How To Make Money in Carbon Capture
Will the long dormant industry finally spring to life? Let’s hope
Abu Dhabi - There is a strong business case scenario for
carbon capture, even without carbon taxes and cap
and trade. And that could be a good thing or a bad one, depending
on your perspective.
The key is how you feel about the tar sands in Alberta, Canada.
If you took 450 million tons of carbon dioxide from power plants
and sold it to oil producers for enhanced oil recovery, you could
double the existing, economically recoverable oil reserves in the
region from 1.4 billion barrels to 2.8 billion barrels, estimated
Jim Allen, chair of the Alberta Carbon Capture & Storage
Development Council, during a presentation at the
target=”_blank”>World Future Energy Summit that took
place this week in Abu Dhabi.
If oil sold for $50 a barrel (low by the current price), the
additional reserves would result in $70 billion in extra revenue,
or more than the cost of capturing the carbon. Canada’s government,
he added, would garner billions in royalties too.
Even if you took out the value of the recovered oil, the
economic outlook for carbon capture continues to increase, he
added. It takes around $150 to capture and sequester a ton of
carbon dioxide. The oil industry will pay almost $110 a ton for
carbon dioxide at the well head.
That means carbon would cost $40 a ton to sequester. However,
the capital and operational costs of sequestration should go down.
The cost of sequestering acid rain is half of what it cost back in
the late 80s. If the same sort of math applies, carbon should then
generate revenue of $35 a ton.
Exploiting captured carbon dioxide in this manner, however,
would lead to more carbon being injected into atmosphere.
Proponents assert that fossil fuels will remain a staple of the
energy market for decades, so using carbon dioxide in this manner
is necessary to meet the world’s voracious and growing demand for
energy. Critics, though, argue that coming up with ways to
get more oil out of the ground will diminish investment in
biofuels.
Alberta, he added, is serious about carbon capture. The province
will dedicate $2 billion to carbon capture, or more than the
national Canadian government. It has already chosen four projects
to fund-two at the oil sands and two for retrofitting coal
plants-and will likely select another. The goal is to have three to
five projects implemented by 2015. Alberta produces 200 million
tons of carbon dioxide now and the figure, without preventative
measures, will rise to 400 million by 2050.
“We want to take 200 million tons (of carbon
dioxide) out of the province and 139 million tons will come from
CCS,” he said.
He also added some factoids about the tar sands. The tar sands
produce 1.5 million barrels a day, a figure that will rise to 3
million barrels by 2030. In all, the productive area of the sands
occupies 530 square kilometers. “That’s about 2/3rds the size of
Los Angeles,” he said. Approximately 4,800 square kilometers are
mineable. However, the sands are in boreal forest that covers
361,000 square kilometers.
Canada produces two percent of the world’s carbon dioxide and
the sands account for only 4.5 percent of that total. By contrast,
U.S. coal plants account for 9 percent of the world’s carbon
dioxide. Oil sands producers recycle 85 percent of their water and
reuse it 19 times. The energy required to extract oil has reduced
by 40 percent since 1990. So there.
Expect to hear a lot more about carbon capture in the coming two
years. People and experts generally agree on the need for some type
of carbon capture. The International Energy Agency has estimated
that carbon capture will have to account for 20 percent of the
total carbon dioxide reductions by 2050 just to keep the level of
carbon in the atmosphere at 450 parts per million level, considered
by many the maximum level humanity can endure.
By 2030, the world, ideally, will have 850 CCS plants storing
2,000 gigatons a year. By 2050, the number of CCS plants should
grow to 3,400 projects said Nick Otter, who heads up the Global
Carbon Capture and Storage Institute, a think tank supported by
$200 million from the Australian government.
“We’re talking about 20 percent of the CO2 reduction coming from
carbon capture and sequestration,” he said.
Unfortunately, carbon capture technology largely
exists in theory right now. Although the Institute has identified
62 major projects that are underway or will likely get done, only a
few token demo plants exist now. Only 18 might be complete by 2015.
And even getting those 18 constructed remains a challenge.
“2010 is the crucial year. If we don’t have the demonstration
plants, we won’t be able to have the commercial plants in 2020,”
said Graeme Sweeney, the executive in charge of carbon dioxide at
Shell.
Debates continue over which technology might work best.
Sweeney said that post-combustion technologies-where carbon gets
captured after coal is burned-is the easiest to deploy. Capture
equipment can be added to existing power plants.
Gardiner Hill, special advisor to BP on CCS and Alternative
Energy, disagrees. Pre-combustion technologies-where coal is
converted to natural gas and carbon dioxide is captured before the
gas is burned-is far less technologically complex. Pre-combustion
technologies for natural gas are also being experimented with. BP
and Abu Dhabi hope to set up a plant by 2014 that will take natural
gas, convert it into hydrogen and carbon dioxide, and then run the
hydrogen through a turbine.
