British CCUS Report Urges Two Clusters Soon
The UK government’s release July 19 of ‘Delivering Clean Growth’ , the report by its carbon capture usage and storage (CCUS) cost-challenge task force, has received support from the upstream industry.
The task force, with over 50 members from industry/academic members – including such investors elsewhere in the world such as Shell, Equinor and Norway's state Gassnova – was set up in January with the remit of proposing a strategic plan to government on how CCUS might be cost-effectively deployed at scale by the 2030s.
By acting now, it says the UK can be a technology leader, developing it at home and then exporting it abroad. It lists three sets of recommendations for short, medium and long-term action.
Among the first, it recommends government to publish a pathway by end-2018 to have at least two CCUS clusters operational from the mid-2020s, along with a joint government-industry roadmap for this. The latter should also identify North Sea and Irish Sea oil and gas infrastructure at risk of being decommissioned in the next 5-10 years that could be “maintained as strategic assets” for future CCUS use. It also has two recommendations linked to investing in and using certain gas networks for hydrogen, or hydrogen-natural gas blends.
It identifies five potential clusters that could be developed: eastern Scotland, Teesside, Humberside, Merseyside, and south Wales. Each have industries that produce, can store, and sometimes use CO2.
It even models a case study spanning all the first three (all east coast) combined, which it says over 40 years could “deliver gross societal and economic benefits … estimated at £160bn ($209bn), outweighing the investment costs of £34bn [$44bn] by a factor of five times.” Smaller case studies though are also provided by the report.
The task force urges that carefully targeted development funding be made available to support initiatives, citing Shell as saying that its next CCUS – after Quest in Canada – might be 30% lower. Shell's 1mn mt/yr Quest carbon capture and storage unit in Alberta was opened late 2015 at a reported cost of C$1.35bn (US$1bn). Some CCS projects to improve oil recovery are self-financing. Injecting an acid gas such as CO2 into rocks that have not previously contained acid gas or oil is a risky business, according to Engie. But there are major sour gas fields in the UK, such as the Morecambe Bay complex, which might be no longer producing by the 2030s.
The report though skims over financing questions. For instance, it cites the EU’s Connecting Europe Fund as one source of funding for past studies, but that will close to the UK after March 2019 if Brexit goes ahead. A table on p37 of the report sets out other financing options existing today. To date, no CCUS project has been fully commercially funded in Europe/UK, without public funds.
Oil & Gas UK CEO Deirdre Michie nonetheless welcomed the report saying it "takes us another step forward towards a diverse, low carbon energy mix needed to meet growing demand.” She said it could benefit from her sector’s established infrastructure and experienced workforce with relevant skills. In a foreword to the report, UK energy and clean growth minister Claire Perry said: "I look forward to continuing to work in partnership with industry to understand further the challenges and opportunities set out in the report."