The case for CCUS [Gas in Transition]

The hard-line greens of the world insist that carbon capture, utilisation and storage (CCUS) is only a crutch for the hydrocarbon industry to justify its existence. There is a growing acceptance, however, that any kind of lower-carbon future is impossible without it.

The Paris-based International Energy Agency (IEA) – which just a few short months suggested a pathway to net zero can’t happen with new oil and gas investments – is now saying that net zero can’t happen without CCUS or carbon capture and storage (CCS) investments, which by their nature, are born largely within the oil and gas sector.

The first half of this decade saw steadily declining investments in CCUS, but since 2017, interest has been rejuvenated, and around the world, more than 30 new integrated CCUS projects have been announced, mostly in Europe and the US but also in Canada, Australia, New Zealand, the Middle East and – perhaps most importantly – in major emitting countries like China and Korea. If all these projects come to fruition, they would represent capture capacity of as much as 130mn mt/yr of CO₂.

Grand plans

The oil and gas industry, however, is talking about CCUS on an even grander scale.

Anglo-Dutch major Shell already operates CCS projects at Gorgon in Australia and at its Scotford complex in Alberta, where Quest has captured and sequestered more than 6mn mt/yr of CO₂ in the last half-dozen years.

In Norway, the first phase of Shell’s Northern Lights project will be designed to capture 1.5mn mt/yr of CO₂ from a variety of emission sources. But a second stage, sanctioned by Shell and its partners France’s TotalEnergies and Norway’s Equinor in September, will increase that to 5mn mt/yr.

Back in Canada, Shell has announced its Polaris CCS project, which in its first phase will capture 750,000mt/yr of CO₂ from the Scotford refinery and an adjacent Shell chemical plant. But like Northern Lights, Polaris has lots of running room: as much as 10mn mt/yr of CO₂ could be captured and safely sequestered in the same saline aquifers used by Quest.

The Alberta Carbon Trunk Line, which began operating in June 2020, has the capacity to carry 14.6mn mt/yr of CO₂ to enhanced oil recovery (EOR) sites in central Alberta. And TC Energy and Pembina Pipeline have proposed their Alberta Carbon Grid, which would gather as much as 20mn mt/yr of CO₂ from a variety of sources for sequestration underground.

And Canada’s Carbon Engineering is working with Oxy Low Carbon Ventures to develop a direct air capture facility in the Permian Basin of the US that will capture 1mn mt/yr of CO₂ for use in EOR and, with a major investment from United Airlines, low-carbon jet fuel. The first 500,000 mt/yr train is expected to be operational by 2024, with the second train to follow soon after. A similar facility is being studied for the UK.

Big, and planning for bigger

US supermajor ExxonMobil, meanwhile, already captures and stores more CO₂ than any other company in the world. But like Shell, it’s not ready to rest on those laurels.

Over the next six years, it’s prepared to invest more than $15bn in lower greenhouse gas emissions initiatives, with a significant share of that directed to its Low Carbon Solutions (LCS) business. In recent months, LCS has announced several CCS hub concepts, where high-emissions industries – think steel, cement, petrochemicals, power generation – would share CCS infrastructure, enabling benefits from economies of scale.

One such hub, in the industrial area surrounding Houston, close to the Gulf Coast, has attracted the interest of 11 major emitters. By 2040, ExxonMobil says, a Houston CCS hub could be capturing and storing 100mn mt/yr of CO₂ from refineries, chemical plants and power generation facilities in the area.

In Wyoming, ExxonMobil is expanding CCS capabilities at its LaBarge natural gas field to 8mn mt/yr. Since 1986, LaBarge has been capturing up to 7mn mt/yr of CO₂, mostly for use in nearby enhanced oil recovery projects.

And it’s working with other companies and governments to advance potential CCS hubs in Scotland, France, Belgium, the Netherlands, Indonesia and Malaysia.

All of this is to show that there is a corporate way forward for CCUS or CCS, pretty much anywhere in the world where there are large point-source emitters and appropriate sequestration geology.

Political will lagging

What’s lacking, at least so far, is widespread political will to make CCS happen at the 7-plus gigatonne scale needed to reach net-zero by 2050.

The US appears to be leading the way on that front: it’s 45Q tax credit, which allowed for $50/mt deductions for CO2 stored, is being expanded to $85/mt. Canada is following: the federal government is exploring an investment tax credit to prod even more CCS development in the country.

Others are dipping their toes in the CCS waters. The UK wants to have two CCS projects operating by the middle of this decade, and another two in service by 2030, when it wants to be capturing 30mn mt/yr of CO₂. Five CCUS “cluster” projects – similar to the hub concepts being advanced by ExxonMobil – have been proposed for the UK, which collectively could capture and store 100mn mt/yr of CO₂.

It’s agreed a plan to finance two projects in England and Wales from its CCS Infrastructure Fund, but has left a Scottish cluster, based around Storegga’s Acorn CCS project – one of the most advanced CCS proposals in all of the UK – off the list. Without state backing, it’s unclear when, or even if, the 6.5mn mt/yr project will ever reach a final investment decision.

Despite environmental groups throwing shade on CCS and CCUS in their zealous pursuit of an energy future magically free of hydrocarbon developments of any kind, it’s becoming increasingly apparent that money speaks louder than ideology, and in this case, at least, money may be winning out.