoming the main reason as fossil fuel producers look to shore up their decarbonisation credentials.
The LaBarge CCS project operated by Exxon is currently the largest CCS project in the world, capturing 7mn mt/yr. In Australia Chevron’s Gorgon project has a maximum capacity of 4mn mt/yr. But Gorgon’s carbon capture facility experienced delays and did not come online until 2019 – a three-year delay that raised costs.
In addition to the delays, Chevron failed to meet its target to capture and store 80% of the emissions from 2016-2021, after experiencing technical difficulties with the pressure management system in the injection wells of their storage site. The project was operating at a storage rate of about 1.6mn mt/yr as of mid-May and faces years of work to hit full capacity.