Electronic copy available at: http://ssrn.com/abstract=1400118

12 November 2008

PESD Carbon Storage Project Database Varun Rai, Ngai-Chi Chung, Mark C. Thurber and David G. Victor

Working Paper #76 November 2008

Electronic copy available at: http://ssrn.com/abstract=1400118

12 November 2008

The Program on Energy and Sustainable Development at Stanford University is an interdisciplinary research program focused on the economic and environmental consequences of global energy consumption. Its studies examine the development of global natural gas markets, reform of electric power markets, international climate policy, and how the availability of modern energy services can affect the process of economic growth in the world’s poorest regions.

The Program, established in September 2001, includes a global network of

scholars—based at centers of excellence on five continents—in law, political science, economics and engineering. It is based at the Freeman Spogli Institute for International Studies at Stanford University.

Program on Energy and Sustainable Development Encina Hall East, Room 415

Stanford University Stanford, CA 94305-6055

http://pesd.stanford.edu

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About the Authors Varun Rai is a research fellow at the Program on Energy and Sustainable Development (PESD). Dr. Rai leads the carbon capture and storage (CCS) research at PESD. He is analyzing the commercial viability of different business models for the CCS industry. Besides CCS, Dr. Rai’s research includes understanding the political economy of energy policy in India. He is also interested in the design of climate-change policy and the evolution of carbon markets. Dr. Rai received his Ph.D. and MS in Mechanical Engineering from Stanford with specialization in Energy Systems. His Ph.D. thesis was on improving the catalytic efficiency of fuel cells for automotive applications. He holds a Bachelor's degree in Mechanical Engineering from Indian Institute of Technology (IIT) Kharagpur. Ngai-Chi Chung, a former PESD research associate, is a consultant in the airline industry. Ngai-Chi has a B.S. with distinction in Civil Engineering and a M.S. in Management Science and Engineering from Stanford University. He has worked as an Associate Consultant for Marakon Associates, with client experience including a major U.S. automotive manufacturer and a major European energy utility. Mark C. Thurber is Assistant Director for Research at PESD, where he oversees all aspects of the Program's research and is also directly responsible for research on low-income energy services. Before coming to PESD, Dr. Thurber worked in high-tech industry, focusing on volume manufacturing operations in Mexico, China, and Malaysia. This work included a multi-year assignment in Guadalajara developing local technological capability in precision manufacturing measurements. Dr. Thurber holds a Ph.D. from Stanford University in Mechanical Engineering (Thermosciences) and a B.S.E. from Princeton University in Mechanical and Aerospace Engineering with a certificate from the Woodrow Wilson School of Public and International Affairs. His academic research has included engineering studies of gas-phase laser diagnostics as well as policy analyses of technology management in the developing world and power plant emissions reductions strategies in the United States. David G. Victor is Professor of Law at Stanford Law School and Director of the Program on Energy and Sustainable Development at Stanford University's Freeman Spogli Institute for International Studies. The Program, launched in September 2001, focuses on power sector reform, the emerging global market for natural gas, energy services for the world's poor, the practical challenges in managing climate change, and the role of state-controlled oil and gas companies in the world's hydrocarbon markets. Much of the Program's research concentrates in Brazil, China, India, Mexico and South Africa. He teaches energy law, regulation and political economy at Stanford Law School. Previously, Dr. Victor directed the Science and Technology program at the Council on Foreign Relations in New York, where he remains Adjunct Senior Fellow. He directed the Council's task force on energy co-chaired by Jim Schlesinger and John Deutch and is senior adviser to the task force on climate change chaired by governors George Pataki and Tom Vilsack. He also leads a study group that is examining ways to improve management of the nation's $50b strategic oil reserve. In the past, his research at the Council his research focused on the sources of technological innovation

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and the impact of innovation on economic growth. His research also examined global forest policy, global warming, and genetic engineering of food crops. His Ph.D. is from the Massachusetts Institute of Technology (Political Science and International Relations), his B.A. from Harvard University (History and Science). His publications include: Natural Gas and Geopolitics (Cambridge University Press, July 2006), The Collapse of the Kyoto Protocol and the Struggle to Slow Global Warming (Princeton University Press, April 2001; second edition July 2004); Climate Change: Debating America's Policy Options (New York: Council on Foreign Relations); Technological Innovation and Economic Performance (Princeton University Press, January 2002, co-edited with Benn Steil and Richard Nelson); and an edited book of case studies on the implementation of international environmental agreements (MIT Press, 1998). He is author of more than 100 essays and articles in scholarly journals, magazines and newspapers, such as Climatic Change, The Financial Times, Foreign Affairs, International Journal of Hydrogen Energy, Nature, The New York Times, Science, and Scientific American, and The Washington Post.

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PESD Carbon Storage Project Database Varun Rai, Ngai-Chi Chung, Mark C. Thurber and David G. Victor

Introduction

Carbon capture and storage (CCS) is among the technologies with greatest potential leverage to combat climate change. According to the PRISM analysis,1 a technology assessment performed by the Electric Power Research Institute (EPRI), wide deployment of CCS after 2020 in the US power sector alone could reduce emissions by approximately 350 million tonnes of CO2 per year (Mt CO2/yr) by 2030, a conclusion echoed by the McKinsey U.S. Mid-range Greenhouse Gas Abatement Curve 2030.2 But building CCS into such a formidable climate change mitigation “wedge” will require more than technological feasibility; it will also require the development of policies and business models that can enable wide adoption. Such business models, and the regulatory environments to support them, have as yet been largely undemonstrated. This, among other factors, has caused the gap between the technological potential and the actual pace of CCS development to remain large.

The purpose of the present work is to quantify actual progress in developing carbon storage projects (here defined as any projects that store carbon underground at any stage of their operation or development, for example through injection into oil fields for enhanced recovery or in saline aquifers or other geological formations). In this way, the real development ramp may be compared in scale and timing against the perceived need for and potential of the technology. Some very useful lists of carbon storage projects already exist – see, for example, the IPCC CCS database,3 the JP Morgan CCS project list,4 the MIT CCS database,5 and the IEA list.6 We seek to maintain an up-to-date database of all publicly-announced current and planned projects from which we can project a trajectory of carbon stored underground as a function of time. To do this, we estimate for each project the probability of completion as well as the potential volume of CO2 that can be stored as of a given year.

1 EPRI. “The Power to Reduce CO2 Emissions – The Full Portfolio”, EPRI Energy Technology Assessment Center. 2 McKinsey. “Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?”, December 2007. The 350 million tonnes total for the CCS options for the U.S. electricity sector was obtained by adding estimated emissions reduced from the following options: “Coal power plants – CCS new builds with EOR”, “Coal power plants – CCS rebuilds with EOR”, “Coal power plants – CCS new builds”, “Coal power plants – CCS rebuilds” 3 IPCC. “IPCC Special Report on Carbon Dioxide Capture and Storage”, 2005, Cambridge University Press, New York. 4 Levinson, Marc. “Capturing the Gains from Carbon Capture”, 11 April 2007, JP Morgan Global Corporate Research. 5 MIT, Carbon Capture and Storage Projects, http://sequestration.mit.edu/tools/projects/index.html 6 IEA, “Energy Technology Perspectives”, 2008

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Results and Discussion Figure 1 displays the potential volume of carbon stored through 2025 by announced projects, with broad grouping of projects by probability they will be completed: currently operating (100% likelihood), possible (estimated 50-90% likelihood), and speculative (estimated 0-50% likelihood). The process of estimating these probabilities is explained in the Appendix. A list of all included projects with their estimated probabilities is provided separately in Table 1. Projects listed under “Others” are included in the database for reference purposes, but have insufficient project details available to allow us to estimate probability of completion and potential volume stored and therefore were not included in the graph of Figure 1. Figure 1 and Table 1 will both be updated regularly, with the results provided on an ongoing basis in updated versions of this paper on the PESD website (http://pesd.stanford.edu).

What is apparent from the trajectory of carbon storage volume in Figure 1 is the profound gap between estimated storage from announced projects and the far greater near-term role for CCS that is projected by technological feasibility studies like EPRI PRISM and the McKinsey Abatement Curve, even with the fairly aggressive methodology we use for quantifying potential storage volumes of announced projects (see Appendix). If one (optimistically) assumes that all “possible” and 25% of “speculative” projects are indeed realized, this will result in about 100 Mt CO2/yr of reductions worldwide by 2025, far short of the 350 Mt CO2/yr of reductions that are projected as technologically feasible by 2030 in the US alone. A wildcard that is impossible to quantify is the size of any pipeline of carbon storage projects that will be announced in future, which will certainly boost the numbers.

Figure 2 shows the same projects, but coded according to the destination of the

CO2: enhanced oil recovery (EOR), enhanced coal-bed methane (ECBM), and Natural Gas (NG) operations (Black); saline aquifers and depleted oil & gas fields (White); unknown (Gray). It is clear that most of the “operating” and “possible” projects are related to EOR, ECBM, or NG operations. This is not surprising given that as yet there is no direct economic incentive (CO2 price, for example) for CCS operations; at present the only certain way to make CCS projects economically viable is to use the CO2 for producing more hydrocarbons to take advantage of high oil & gas prices. In the electric power industry more CCS projects appear in the pipeline post-2015 (5 Mt CO2/yr in 2010; 65 Mt CO2/yr in 2015; and 90 Mt CO2/yr in 2025). But if CCS is to be a central player in efforts to slash CO2 emissions over the next few decades, one would hope for its much wider applications to the electric power industry in the next decade or so.

Final Note An important objective of this work is to contribute to a general understanding of the progress of the nascent carbon storage industry. As such, we welcome comments and feedback that will help us improve our database, including identification of other projects which should be included or refinements to the probabilities and storage estimates for specific projects.

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Million Tonnes CO2 Captured / yr

Figure 1: P

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Million Tonnes CO2 Captured / yr

Figure 2: P

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Table 1: PESD Carbon Storage Database

Project Name Location Owner(s) Operation Start

CO2 Storage

('000 tonnes/yr)

For Electric Power?

CO2 Destination Status

In-Salah Algeria BP & Sonatrach 2004 1277.5 N Gas Reservoir Operating Cerro Fortunoso Argentina MGM International 2015 50.0 N Oil Reservoir Speculative

Otway Victoria, Australia CO2CRC 2008-2010 110.2 N Gas Reservoir Operating

Gorgon Australia Chevron Texaco/ ExxonMobile/ Shell 2013 3300.0 N Saline Aquifer Possible

Callide Australia CS Energy 2011 216.0 Y; Oxyfuel Combustion

Depleted gas fields (Denison Trough)

Possible

Latrobe Valley (Monash)

Victoria, Australia Monash Energy 2015 13000.0 N

Depleted oil field (offshore) or deep acquifers in the Gipplsland basin

Possible

ZeroGen Queensland, Australia ZeroGen Pty Ltd 2012 720.0 Y; IGCC Saline Aquifer Possible

ZeroGen Mark II

Queensland, Australia ZeroGen Pty Ltd 2017 2880.0 Y; IGCC Possible

Hazlewood Australia International Power/ CO2CRC 2015 9.1 Y; Post-

Combustion Speculative

Fenn Big Valley Canada 1998 18.3 N ECBM Operating

Weyburn Canada EnCana 2000 1460.0 N EOR Operating

Spectra (Multiple)

Alberta and British Columbia, Canada

Spectra Energy 2003 200.0 N Operating

Alberta Alberta, Canada

Alberta Government 2015 5000.0 Possible

Fort Nelson British Columbia, Canada

Spectra Energy 2011 1000.0 N Possible

Genesee (EPCOR)

Alberta, Canada 2015 3600.0 Y; IGCC EOR, Pembina

fields Speculative

Qinshui Basin China 2003 11.0 ECBM Operating

Greengen China Huaneng / NRDC 2015 720.0 Y; IGCC EOR Possible

Elsam Esbjerg, Denmark CASTOR 2006 8.8 Y; Post-

Combustion Operating

K12B Denmark GDF 2004 20.0 N Gas Reservoir Operating Hypogen EU EU 2012 2880.0 Y; IGCC Possible Huerth (RWE) Germany RWE 2014 3240.0 Y; IGCC Possible

Janschwalde Brandenburg, Germany

Vattenfall (Swedish) 2008 216.0 Y; Oxyfuel

Combustion Possible

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Janschwalde II

Brandenburg, Germany Vattenfall 2015 3600.0 Y; Oxyfuel

Combustion Possible

Brindisi Italy ENEL 2012 1250.0 Y; Post-Combustion Saline Aquifer Speculative

Yubari Japan 2004 3.7 ECBM Operating

Nagaoka Japan 2015 7.3 Saline Aquifer Speculative

Hokkaido Japan Japanese Government 2015 8.8 ECBM Speculative

Buggenum Eemshaven, Netherlands Nuon 2013 2880.0 Y; IGCC Possible

Rotterdam Climate Initiative - Phase 1 & 2

Rotterdam, Netherlands 2010 5000.0 N Possible

Rotterdam Climate Initiative - Phase 3

Rotterdam, Netherlands 2020 15000.0 Speculative

Sleipner Sleipner, Norway StatoilHydro 1996 1058.5 N Saline Aquifer Operating

Snøhvit Melkøya, Norway StatoilHydro 2008 700.0 N Saline Aquifer Operating

Mongstad Mongstad, Norway Gassnova SF 2014 1500.0

Y; NGCC + Post

Combustion EOR Possible

Kårstø Kårstø, Norway Gassnova SF 2012 1000.0

Y; NGCC + Post

Combustion

Offshore, Under sea bed. Possible

Recopol Poland Recopol 2003 0.4 ECBM Operating

Repsol Repsol, Spain CASTOR 2010 500.0 EOR Speculative

Abu Dhabi Abu Dhabi, UAE

Hydrogen Energy (BP, Rio Tinto, Masdar), backed by UAE govt

2012 1700.0 Y; NGCC EOR Possible

Hatfield Hatfield, UK Powerfuel / Kuzbassrazrezugol 2013 6480.0 Y; IGCC EOR Possible

Ferrybridge Yorkshire, UK

SSE w/ Mitsui Babcock, UK Coal, Siemens

2011 1100.0 Y; Post-Combustion Possible

Immingham Immingham, UK Conoco-Philips 2010 3240.0 Y; IGCC North sea

(offshore) Speculative

Killingholme Lincolnshire Coast, UK E.ON 2011 3240.0 Y; IGCC Gas Reservoir Speculative

Kingsnorth Kent, UK E.ON 2015 2880.0 Y; Post-Combustion Speculative

Kingsnorth Demo Kent, UK E.ON 2014 1500.0 Y; Post-

Combustion

Offshore in North Sea; approx 150km

Speculative

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Tillbury Tillbury, UK RWE 2014 1500.0 Y; Post-Combustion

Offshore in North Sea; approx 150km

Speculative

Tillbury-2 Tillbury, UK RWE 2020 11520.0 Y; Post-Combustion Speculative

Frio US 2004 64.6 Saline Aquifer Operating

Salt Creek Wyoming, US Anadarko 2006 2200.0 N EOR Operating

Decatur Illinois, US ADM / US DOE 2010-2012 365.0 Y Possible AEP-B&W Retrofit US Babcock & Wilcox

Co 2012 1642.5 Y; Oxyfuel Combustion Possible

Mountaineer West Virginia, US AEP w/ RWE 2009 100.0 Y; Post-

Combustion Deep Saline Acquifer Possible

Oologah Okhlahoma, US AEP w/ RWE 2012 1500.0 Y; Post-

Combustion EOR Possible

Antelope Valley Station

North Dakota, US 2011 1095.0 Y; Post-

Combustion EOR Possible

Denbury-Rentech-Faustina

Gulf Coast, US

Denbury Resources Inc, Faustina Hydrogen Products LLC, Rentech Inc

2011 15359.2 N Possible

DOE RCSP US DOE 2011-2014 4015.0 N Saline Aquifer Possible

South Heart North Dakota, US

Great Northern Power Development

2012 644.1 N EOR Possible

HECA California, US HydrogenEnergy 2014 2496.8 Y; IGCC EOR Possible

Sugarland Texas, US NRG/Powerspan 2012 1000.0 Y; Post-Combustion Possible

Mason County (AEP)

West Virginia, US AEP / Bechtel / GE 2015 4320.0 Y Speculative

Meigs County (AEP) Ohio, US AEP / Bechtel / GE 2015 4320.0 Y; IGCC Speculative

Barberton Ohio, US AEP 2008 216.0 Y; Oxyfuel Combustion Speculative

Edwardsport Inidiana, US Duke Energy 2015 1008.0 Y; IGCC Saline Aquifer Speculative

Wabash River Indiana, US Duke Energy 2015 419.2 Y; IGCC Speculative

SoCalEd US SoCalEd 2017 4320.0 Y; IGCC EOR or Saline Acquifer Speculative

Trailblazer (Sweetwater, Tx)

Texas, US Tenaska 2014 4320.0 Y; Post-Combustion EOR Speculative

Colorado (Xcel) Colorado, US Xcel 2016 2520.0 Y; IGCC Speculative

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Appendix: Methodology

The project database is compiled through a careful examination of various information sources (see “Information Sources” below). Our database records the following fields, if available, for each announced carbon storage project:

• Project name • Country • State • Cost • Owners • Volume of CO2 captured per year (see below for details) • Electricity generation capacity • Capture technology • CO2 storage destination • Years of operation (see below for details) • Probability of completion (see below for details)

Given that not all projects publish all of the above information, we have made our own assumptions to estimate some of the above parameters.

1) Volume of carbon dioxide captured per year

Some projects, especially those that are currently operating, announce publicly the volume of CO2 captured per year (in tonnes of CO2). However, for projects that are more speculative, there is often no explicit information available on the volume of CO2 captured per year. For such projects, we use assumptions for an average project to make an estimation based on the formula:

Electricity generation capacity (MW)

×

90% capture (assumption for an average project – note that this was intentionally chosen to be an aggressive estimate of potential storage volume)

×

8000 tonnes CO2 per year per MW electricity generation capacity (assumption)

=

Estimated volume of CO2 captured (tonnes CO2 per year)

2) Years of operation

Unless explicitly noted by the promoters of the projects, it is assumed that each project will operate from the year it begins operation until 2025.

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3) Probability of completion

All the projects are categorized as follows:

• Operating: These projects have explicitly noted that they are in operation as of the date of the update of the project database.

• Possible: Information sources indicate that there is a reasonable possibility that these projects will be completed and start operating in the future. Examples of such projects can be found in the JP Morgan CCS project list – for example, projects that are considered by the International Energy Agency as “likely get underway around the world over the next decade”.7 We deem the project probability for these projects to be between 50% and 90%.

• Speculative: Information sources suggest that there is substantial uncertainty as to whether these projects will actually go forward. We consider the project probability for these projects to be between 0% and 50%.

• Other: Information sources provide very little information regarding the status and nature of these projects.

Information Sources

The information sources used to compile this database include the following:

• Company press releases • Company websites • News articles • Academic papers and presentations • The Carbon Capture Journal (http://www.carboncapturejournal.com) • “Capturing the gains from carbon capture”, April 11 2007, by JP Morgan Global

Corporate Research • IPCC Special Report on Carbon Dioxide Capture and Storage, 2005 • IEA Greenhouse Gas R&D Programme Projects Database

(http://co2captureandstorage.info/) • MIT Carbon Capture and Storage Projects,

(http://sequestration.mit.edu/tools/projects/index.html) • IEA, “Energy Technology Perspectives”, 2008 • Innovation Norway, “International CCS Technology Survey”, 2008

7 Levinson, Marc. “Capturing the Gains from Carbon Capture”, 11 April 2007, JP Morgan Global Corporate Research.