4.3 CO2 storage

Initial Storage Site Finding and Characterisation Costs

To illustrate the impact of this cost on the CO2 storage cost, a sensitivity study was performed by varying the site characterisation costs over the anticipated cost range. The same cost range was used from the 2009 study (US$15 million to US$150 million) with the resulting impact on CO2 storage cost illustrated in Figure 4-10 and the storage cost contribution to LCOE shown in Figure 4-11. The upper value of US$150 million was used as this was considered the economic threshold before proponents would abandon investigations.

Figure 4-10 Dependence of CO2 storage costs on initial site characterisation and identification costs

Figure 4-11 Dependence of storage contribution to LCOE on initial site characterisation and identification costs

Storage site geological characteristics

The reservoir geological properties govern the rate that the CO2 can be injected. For reservoirs with geologic properties (low reservoir permeability thickness product) that significantly limit the injection rate, additional wells in the same area will be required to take all of the CO2 from the pipeline. However, the number of wells, and hence maximum rate in a given area, is limited not by the performance of a single well but by pressure interference between them, such that there is a diminishing return (incremental injection rate) for additional wells. A sensitivity study for the CO2 storage costs ($/tonne) and the LCOE ($/MWh) around the poor (absolute permeability = 150md and thickness = 5m) and the good (absolute permeability = 400md and thickness = 15m) reservoir properties are shown in Table 4-8.

In the case of the ‘poor reservoir’ case for NGCC, the storage cost contribution to LCOE is lower than for the other power generation applications. This can be attributed to the volumes of CO2 from an NGCC facility being approximately half that of the others. On the other hand for the ‘good reservoir’ case for NGCC, the storage cost contribution to LCOE is comparable to those of the other power generation applications as the number of wells required to inject the greater volumes of CO2 from the other applications is small.

Table 4-8 Storage cost and contribution to LCOE based on reservoir properties

Reservoirproperties Storage cost contribution to LCOE (US$/MWh) Storage costUS$/tonne CO2
PC supercritical Oxy-combustion supercritical IGCC NGCC
Poor 13 13 13 9 13
Good 6 6 6 6 6

Summary of storage considerations

A number of reservoir characteristics for these conceptual case studies were assumed that allow a rapid preliminary assessment of their potential project economics. However, the reader must understand that these same assumptions remain simplifications for the purposes of these preliminary macroeconomic models. Developing an actual project will require a much deeper assessment that will require a project specific model be built once a suitable storage site has been identified and characterised.

Using these conceptual study assumptions, the overall economics show the discounted cost of storing a tonne of CO2 is similar in both cases at approximately US$10/tonne CO2, which shows that the storage costs under the assumptions used here could be relatively minor contributors to the overall cost of a full CCS project. However, such a statement must be read with caution that the assumption being made is that the exploration and appraisal program that must be undertaken to prove up the sites, works perfectly, and that the exploration wells can be re-used as both injection and monitoring wells. Thus there is no ‘lost’ exploration funds exhausted on sites that prove technically unsuitable for CO2 storage. Likewise, should a move offshore be required, it would dramatically increase the cost of CO2 storage and transportation over that used here.

In reality, some key observations can be made on the cost of storing CO2. This model only considers onshore storage. However, the authors are aware of many projects proposing to store CO2 offshore. Storing CO2 offshore will increase costs significantly, especially in the existing relatively tight market for offshore drilling rigs and platforms.

Water issues are also becoming apparent, not just for CCS projects but for other new hydrocarbon projects such as shale gas and coal seam methane. Thus, it is reasonable to expect that there may be more upfront (and on-going) work needed to ensure regulators are satisfied that there is little or no impact of CCS operations on water resources. This extra monitoring will increase costs.

This analysis has also only considered ‘proven’ geological storage options into saline aquifers or depleted oil and gas reservoirs, and not any potential EOR, enhanced gas recovery (EGR) or enhanced coal-bed methane recovery (ECBM) options that could provide an offsetting economic benefit of carbon capture through beneficial re-use. ECBM still has a number of technical issues needing solved prior to the implementation on large scale CCS project though progress is being made, notably in the US and beneficial re-use needs to be considered on its own merits should it prove a potential early revenue generator for CO2 use. That said, the authors do reiterate that the sheer volumes of CO2 being emitted from even small power stations (500MW +) places a fundamental supply and demand mismatch with many EOR projects that would be at best only able to utilise 1–2Mtpa CO2 and indeed may not have anything like the 30 year lifespan of a power station project. This was discussed in Foundation Report Two in 2009.

As stated previously, CO2 storage costs are site specific and the local geology will drive the costs of CO2 storage. Injection enhancements such as deviated wells and fracturing operations may increase the injection rates, but the trade-off will need to be evaluated in the specific site context. The costs shown here are conservative. Based on currently industry trends, it is unlikely that these will decrease in the near future. Furthermore, many potential market pressures exist that are only likely to increase from this point onwards given the continued demand for oilfield services around the world.

It is important to recognise that should CO2 storage demand increase as much as predicted, then it will place significant pressure on the supply of oilfield services competing against a mature industry (hydrocarbons). As a result, prices and price inflation could rise significantly more than that assumed in this study.