Developing a commercial CCS transportation infrastructure

1
Developing a commercial CCS transportation
infrastructure

• Alastair Rennie, Project Director- Renewables,
  AMEC. 23rd April 2008

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AMEC at a glance
Services focused on designing, managing the
delivery of, and maintaining strategic and
complex assets

• We have annual revenues of over 2.3 billion
• We employ 20,000 employees in over 30 countries
• Our shares are traded on the London Stock
  Exchange where we are listed in the Oil Equipment
  and Services sector
• We are a member of the FTSE 100

Financial Times Stock Exchange listing
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Where we areMain office locations
Our 20,000 employees operate from more than 30
countries
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CCS US Activities are onshore and EOR led,
doing commercial work
AMEC is an engineering company in doing
transportation, flood and dehydration systems,
pipeline design services, EOR Conceptual Design
Services, PM and Engineering Services for new and
existing pipelines. The North American market
is EOR led to increase revenue, with CO2 as a
commodity feedstock. As such it is oil producer
led. Re-cycling of the CO2 from the oil is simply
good cost management.
CO2 is Europe is environmentally led, with the
CO2 as a cost burden and integrity of storage as
the goal, with any EOR as a bonus. As such it is
emitter led.
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UK CO2 transport workare precursors to business
cases

• IEA GHG RD studies Mersey area
• Distributed Collection and Transmission of CO2
  Study
• Upgrade of CO2 Pipeline Cost Calculation
  Programmes
• Yorkshire Forward Regional study
• Multiple source network and trunk line CO2
  collection
• Pipeline study to geological or EOR storage
• Economic cost modelling of network
• CASSEM -Academic/business consortium
• Pipelines and network study for two proposed CCS
  locations for potential saline aquifer storage
  sites
• Teesside CCS project and others
• BERR demonstration competition has spurred
  consideration of transport and storage options,
  including both pipeline and shipping concepts. A
  number of companies may be doing more specific
  work this year

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Will it happen?
Requires a number of things to happen before we
see CO2 transported and utilisation of North Sea
and Irish Sea storage

• Global political agreements
• EU financial and regulatory support simple EUA
  value is not enough
• Government legislation and financial mechanisms
• Agree the regulatory regime, especially HS of
  high pressure CO2 and long term storage
  characterisation
• Enabling, by EU or bilateral agreement, the
  storing of CO2 from another country
• just to arrive at a position where Carbon
  Capture and Storage is a long term commercially
  viable proposition, enabling the
• Commitment to capture (the major commercial cost
  and risk)
• Commitment to provide storage or EOR. Some
  storage has capacity to match sources- mostly a
  multiple store strategy will be required to match
  timescales and sizes of sources.
• Before finally being able to commit to transport
  of the CO2

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Factors helping implement transport in the EU

• It is a relatively small but necessary part of
  CCS
• Identified potential for re-use of existing
  assets
• Good timing for use of low risk storage in the
  North Sea
• Can benefit from shared infrastructure with
  clustering of sources
• Source owners well aware of the low marginal cost
  in oversizing of pipelines if there is a foreseen
  larger supply after the initial flow
• Must stress that without decent volume from a
  number of sources then transport and storage
  become expensive

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Shipping and Pipelines play to commercial
strengths, not the distance versus cost diagram

• Shipping
• Low capital cost to user
• High operating cost
• 3-10 year commitment
• Another commodity to a competitive transport
  industry
• Practical issues around acquisition dominate
  consenting
• Interim storage is an additional constraint
• Flexible but more disruption risk

• Pipeline
• High capital cost
• Low operating costs
• 10-15 year minimum to plant life commitment
• Bespoke, improved by networking
• Slow approval processes
• Limited capacity variability
• Rigid asset between a source and a store leads to
  fewer commercial options
• High reliability

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Commercial options for a pipe network

• This ignores single source to single store
  situations covered by in-house or linear
  commercial agreements
• Covers pipeline networks, including shipped CO2
  inputs and outputs
• Focus is on earlier configurations of networks -
  other ownership and commercial arrangements may
  arise with well established assets and CO2 flows

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Network commercial demarcations
Common network resources
Each piped source
Licensed storage
separation
Injection, monitoring
dry/compress measure
Pumping, pipes, meters
Each final storage asset
S
Node
C
D
P
Shipped CO2
T
Port
Shared port facilities, export storage
Ship
Other system- Transfer of all liabilities and
payment
Ships
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Network commercial demarcations
Common network resources
Each piped source
Licensed storage
separation
Injection, monitoring
dry/compress measure
Pumping, pipes, meters
Each final storage asset
S
Node
C
D
P
Shipped CO2
T
Port
Revenue from CCS
Shared port facilities, export storage
Commitment to CCS
Ship
Other system- Transfer of all liabilities and
payment
Ships
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Commercial ranges

• P
• C to S or T
• P plus options on D, Port, Ship (service)

For simplicity focus on ownership options for P,
the shared network

• Public or Regulated infrastructure- open access,
  no market exposure
• Shared ownership by sources
• Ownership by an independent transport company
• Shared ownership by investment stakeholders-
  sources, transporters, store operators. Could
  include public bodies.

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Common issues facing establishment of a network

• Ownership of the CO2 whilst transported
• Commitment to CCS by source-
• Timing of initial flow, duration, risk of failure
  to provide CO2
• Peak versus average flow
• Initial, stage flow rates, maximum flow
• Take or pay contract is obviously a partial
  answer to cover initial capital spend
• Storage availability
• Timing (decommissioning, proving, work overs),
  risk of ability to inject at peak rates, total
  capacity
• Alternative storage
• Avoid liability for failure to store (either flow
  or retention of CO2)
• Transport availability
• Unplanned breakdowns and maintenance of the
  network
• Agree process for planned outages with sources
  and stores.
• Avoid consequential losses to store owner and
  sources
• Agree terms for loss of CO2 whilst within the
  network boundary
• Discount rate for a long life asset
• Cost of the system is driven more by the cost of
  capital than capacity

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Relative comparisons of main issues
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Relative comparisons of main issues
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Conclusions

• Public ownership is possible because it is a
  network rather than a single source solution.
  However this is otherwise unattractive,
  especially as the network must be developed.
• The shared ownership by source interests is, on
  balance, probably the preferred option.
• We would suggest that this may be enhanced by
  elements of other stakeholders, not least to
  engage with the public and enable increments of
  investment to reduce the life time costs of
  moving CO2 to storage.
• We see the provision of the wider scope of CO2
  services from source to sink as a good way for us
  to support emitters to minimise costs and for
  store owners to earn additional income from their
  oil gas experience. It is possible to see how
  good engineering and good commercial design could
  build cost efficient networks in Northern Europe.