Norwegian CCS gets investors [NGW Magazine]
Three European majors – Norwegian Equinor, Anglo-Dutch Shell and French Total – have committed to the Northern Lights carbon capture and storage project (CCS) offshore Norway.
The project as a whole is to cost $700mn, including the tankers, but that includes an undisclosed amount of Norwegian state funding.
The partners said mid-May that it could become the first step in the development of a value chain that is vital to reach the global climate goals of the Paris Agreement. All that is needed are final approvals from the host government and the European Free Trade Area Surveillance Authority.
Total’s head of gas and renewables Philippe Sauquet said that CCS technology is “essential to reach Europe carbon neutrality and is fully part of Total’s new climate ambition to get to net zero by 2050.”
But there is no established business model for taking third-party emissions and storing them on the customers’ behalf, so some creative legal work lies ahead to ensure risks and rewards are shared fairly.
Development of these projects will also represent new activities and industrial opportunities for Norwegian and European industries, said Equinor’s technology and drilling head Anders Opedal, announcing the plan.
Northern Lights is south of the giant Troll field but Johansen is an entirely separate structure, being a saline aquifer. Liquefied CO2 is brought on tankers then piped underground where it remains a liquid, occupying less space than gaseous CO2.
In an interview with NGW, Shell’s CCS head Syrie Crouch said that the venture was a new departure for the company, which in the past had captured and stored only the carbon emissions from projects it was involved in. This was the case in Canada (Quest, for enhanced oil recovery) and Australia (Gorgon LNG, to meet the government’s environmental requirements).
Another partner, Equinor, has been injecting CO2 at both the Sleipner and Snohvit fields.
At Sleipner, around 1mn mt of CO2 have been removed from the gas and injected in the Utsira Formation since 1996. And since 2007, around 700,000 mt/yr have also been stored each year on the Snohvit field.
But Crouch, who was in at the start of the Northern Lights project a few years ago, and was instrumental in the launch of the Quest project in 2008-2012, said this was the first time that the permanent sequestration of third-party emissions were the purpose of CCS.
This is also different from another project in which Shell is involved, namely the UK Acorn project (see box). There, its depleted Goldeneye gas field is to hold CO2 delivered through its now-idle gas line, if the project is realised. But Crouch says there will be room for many projects, as industry is going to need to decarbonise. Its plan to invest in NL has no negative consequences for Acorn, she said.
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Total partners on adsorbents Total is also developing alternative methods to underground storage of carbon: nanoporous materials called adsorbents. It has signed a multi-year partnership with UK start-up Cambridge Quantum Computing (CQC) to simulate all the physical and chemical mechanisms in these adsorbents as a function of their size, shape and chemical composition, and therefore make it possible to select the most efficient materials to develop. It said its own conventional supercomputer was not suitable for the job. These materials could eventually be used to trap the CO2 emitted by the company’s own, or third-party industrial operations. The CO2 recovered would then be concentrated and reused or stored permanently. These materials could also be used to capture CO2 directly from the air. |
Customers lined up
The two foundation customers in Norway will account for at best 800,000 metric tons or about half the 1.5mn metric tons/yr project.
One is Finnish utility Fortum’s heat recovery plant at Klementsrud in Oslo; the other is Norcem’s cement factory Porsgrunn. The NL partners will collect the CO2, liquefy it and transport it by ship to an intermediate storage location at Kollsnes in the Oygarden municipality.
However, the plan includes flexibility to accommodate more by expanding the location’s capacity, and one important objective is to be able to offer the site as a storage location for CO2 from other European countries, said the Norwegian Petroleum Directorate May 15.
NL also has heads of agreement with seven industrial users in continental Europe, Crouch said. This is entirely new territory, commercially, and the terms for transport and storage are not agreed yet. Discussions are ongoing with the different industrial customers about the delivery point where NL takes ownership.
How much, if at all, the final contracts will resemble traditional gas sales and purchase or transportation agreements – with their take-or-pay conditions, title transfer point, assignability, maximum quantities, not to mention contentious pricing clauses – is still unknown.
A multi-lateral operation of this size needs a lot of political and technical heft to start up: this is difficult for a smaller player or one without sufficient corporate experience and intellectual property to take on.
All the individual elements of the chain can be learned – and because of the element of government funding needed to mobilise the project, NL will share its knowledge with the broader community. But Crouch explains that the links have not been assembled in this way before and it needs “innovative thinking.”
Ultimately competition may develop between different projects, she says, once the groundwork has been laid down.
Funding
The EU has been involved in the NL project, and has recognised it a Project of Common Interest, which will help funding for companies.
There will, unless plans change following the Covid-19 crisis, be EU funding available for industrial emitters under the €10bn innovation fund, part of the Green Deal for infrastructure from June to September, but not for NL itself, which is Norway’s responsibility.
As Crouch points out, there are some countries in the EU who lack the political or geological enablers for CCS – not everyone is happy for CCS on their territory – and NL offers one of the solutions to their CO2 emissions.
The UK government also announced £800mn for CCS projects such as Acorn's, but that was in the budget just before the Covid-19 hit.
The Dutch government also has a SDE++ fund that will provide the initial capital for companies to contribute to the energy transition, and CCS will be a part of that.
SDE++ is an extension of the SDE+ (Stimulating Sustainable Energy Production+), which focuses on the generation of sustainable energy. This can be renewable electricity, green gas or heat. SDE++ focuses on CO2 reduction instead of the production of renewable energy.
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Acorn: a dry storage plan for the UK UK carbon capture and storage project company Pale Blue Dot Energy (PBDE) is working (coincidentally) with two Northern Lights’ member companies – Shell and Total – and private equity-backed Chrysaor as partners in the Acorn project. The aim is to convert a depleted gas field, Goldeneye, into a permanent storage site for CO2. The project has received funding through the UK government’s CCUS Innovation programme and Hydrogen supply competitions, and from the Scottish government. Some of these funding packages require matching funding from industry. The company hopes to take a final investment decision by the end of next year, it told NGW in an interview; but a year ago the plan was to do so by the end of this year. There are two strands to Acorn: 1) CCS, initially capturing existing emissions at the St Fergus gas terminal, which are processed and then piped through the Goldeneye pipeline for injection into the Acorn CO2 Storage Site – a large sandstone rock formation deep under the North Sea. The target CO2 injection year is 2024. Buildout options – at a later date – include CO2 from the Grangemouth area in central Scotland; and imported CO2 from other UK and oversees industrial clusters. 2) Hydrogen production from UKCS natural gas, possibly from steam methane reformation, from which the carbon dioxide is fed into the Acorn CCS project and stored underground offshore. Target to be operational: 2025. The first phase of the project is to drill one well capable of injecting 340,000 metric tons/yr of CO2 subsea. But the pipeline from St Fergus to the depleted Goldeneye field is much larger, able to carry 5mn mt/yr of CO2. The first well will be able to inject 2mn mt/yr and the project is designed to be scaled up quickly. Acorn is ahead of the pack: specifically, there are offshore pipelines suitable for CO2 transportation already in place and this means a big cost saving. The final investment decision for the first phase of Acorn CCS is planned for end-2021 but discussions over the commercial framework are continuing between industry and government. And with time the risk grows of offshore pipelines suitable for other CCS projects being decommissioned. The current phase of project funding has been from a combination of government Innovation Fund and Connecting European Facilities funding and this will continue until March 2021. The front-end engineering work (Feed) is underway for the first phase of the full-chain CCS project. PBDE told NGW it is important to make delivery – first injection by 2024 – and to keep to the project’s timeline. The hydrogen part of the Acorn project is in concept evaluation (pre-Feed) to decide which methane reformation technology to use to extract the hydrogen, as well as develop all other aspects of the hydrogen production facility. The two parts of Acorn – hydrogen reformation and CO2 storage – are separate operations, but PBDE says they make sense together because producing hydrogen from natural gas results also in CO2 and this must be captured and stored if the gas is to be considered low carbon. About a third of UK gas is landed at St Fergus Gas Terminal. The focus in the early phases is on establishing the CO2 transport and storage system, and on building the hydrogen reformation facility, collecting emissions from other industrial clusters in the UK or Europe is part of the build out plans for the Acorn Project. The focus now is on St Fergus: the capture of existing terminal emissions; progressing the concept options for reforming methane; the pipeline and the storage site. The project build-out plans are ambitious and there is plenty of CO2 storage capacity to support a rapid growth in this industry, said PBDE. One option for the Acorn Hydrogen project is for the hydrogen to be injected into the national grid, subject to commercial and regulatory conditions. There are several studies and projects around the UK that are looking at different options for hydrogen blending with natural gas in the existing transmission system up to the full conversion of localised gas networks to 100% hydrogen. The Aberdeen Vision Project – led by PBDE, with local networks operators SGN and National Grid – explored the feasibility of using hydrogen from the Acorn project to blend at percentages between 2% and 20% with methane, as well as a full conversion of the Aberdeen network to 100% hydrogen. The offshore CO2 transport and storage infrastructure element of the Acorn project’s scope is eligible for funding from the Connecting Europe Facility because it is listed as a European Project of Common Interest (PCI). The UK upstream regulator Oil & Gas Authority awarded PBDE a four-year appraisal CCS licence for Goldeneye in December 2018, saying also it was continuing its close work with the government and others to identify UK offshore infrastructure that could be re-used. It said it was looking at other ways too to clean up the offshore, including the role of gas as a transition fuel; reducing emissions in flaring and venting; considering CO2 opportunities for enhanced oil recovery; and where suitable bringing attention to energy integration with renewables, including gas-to-wire technology. |