The scale of the impact of national lockdowns and the global economic slowdown caused by COVID-19 has been clearly demonstrated by the significant drop in global carbon emissions in 2020 declining by approximately 6% (IEA estimate). Carbon emissions are now rebounding sharply off the back of global economic recovery, governments face the difficult task of suppressing emissions without negatively impacting economic growth. Application of CCUS in the oil and gas sector can play a key role in achieving this objective.

The CCUS Process

Essentially, CCUS is the process of capturing the CO₂ from an existing industrial process (either pre- or post-combustion) and subsequently storing the captured CO₂ in subterranean structures, namely either depleted oil and gas fields or deep saline aquifer formations. It is estimated that CCS technology can capture up to 90% of the CO₂ emissions produced from the use of fossil fuels in electricity generation and industrial processes, preventing the CO₂ from entering the atmosphere and contributing towards climate change.

Furthermore, CO₂-Enhanced Oil Recovery (CO₂-EOR) technology, which has been widely applied in North America, could store around 75Mt of CO₂ from CCS projects. It could also enhance oil production from reservoirs deep beneath the North Sea by 10% to 25%.

CCUS will be essential until such time as all (or at least most) technology, industrial processes and power generation become carbon neutral. CO₂ is the primary greenhouse gas, accounting for approximately 75% of all emissions.  The transition periods required to effect changes are often lengthy, with this in mind, it is clear that action needs to be taken in order to reduce the impact of CO₂ currently being produced and CCUS has the potential to play a key role in achieving that goal.

Many of the locations most suitable for CCUS are in key oil and gas producing countries such as the US, UK, Norway, Australia, Canada, those in the Middle East and so on. However, not all sequestration sites currently being utilised/proposed are situated in former, or current, oil and gas producing provinces, but includes areas where the geology enables safe, long-term storage and in this regard much of Europe and parts of Asia, Africa and South America are also potential locations for CCUS to be implemented.

Century Plant – Texas, US

Despite being in operation since 2010, the Century Plant (developed by Occidental Petroleum and Sandbridge Energy) remains one of the largest CCS projects in the world with a processing capacity of up to 8.4Mtpa. The Century Plant is a key component of Occidental’s enhanced oil recovery (EOR) program in the Permian Basin.

The gas processing facility captures CO₂ from locally produced gas which is then transported via a 160km pipeline to a CO₂ hub in Denver City before being injected into the Kinder Morgan Permian delivery system. The CO₂ is injected into oil reservoirs, causing trapped oil to flow more efficiently, and is permanently trapped within the subterranean reservoir.

Exxon Mobil Gulf of Mexico CCS

Exxon Mobil recently announced a proposal to establish a US$100 billion public-private CCS project that, if successful, could store up to 50Mt of CO₂ by 2030, with capacity potentially doubling by 2040. The project, which follows Exxon’s announcement that it had established a new “Low Carbon Solutions” business, is proposed to be situated in the Houston Ship Channel and captured CO₂ would be piped to offshore reservoirs in the Gulf of Mexico. Exxon has projected that the CCS market could be worth US$2 trillion by 2040.

Gorgon CO₂ Injection Project - Australia

Australia has been a leader in the development of CCUS technology, the Gorgon Project, one of the world’s largest natural gas project, also incorporates a CO₂ Injection Project which injects and stores CO₂ in a deep offshore reservoir, known as the Dupuy Formation, beneath Barrow Island where Gorgon is located.

The Chevron lead project aims to reduce greenhouse gas emission from Gorgon by approximately 40% or over 100Mt over the course of the project’s life. However, since coming into operation in August 2019, the CO₂ Injection Project has been the subject of recent controversy due to technical issues with the injection system resulting in substantially lower efficiency than anticipated.

Acorn Project – UK

The Acorn Project is backed by Pale Blue Dot Energy, Shell, Harbour Energy and the UK and Scottish government, as well as the EU.  The project, centred on the St Fergus Gas Terminal in North East Scotland, aims to deliver a low-cost CCUS system by 2023. Designed to be constructed rapidly by utilising existing oil and gas infrastructure, Acorn was the first CO₂ appraisal and storage license to be awarded by the UK’s Oil and Gas Authority. The project comprises a CCUS component – where existing gas pipelines will be repurposed to take CO₂ from the gas terminal directly to Acorn’s offshore CO₂ storage site (the depleted Goldeneye reservoir.

The second phase of the project focusses on hydrogen production. Acorn Hydrogen will utilise North Sea natural gas as feedstock and reform it into hydrogen, with the CO₂ emissions being removed and stored using the CCUS infrastructure. The first Acorn Hydrogen plant is scheduled to come online in 2025.

Abu Dhabi CCS – UAE

Earlier this year, the Abu Dhabi National Oil Company (ADNOC) announced its intention to expand its existing CCS program, building on its position as one of the world’s least carbon-intensive oil and gas producers with the goal of reducing its greenhouse emissions by 25% by 2030.

ADNOC currently operates the Al Reyadah facility in Abu Dhabi which can capture up to 800ktpa of CO₂ and plans to expand its CCS capacity by over 500%. In recent months, ADNOC has taken further steps to emphasise its commitment to the development of CCS by entering into separate agreements with Total and Italy’s Eni to explore collaboration on CCS projects.

Challenges and Opportunities

The CCUS sector will continue to gather pace as carbon emitters (both businesses and governments) struggle to meet emissions targets and satisfy environmental, social and governance (ESG) objectives. The oil and gas industry faces significant hurdles in that regard and it is no coincidence that many of the key CCUS projects currently under development are being promoted by major hydrocarbon producers. In addition, however, there are a number of other factors which have the ability to hinder development in the CCUS sector.

When considered as a whole, the process of carbon capture is expensive due to significant deployment and energy costs.  In the oil and gas sector the success of CCUS projects with an EOR element is closely tied to fossil fuels with the Petra Nova NRG project serving as an example of a project becoming economically challenging when oil prices are low. On 1 May, 2020, NRG placed the Petra Nova facility into reserve shutdown status, citing the effects of the global economic downturn and low oil prices. The project remains closed but NRG will “continue to evaluate options” as the oil price environment evolves.

What's next for CCUS?

CCUS potentially provides a solution to one of greatest challenges faced by oil and gas producers, decommissioning. With the prospect of mature fields reaching end of life, operators across the globe are keen to offset (or at least delay) the hefty costs associated with decommissioning oil and gas infrastructure. Existing structures and depleted wells can be repurposed for CCUS, with the UK’s Acorn Project serving as an example. In addition, CCUS has the potential to create new revenue streams for oil and gas players by charging emitters for sequestration.