Executive Viewpoint: Carbon capture and storage: The current market, challenges, integrated hubs and where industry goes from here
Lee Nichols, Vice President, Content, Gulf Energy Information
Hydrocarbon Processing met with Johan de Villiers (JV), Senior Vice President, Global Energy Accounts, ABB, and Matt Healey (MH), Managing Director, Pace CCS, to discuss the global carbon capture and storage (CCS) market, the challenges involved in scaling up operations and building integrated hubs.
HP: How has the CCS market evolved over the past few years? Where do you see it moving in the short-term?
MH: In the short-term, it is different in different parts of the world. In Europe, it is largely driven by government investment and regulation, with a carbon price and a trading system.
In the U.S., the 45Q tax credits provide an impetus for the profit-driven CCS projects to enable companies to invest money to capture and dispose of CO2 (carbon dioxide) and offset that against profits, which encourages investment.
In Asia, we are seeing a lot of strategic developments in Australia and southeast Asia, with a lot of that being driven by Japanese investment to decarbonize sizable emitters of emissions like steel production and refineries to mitigate carbon emissions and meet their company’s internal goals.
In the short-term, the industry is growing, and we are seeing more projects take shape. This trend is likely to continue over the next 1 yr–2 yr. As these projects move into the later stages of design, there will need to be more engineering and additional investments to develop industrial hubs.
With the amount of carbon that needs to be captured, the CCS industry will continue to grow significantly. Including CCS technologies into operations will be imperative for industrial players to meet their net-zero goals.
JV: If you look across the spectrum of options available today to decarbonize energy systems, CCS is one that is the most mature and ready to deploy at scale—many of the others will take more time to become cost competitive. This is why our organization has taken an interest in CCS and has followed up with our customers; many have echoed mutual interest in incorporating CCS technologies within their operations, as well as investing in carbon storage infrastructure.
Our organization provides the electrical and automation systems that enable CCS. When we engaged with them on developing CCS projects, many of them noted Pace CCS having also been a part of their journey, supplying them with design input to shape these projects. That was the beginning of the partnership between ABB and Pace CCS.
MH: That is correct. We developed a digital twin to support our design work which allows a user to model the full chain of a CCS system, and that is something existing software cannot do. However, we are fundamentally an engineering company and not a software company. That is ABB’s expertise, so it provided a clear road to a mutually beneficial partnership, one that can take the technical background behind a digital twin and deploy it into the operating space, which is the major challenge facing this industry.
HP: One of the most pressing challenges facing the global CCS industry is cost. How can partnerships like ABB and Pace CCS help lower capital expenditures for CCS projects?
MH: At a design level, the biggest cost is capture. When you are designing a capture system, the CO2 always comes with impurities. Those impurities add risk. For example, when you start adding water, acids, SOx (sulfur oxide), NOx (nitrous oxide) and things like methanol and glycol, you get behavior where these impurities interact and potentially cause problems in operations.
Now, projects are having to take conservative design decisions. For example, in Europe, on major projects that are in the later stages of design, they have told their emitters that they cannot use glycol to dehydrate their CO2; they must use competing technology, which is $10 MM–$15 MM more expensive on a typical application. They have to do that because they are concerned about the risks of the glycol being introduced in this operation.
By understanding the fluid, we can develop a digital twin that takes into account those impurities and enables developers to make less conservative decisions in design, while safeguarding their downstream operations. In operations, the savings are all in OPEX (operational expenditures). You need to pressurize and heat your CO2, and by understanding how the full system is operating, we can reduce the amount of energy, so your plant is not over-compressing or overheating.
Energy is not always easy to get to on a CCS network. There is not always a source of power at the point of injection or the midpoint of a pipeline or even excess power at the capture source. If we can reduce the cost of that power with a digital twin by knowing where the system is and how it is operating, we are reducing OPEX, as well.
HP: From the software side, how does ABB fit into all this?
JV: ABB has software solutions that are relevant for all the stages of a CCS project, from design through to operations and maintenance. During the design stage we use our software tools and systems to simulate the power system to ensure efficiency and stability. For operations we are able to provide advanced control of the CCS system, especially relevant for complex HUB storage projects. And we have a full suite of software solutions to optimize maintenance of the assets and to support operators.
As far as I know, this is the first time that we can simulate or produce a digital twin of all the surface-level equipment and the reservoir (the subsurface part). When you bring this together, a strong picture develops of how this CCS system will operate and how the design can be optimized. Then, when you are actually operating it, you need to make sure that it all works together. As Matt said, you can either take a very conservative approach and design for the worst possible case scenario or you can operate the plant dynamically.
Take a hub storage project as an example of what this all means. The CO2 hub will have various emitters feeding into one storage reservoir. These may be gas turbines which may be ramping up or down throughout the day depending on what is happening with renewable power. This means that you must operate these systems dynamically. You cannot run this system in steady-state. This is where the power of automation combined with digitalization, where users can actively manage set points, pressures and temperatures to ensure that the assets are protected, safe and the reservoir is managed in a proper way.
HP: When you talk with customers, what are the biggest challenges in CCS projects? Is it cost, know-how or a combination of several things?
MH: It is a lack of experience. Regarding industrial hubs, there are many being designed but none are up and running. The experience is a combination of EOR (enhanced oil recovery) and very simple CCS projects where one operator is in control of the source of CO2, the transportation network and the storage. In an industry hub, you have various third parties producing CO2 that is being combined in shared infrastructure. This is a new problem, with a lack of experience in design.
I use myself as an example. I am on the ISO (International Organization for Standardization) committee that is responsible for writing standards related to CCS, I am a Managing Director of a CCS design consultancy and, realistically, I have about 4 yr–5 yr of experience in the CCS industry. In the oil and gas industry, there are professionals with decades of experience that have seen it all and done it all; the CCS industry does not have that. And when it comes to operations, there is no experience; the first industrial CCS hub to begin operations is in the future.
JV: To put it into perspective, I saw an industry report that said today we capture approximately 40 megatons of CO2/yr. That needs to increase to more than 1.6 gigatons by 2030. It is incredible the scale that is required to hit those goals.
HP: Are industries able to take on this type of scale up?
MH: The good news is that (carbon) capture equipment and the technology for capturing CO2 have been around for a while, industry knows how to operate pipelines and what happens when you inject CO2 into a reservoir. The challenge is then combining all of those items into one integrated network that operates in a predictable way—that is the job of engineering; it has to be predictable, reliable and safe.
In the example Johan provided, if you have power being provided by green energy that is offline, the system can switch to blue power as a backup. That gas-fired power station will be off until it is needed. If so, it can ramp up very quickly. That obviously has an impact on everything downstream that is capturing CO2, so you need a system that already knows what will happen and can react safely to those changes. This is what I mean when I say, “an integrated network.” These are operational challenges that simply have not happened before.
JV: The great thing is that we have all the parts of it. The ingredients to build these projects (CCS) are available, including a lot of skills and experience. The oil and gas industry knows how to do these large-scale projects, design them, engineer and build them, and ultimately operate them through the entire lifecycle. The question is really how quickly can we scale CCS projects and obtain more experience, especially with large integrated hubs?
HP: Where do you see this partnership (ABB and Pace CCS) in the short-term heading?
JV: We, of course, want to help our customers be successful. So where possible we will combine our know-how and technology to enable projects. For countries to achieve their net-zero commitments, uptake of CCS by industry needs to grow 120-fold by 2050, according to analysis from McKinsey.1 If successful, CCS alone could be responsible for reducing carbon emissions generated by the industrial sector by 45 percent. For this to become reality we need an ecosystem; no one can do this alone. That is where collaboration like this one come into play. We are in the early phase, and I think there is a very exciting journey that lies ahead of us.
1 B. Krysta, P. D. Luna, L. D. Fiori, A. Hamilton and B. Stackhouse, “Scaling the CCUS industry to achieve net-zero emissions,” McKinsey & Co., October 2022, online: https://www.mckinsey.com/industries/oil-and-gas/our-insights/scaling-the-ccus-industry-to-achieve-net-zero-emissions