The New Player In Town
THE LATEST LARGE-SCALE CCS PLANT TO COME ONLINE IS IN THE NEIGHBOURING EMIRATE OF ABU DHABI, WHERE THE CARBON DIOXIDE CAPTURED FROM STEEL MANUFACTURING PROCESS IS BEING UTILISED FOR ENHANCED OIL RECOVERY.
Ajoint venture by Masdar and the Abu Dhabi National Oil Company, Al Reyadah is the region's first dedicated CCS company focused on commercialisation. When its CCS plant officially went online in November last year at the Emirates Steel Industries, it became the first large-scale project to capture CO₂ from a steel manufacturing plant. Speaking to Qatar
Today, the CEO of Al Reyadah, Arafat Al Yafei, says the plant will capture 800,000 tonnes of CO₂ annually, which will be used for EOR at the Rumaitha oil fields, helping ADNOC save on the natural gas that is traditionally used for this purpose.
“There are different solutions being proposed to limit temperature rise to below 2°C, with CCS and energy efficiency being on top of the list and expected to play a very important role to achieve this,” Al Yafei says. Al Reyadah company represents a perfect example of a practical initiative for a sustainable CCS solution for climate change. “Under ADNOC and Masdar, Al Reyadah Company is going to play a crucial role to establish CCS solutions on business terms and promote developments for CCS industry, which will eventually support larger CCS implementations on the global scale.”
Al Yafei believes that the CCS business is a real need have due to the fact that the region's huge oil and gas fields are increasingly seeing more of EOR development schemes, where CO₂ utilisation will become a key component. There are a number of future opportunities that they will be looking at. “As it is a new business, we work seriously with out partners to evaluate the opportunities and conduct the required due diligence from multiple aspects. Meanwhile, we are proceeding in building the capabilities towards creating a CCS industry in the region that considers new technologies, business aspects and worlds challenges. Time is important to ensure that these projects are done correctly in order to meet the business objectives in the local and regional markets,” he says.
“Right now a utilisation strategy linked with oil companies and EOR is the most viable way to implement large scale CCS in our region,” Al Yafei says. “Our aim here at Al Reyadah is to prepare the platform, set an example, and build expertise in the business. We initially want to show governments and industries that CCS is technically and commercially viable. Eventually this will be expanded to other kinds of utilisation, be it in beverage industries or food preservation or medical uses. If we can demonstrate a revenue stream, there will be an uptake in the CCS business. Just subsidies will not be enough to make this concept sustainable as we have seen in the past,” he says.
For the time being, the new CCS plant is able to capture most of the steel plant's CO₂ emissions, which is processed and transported to the oil fields for EOR. However, this volume is not even near the potential demand that is estimated for ADNOC CO₂ EOR plans. Accordingly, Al Reyadah is working closely with ADNOC and its partners to ensure the next CCUS projects are aligned to ensure timely implementation. “The future captured CO₂ volumes will also be directed towards EOR as the requirement in this area is huge.”
If done right, Al Reyadah can set a regional example of the elusive CCS business case that we have been looking for. “All parties involved in the Al Reyadah CCUS initiative are benefiting in one way or the other. ADNOC is able to obtain the CO₂ it needs while simultaneously supporting the global environmental initiatives. Masdar on the other hand is the catalyst coming from a renewable/clean energy business, while Emirates Steel, an intensive energy utiliser, emitting a lot of carbon has become the first steel plant in the world to produce free carbon steel which has a marketing advantage [Green Steel],” Al Yafei points out. From where he sits, it's a win-win situation all around.
“HIGH COST AND LACK OF GOOD BUSINESS MODELS REMAIN THE MAJOR CHALLENGES TO THE DEPLOYMENT OF CCS IN THE REGION AT THIS MOMENT.” DR I-TSUNG TSAI Assistant Professor Department of Engineering Systems and Management Masdar Institute
to be decommissioned. Sure, CCS is expensive now but the net cost of good policy is ultimately negative, Page says. “As we invest in it, it's going to get better and cheaper.”
“When you look at cost curves of available clean technologies, hydro, energy efficiency and onshore wind are already extremely cost-effective. The cost of solar PV is coming down quickly and CCS will follow soon after, trailed by other currently less advanced technology like concentrated solar PV. Obviously the cheapest ones will be adopted first but they won't get you far enough. In the next 3-5 years, as more countries are called upon to increase targets and ambitions, they will be challenged as to what else they are going to deploy. That's where CCS will come riding into play and that will also drive its costs down.”
Winning the public debate
It's difficult to deny that CCS is yet to win the hearts and minds of the public as a viable green solution. This is partly because there is a significant gap in perception about how ready the technology is; many still consider it experimental and not ready for commercialization. The financial feasibility of CCS is also often called into question. And it is argued that every dollar of public money that goes into funding or subsidizing CCS is one dollar lost to renewable energy projects. CCS is also viewed as an encouragement to bring more coal plants online and prolong fossil fuel use.
Now, the 100% renewables future is definitely possible and it is surely coming. But no one can predict with any certainty when it will be there. All energy projections we have now show hydrocarbons as part of the energy mix for several decades to come and though their share will continually fall, it will not be as fast as we need it to be. “Fossil fuels are going to be with us for a long time to come,” Al Falih said during the panel discussion at COP22. “The move away from hydrocarbons will be a long journey that requires huge investments and a lot of technology and innovation. In the meantime, greenhouse gas emissions are at an unacceptable level and we have to find abatement measures. And one of the key tools in our toolbox is CCUS; we can't make the transition without it.”
This isn't just the opinion of the energy minister of a major oil producer but stark facts. “To be honest, there is no reticence on the part of the power industry globally to move towards a 100% renewable future,” says Page. “Let's be realistic about how fast we are going to get there. I don't think it's going to be in the next ten years. In 2040, we are still going to be dependent on fossil fuel for 70% of our power. It's inconvenient but we have to deal with it.”
To increase public awareness and discussion about CCS it's important to provide clear and careful explanations of the issues at stake. Public acceptance and engagement are critical elements of any development project. The 15 projects currently in operation around the world have not encountered significant opposition and, in some instances, are celebrated by the communities in which they are located because time and effort were committed in engaging with local communities, especially those located close to storage sites. “We have a responsibility to actually educate people a whole lot better,” says Page. “The public also needs to see a strong, well-recognised regulatory framework around CCS, so we know that it is not ad hoc and has been well thought out.”
The fact the CCS is seen as a “false solution” proposed by hydrocarbon companies and economies is also hurting its image among those fighting climate change. Only a few days before COP22, the Oil and Gas Climate Initiative was announced. Under this programme, 10 oil majors including Saudi Aramco, British Petroleum and Statoil have committed to spend $1 billion over the next 10 years on reducing carbon emissions. A large portion of this investment will go towards CCS. For many, this confirms their worst suspicions. “For now CCS is considered an unstable strategy for climate change mitigation. Environmental NGOs think that CCS is a strategy for oil producing economies to sustain global consumption of fossil fuels,” says Dr I-Tsung Tsai, Assistant Professor in the Department of Engineering Systems and Management at Masdar Institute. “That argument is difficult to break. But
THE LACK OF ADEQUATE SUPPORT COUPLED WITH FIRST-OF-A-KIND TECHNOLOGY CHALLENGES HAVE CONTRIBUTED TO THE CANCELLATION OF 22 LARGESCALE CCS PROJECTS SINCE 2010.
if fossil fuel use can be made sustainable, it can help people in very low-income countries develop. But ultimately these people have no bargaining power in the international arena to help lobby on behalf of these technologies,” he says.
Show me the business case
CCUS can be quite relevant to countries in the MENA region for three reasons – the vast oil and gas fields provide excellent CO₂ storage sites in the order of 60 Gt; carbon storage via EOR may contribute to oil reduction while reducing CO₂ emissions; and CO₂ for EOR substitutes gas for EOR and increases the output of gas as a valuable product.
Despite this, regulation around CCS in the GCC is nonexistent. In any case most CCS-related activities are related to national oil companies which have never been explicitly regulated. However, the lack of regulation is not the key factor that blocks CCS deployment, says Dr Tsai. “Lack of regulation is a result of lack of good business models (so there is no incentive to introduce CCS legislation and regulation). In the GCC, cost and good business models remain the major challenge to the deployment of CCS in the region up to this moment.”
Dr Tsai also points out that while the uilisation of captured carbon in oil recovery is enticing, the process is complicated, which might explain why oil companies in the region haven't embraced it more enthusiastically. “Specifically, even though the technology for capturing CO₂ from specific industrial production processes is not regionspecific, optimal injection of CO₂ is highly reservoirspecific. As a result, local testing of CO₂ injection and storage is critical,” he says. “CO₂-EOR introduces further technical challenges: for example, how to incorporate CO₂EOR into existing EOR practice (e.g. water flooding, water alternating gas injection).”
However, he maintains that the key challenge now for GCC countries is to get the economics right (minimizing the cost) so we can identify the feasible business models even without extra incentive (such as CCUS for Clean Development Mechanism). “We need to find a good revenue flow to convince a business that is already in operation. Retrofitting this new machinery may be difficult due to space and technology constraints; power generation
QCCSRC'S WORK WILL BE ABLE TO PROVIDE THE SCIENTIFIC INFORMATION NECESSARY FOR QATAR TO IMPLEMENT A CARBON STORAGE SCHEME WITH CONFIDENCE.
is the major source of CO₂ emissions in the region. How are we going to find economic value for them?” asks Dr Tsai.
This is probably why Qatar does not have large-scale CCS projects like KSA and UAE even though it has been one of the regional leaders in CCS research. “Qatar has initiated very large research programmes such as the Qatar Carbonate and Carbon Storage Research Centre (QCCSRC). Qatar also established a Qatar CCS Multi-scale Imaging Laboratory in Imperial College London. As CO₂EOR is not as important to Qatar as it is to UAE and Oman, it is reasonable that the Qatari government takes a wait-andsee approach on CCUS, as there exists a life cycle loss from deploying inefficient technology rather than implementing a high-efficiency technology,” explains Dr Tsai.
Qatar is prepared
There is a high degree of confidence that global storage resources are more than adequate to accommodate future requirements, even under highly ambitious scenarios. For example, estimated geological storage resources in the United States is between 2,376 Gt and 21,000 Gt, around 1,500 Gt in China, and 78 Gt in the United Kingdom. To put this in context, the cumulative global storage requirements between now and 2050 in the 2C scenario are 94 Gt. However, further work is required to convert this theoretical storage capacity into “bankable”, practical storage facilities, where there is a high degree of confidence that desired amounts of CO₂ can be injected at desired rates.
This is where the likes of QCCSRC come in. Funded by Qatar Petroleum, Qatar Science and Technology Park and Shell, the centre is headed by Dr Martin Blunt. The 10-year programme with an overall budget of $70 million was tasked with understanding CO₂ storage in a Qatari or Middle-Eastern context, i.e., the process of injecting CO₂ deep underground into carbonate rocks which are the most prevalent kind in Qatar. This involves the study of rock properties, how CO₂ can be trapped within the submillimetre gaps in porous rocks, storage in depleted oil and gas field, fluid-rock interactions, etc. While the research is based in Imperial College London, several Qatari PhD students are involved in looking at the underlying science of carbon storage. While not directly involved in demonstrative project or site identification in Qatar, Blunt says their work at the centre will be able to provide the scientific info necessary for someone in Qatar to implement a CO₂ storage scheme with confidence.
Eight years in, the centre has been able to enormously
“THE CONSENSUS AMONG SCIENTISTS IS THAT OUR UNDERSTANDING OF THE PROCESS IS OFFICIALLY EVOLVED TO A POINT WHERE IT CAN BE RAPIDLY IMPLEMENTED AT SCALE.” DR MARTIN BLUNT Director Qatar Carbon and Carbonate Storage Research Centre
advance the understanding of carbonate geology. Dr Blunt says “We are certainly at a stage where we can provide valuable information for a storage project.” Shutting down talk about CCS still being experimental, he says the barriers to global implementation are not scientific but are rather political, legal and financial barriers. “The consensus among scientists is that our understanding of the process is officially evolved to a point where it can be rapidly implemented at scale. There is no big technical problem that we can't overcome. It only needs the political will, money and legal framework.”
This is probably why Dr Blunt shares the frustration of the scientific community and industry experts who feel we are not applying CCS as rapidly as we could. “We want to be doing this now but the progress is agonizingly slow. We have to start having more demonstrative projects that involve the full cycle, from collecting CO₂ from power stations or industrial sites, piping it to storage sites and injecting it underground. We need to learn by doing; build up experience and expertise.”
ARAFAT AL YAFEI, CEO, Al Reyadah
The Al Reyadah CCS plant at Emirates Steel Industries