By 2034, the world will have developed carbon capture capacity of 440 million tonnes per year. Wood Mackenzie, a global energy data and analytics provider, predicts that storage capacity could reach 664 million tonnes, with total investment at $196 billion.
In a report titled “CCUS: A 10-Year Market Forecast,” WoodMac predicts that nearly half of global CCUS (carbon capture, utilization and storage) investment over the next decade will be for CO2 capture, with $53 billion for transportation and $43 billion for storage. Energy experts estimate that government support in major countries is currently at $80 billion, with the US accounting for half of that, the UK 33% and Canada 10%.
“This is a huge growth given today’s industry landscape. Government funding has played a key role in driving the first wave of CCUS investment. Governments are providing capex grants, opex subsidies, tax incentives and contracts for difference for CCUS. While no single mechanism is in mainstream use and countries are coming up with new ways to encourage investment, the five major countries have put roughly $80 billion directly into CCUS.Hetal Gandhi, APAC CCUS lead at Wood Mackenzie, said:
According to WoodMac, CCUS has received strong government support in the US and Europe, but APAC is lagging behind. Despite a significant project increase, WoodMac sees only 440 Mtpa of carbon capture capacity by 2034, failing to meet industrial demand of 640 Mtpa. On a bright side, analysts forecast that almost 80% of the 664 Mtpa of planned pipeline storage capacity will be available by 2030.
Related: Argentina’s first ultra-deep water well runs dry
On a more sobering note, governments and the private sector will have to do much more if CCUS is to save the planet from ongoing climate problems.
In a 2023 report, McKinsey & Company estimated that the world would need to capture at least 4.2 gigatonnes of CO2 per year (GTPA) to reach net zero by 2050. This is 120 times the current total annual capacity of about 45 million tonnes of CO2 from the world’s 35 available commercial CCUS facilities.
Carbon Capture in Oil Production
The Biden administration is a strong supporter of CCUS. Last year, the U.S. Department of Energy (DOE) announced up to $1.2 billion to advance the development of two commercial-scale direct air capture facilities in Texas and Louisiana. Combined, the projects are expected to remove more than 2 million tonnes of carbon dioxide (CO2) emissions from the atmosphere annually, equivalent to the annual emissions from about 445,000 gasoline-powered vehicles, according to the DOE.
The Canadian and Alberta governments have offered more than $15.3 billion in tax credits to the country’s largest oil sands producers for CCS projects. Canada is not alone.
The UK government has committed £20 billion to CCS subsidies, while US oil and gas producers can get a tax credit of $85 for every tonne of carbon dioxide they put into formation (the credit reduces to $60 per tonne if the CO2 is used for EOR).
Thankfully, the private sector is starting to play a role. Over the past few years, big oil companies have invested heavily in carbon capture and storage technologies, ostensibly to offset the carbon dioxide emissions from the energy commodities they produce.
ExxonMobil (NYSE: XOM) has launched a Low Carbon Solutions business unit focused on innovating the next generation of low-emission fuels supported by its carbon capture division. Last year, Exxon Denbury Co., Ltd. Acquired in an all-stock transaction valued at $4.9 billion. Denbury recycles CO2 through enhanced oil recovery (EOR) operations to produce environmentally friendly, carbon-negative blue oil. The company owns the largest CO2 pipeline network in the United States, with 1,300 miles of CO2 pipelines, including approximately 925 miles of CO2 pipelines in Louisiana, Texas and Mississippi, and 10 onshore sequestration facilities.
That same year, Exxon signed long-term contracts with industrial gas companies. Linde (NYSE:LIN) is involved in carbon capture linked to Linde’s planned clean hydrogen project in Beaumont, Texas. Exxon will ship up to 2.2 million tonnes of carbon dioxide from the Linde plant each year and store it permanently.
Two years ago, a company in the oil field services industry Schlumberger K.K. (NYSE:SLB) announced its SLB New Energy division, which will encompass carbon solutions such as CCUS, hydrogen, geothermal, geothermal energy, energy storage and critical minerals, with the company saying each of these niche markets is worth at least $10 billion.
meanwhile, Occidental Sekiyu Co., Ltd. (NYSE:OXY) has formed Oxy Low Carbon Ventures (OLCV). Through a development license with Carbon Engineering, Oxy’s 1PointFive is advancing large-scale direct air capture (DAC). The first facility, STRATOS, is under construction in the Permian Basin. STRATOS is designed to extract 500,000 tonnes of atmospheric CO2 per year, laying the foundation for commercial-scale DAC deployment.
Thankfully, big oil companies will be able to put some of the captured CO2 to good use in their own oil fields. Mengwei Zhao, a Calgary-based senior geological advisor, conducted a study for the AAPG Bulletin on the use of CCS for enhanced oil recovery (EOR). He analyzed production data over 22 years from the Weyburn-Midale field in Saskatchewan, which has received carbon dioxide injection since 2000, making it the longest-running EOR project in the world. Zhao said that without CO2 injection, the field would have stopped producing oil by 2016, but “it’s not just the future,” he said.Enhanced oil recovery could extend the pool’s lifespan to 39 years, or even 84 years.While Zhao acknowledged that his findings were focused on a specific Canadian project, he said he expects to see “similar results” in other large-scale CCS projects around the world.
Zhao’s claim may not be an exaggeration: In the Denver Unit CO2 EOR project in the Wasson field, crude oil production increased about seven-fold after CO2 injection.
Article by Alex Kimani of Oilprice.com
Other popular articles from Oilprice.com:
