4.6 Cost estimates
In this section we present the results of our analyses of the costs of transport and injection for both the base cases and sensitivity cases. We also present the average costs of transport and injection for each economy under consideration.
4.6.1 Costs for each base case
Figure 10 and Table 8 show that our estimates of the costs of CO2 compression, transport and injection for individual basins range from US$3 to US$67 per tonne avoided in A$2010 terms depending on the project. The most expensive discovery is Pematang Fm (Central Sumatra Basin, Indonesia), whereas the cheapest discovery is the Terumbu Fm (East Natuna Basin, Indonesia). Approximately a quarter of the total costs are for compression (both machinery and platforms) with a further quarter-to-half of the total costs for injection (both wells and platforms). In some cases, two-thirds of the compression costs are for the compressor platforms. More details are provided in Appendix 4.
The range of estimates reflects the different volumes of CO2 injected, different locations (onshore, shallow water, deep water) and formation characteristics. None of our estimates include the cost of CO2 capture. We report costs in terms of CO2-e avoided and not CO2 avoided. The amount of CO2-e injected is generally between one and three times the amount of CO2 injected. In the case of Nam Con Son Basin, the CO2-e injected is almost twelve times the CO2 injected because of the low concentration of CO2 in the injection gas.
The lowest absolute costs are for the Talang Akar Fm (North West Java Basin, Indonesia) with an up-front capital cost of US$66 million and a present value of all costs of US$72 million. While, the highest absolute costs are for the Terumbu Fm (East Natuna Basin, Indonesia) with up-front capital costs and present values of all costs of US$4,880 million and US$6,460 million respectively.
The specific cost of the Terumbu Fm (East Natuna Basin, Indonesia) is low because the process has large flow-rates (over 170 Mt/yr) with favourable injection characteristics and so high injectivities. There are therefore economies of scale in transport as well as large quantities of CO2-e avoided. The latter means that the significant capital, operating and decommissioning costs are translated into a very small specific cost of CO2-e avoided. This discovery also has the largest absolute costs of any of the representative discoveries.
The most expensive discovery on a specific cost basis is the Pematang Fm (Central Sumatra Basin, Indonesia). This case has very low flow-rates (less than 1 Mt/yr) and also very low injectivity.
We also calculate the average cost of all the discoveries by dividing the total present value of all costs for all formations by the total present value of CO2-e avoided for all formations. This gives an average cost of approximately US$5 per tonne of CO2-e avoided. This cost is lower than all but two of the formations. The reason for this is that the two cheapest formations comprise 80% of the total CO2-e avoided by all the projects.
The effect of flow-rate on cost is shown in Figure 11 where the specific cost is plotted as a function of the annual rate of CO2-e avoided using a logarithmic scale. The graph shows that cost decreases significantly as the rate of CO2-e avoided increases. In fact the cost increases sharply at flow-rates below 1 Mt/yr.
Figure 10 – Ranking of representative base cases on the basis of specific cost of CO2-e avoided
4.6.2 Costs for each economy
The cases discussed in the previous section are representative of a typical or average field in each of the formations investigated. We extend this analysis by summing the present values of all costs and of CO2-e avoided for all the formations in each economy and calculating a typical specific cost of CO2-e avoided. These values are not a weighted average cost for each economy. This would require weighting each formation cost and CO2-e avoided by the proportion of an economy's total resource contained in that formation. We calculate the simple average to allow comparison of costs between economies.
Table 8 – Results for base cases
Figure 11 – Plot of representative costs as a function of annual injection rate of CO2-e
The H and K Groups of the Malay Basin occur in both Malaysian and Vietnamese waters. Since the representative case studies simulate typical fields rather all fields in each formation, we include the H and K Group cases in both the average Malaysian and Vietnamese costs.
The results of our analysis are given in Figure 12 and Table 9. These results show that is the cheapest (US$4 per tonne) as it benefits from including the two largest CO2-e injection projects. The next cheapest is (US$6 per tonne) whose sole formation represents 10% of all the CO2-e avoided in this analysis. The sole Thai formation has moderate flow-rates and moderate costs and so has a moderate specific cost (US$9 per tonne). The Malaysian and Vietnamese discoveries have low flow-rates of CO2-e (mostly about 1 Mt/yr). They are also offshore. Therefore, they have relatively high specific costs (US$14 and US$18 per tonne respectively).
Figure 12 – Ranking of economies on the basis of specific cost of CO2-e avoided
Table 9 – Results for each economy and for all cases
|Economy||Rate of CO2-e injected (Mt/yr)||Rate of CO2-e avoided (Mt/yr)||PV of CO2-e avoided (Mt)||Capital costs (US$ million)||Annual operating costs (US$ million/yr)||Decommissioning costs (US$ million)||PV of costs (US$ million)||Specific cost of CO2-e avoided (US$/t)|
4.6.3 Costs for individual economies
Figure 13 shows the costs of the Indonesian representative discoveries. The cost of all Indonesian cases is provided for comparison. The Terumbu formation is the cheapest and the Pematang the most expensive. Because of the effect of Terumbu, most Indonesian discoveries are more expensive than the economy average of US$4 per tonne of CO2-e avoided.
The Malaysian cases are shown in Figure 14. Three of the four discoveries cost about US$25 per tonne with the E Group of the Malay Basin costing just over US$10 per tonne. The average cost across the four discoveries is US$14 per tonne of CO2-e avoided.
Figure 15 shows the results for Vietnam. Again most of the representative discoveries cost around US$25 per tonne of CO2-e avoided. The Nam Con Son Formation is the cheapest at just under US$10 per tonne. The average cost for a Vietnamese discovery is almost US$19 per tonne of CO2-e avoided.
Figure 13 – Ranking of Indonesian cases and alltogether
Figure 14 – Ranking of Malaysian cases and alltogether
Figure 15 – Ranking of Vietnamese cases and all Vietnam together
4.6.4 Sensitivity of cost to injection flow-rate
For each of the base cases discussed above, we also analyse the sensitivity of the results to varying injection gas flow-rates. The specific cost of CO2-e avoided for all the sensitivity cases are shown as a scatter plot in Figure 16. As in Figure 11, the results show that cost generally decreases as the rate of CO2-e injected or avoided increases. The reduction in cost with increasing rates reflects mainly the economies of scale.
Figure 17 shows how the present values of all costs are relatively stable up to 10 Mt/yr, keeping below US$25 million. Beyond 10 Mt/yr, the costs increase rapidly. Figure 18 shows the spread of specific costs for each of the discoveries considered across the range of sensitivity flow-rates. The discoveries are ranked according to the base case cost.
Figure 16 – Scatter of the specific cost of CO2-e avoided for the sensitivity cases as a function of the annual rate of CO2-e injected
Figure 17 – Scatter of the present value of all costs for the sensitivity cases as a function of the annual rate of CO2-e injected
Figure 18 – Spread of sensitivity results for each representative case ranked by base case cost