Carbon Sequestration & Storage: Developing A Transportation Infrastructure

Carbon capture and storage (CCS) consists of the separation of carbon dioxide (CO2) from industrial and power plant sources, transport to a storage location and long-term isolation from the atmosphere. The principal technical, economic and regulatory challenges of CCS are significant for the capture and storage phase of the process and considerable research into these areas is ongoing. By contrast little analytical work has focused on the pipeline system for transporting CO2 from capture sites to storage sites. The INGAA Foundation Inc. (Foundation) commissioned this study to provide some initial information and insights on the size, configuration, costs, timing, commercial structure, and regulation of U.S. and Canadian pipeline systems to transport CO2. This study will help inform Foundation members, policymakers and others on issues associated with developing and operating a CO2 transportation system for purposes of carbon capture and sequestration (CCS).
Objectives
  • Carbon capture and storage (CCS) consists of the separation of carbon dioxide (CO2) from industrial and power plant sources, transport to a storage location and long-term isolation from the atmosphere. The principal technical, economic and regulatory challenges of CCS are significant for the capture and storage phase of the process and considerable research into these areas is ongoing. By contrast little analytical work has focused on the pipeline system for transporting CO2 from capture sites to storage sites. The INGAA Foundation Inc. (Foundation) commissioned this study to provide some initial information and insights on the size, configuration, costs, timing, commercial structure, and regulation of U.S. and Canadian pipeline systems to transport CO2. This study will help inform Foundation members, policymakers and others on issues associated with developing and operating a CO2 transportation system for purposes of carbon capture and sequestration (CCS).

This study focuses on the pipeline infrastructure requirements for carbon capture and sequestration (CCS) in connection with compliance with mandatory greenhouse gas emissions reductions. The major conclusion of the study is that while CCS technologies are relatively well defined, there remain technological challenges in the carbon capture and sequestration phases, and less so in transportation. Carbon capture is the most significant cost in the CCS process. 

The study forecasts that the amount of pipeline that will be needed to transport CO2 will be between 15,000 miles and 66,000 miles by 2030, depending on how much CO2 must be sequestered and the degree to which enhanced oil recovery (EOR) is involved. The upper end of the forecast range is of the same order of magnitude as the miles of existing U.S. crude oil pipelines and products pipelines. 

While there are no significant barriers to building the forecasted pipeline mileage, the major challenges to implementing CCS are in public policy and regulation. Because a CCS industry can evolve in several ways, public policy decisions must address key questions about industry structure, government support of early development, regulatory models, and operating rules. Such issues must be resolved before necessary investments in a CCS pipeline system can be made.  

Carbon capture and storage (CCS) consists of the separation of carbon dioxide (CO2) from industrial and power plant sources, transport to a storage location and long-term isolation from the atmosphere. The principal technical, economic and regulatory challenges of CCS are significant for the capture and storage phase of the process and considerable research into these areas is ongoing. By contrast little analytical work has focused on the pipeline system for transporting CO2 from capture sites to storage sites. The INGAA Foundation Inc. (Foundation) commissioned this study to provide some information and insights on the size, configuration, costs, timing, commercial structure, and regulation of U.S. and Canadian pipeline systems to transport CO2


Key Findings on CCS Technologies and Costs

  • While many of the underlying technologies involved in CO2 capture are mature, their use in the circumstances and scale needed for CCS carries considerable technological and commercial risks.
  • The major components of costs are in the capture/compression and storage. The capture component of CCS is the most technologically challenging and uncertain. Depending on the quality of the CO2 stream, capture costs range from nothing to over $50/tonne. Compression costs add $9 to $15/tonne. Transportation of CO2 by pipeline is a mature technology and should not see significant change over the next 20 years. Geologic storage costs vary depending on whether the site is an enhanced oil recovery site, where costs are negative, or is one of various types of underground rock formations for which geologic storage costs are a few dollars per tonne.
  • The types of geologic formations suitable for CO2 are depleted natural gas and oil reservoirs, saline aquifers, coal beds, and shales.
  • Despite little experience in large scale geologic storage of CO2 in the United States, developments at the Sleipner in the North Sea, In Salah in Algeria, and Weyburne in Saskatchewan have been successful. . 
  • To give a sense of scale, the estimated geological storage capacity in the Lower 48 states is equivalent of over 450 years at recent U.S. GHG emissions rates. The Western Canadian Sedimentary Basin of Canada has a partially estimated geological storage capacity of over 100 years at recent Canadian GHG emissions rates. The full geologic storage capacity in Canada may be about 2,000 years equivalent.

Key Findings on Carbon Reduction Policies and Demand for CCS

  • The widespread application of CCS will depend on the technology’s maturity, costs, volume potential, regulatory framework, environmental impacts, public perception of safety, and other mitigation options.
  • EIA and other forecasters projects a wide range of potential for CCS volumes based on the ultimate regulatory framework and various technological and economic factors. For the U.S., the High Case developed for this report anticipates 1,000 million tonnes per year of CCS by 2030 while the Low Case has 300 million tonnes per year by that date. These numbers can be compared against U.S. CO2 emission from coal power plants which are approximately 2,000 million tonnes per year. Hence, the High Case and Low Cases are roughly equivalent to having 50 percent and 15 percent respectively of the existing U.S. coal fleet capacity operated with CCS by 2030.
  • Much of the expected CCS in Canada would be in the oil and gas industry, in particular, emissions related to oil sands production and natural gas processing in Alberta and British Columbia. The overall level of CCS is subject to the same sorts of uncertainties as in the U.S. The Canadian High and Low Cases adopted for this study range from 30 million to 70 million tonnes per year by 2020, respectively. By 2030 these values are 90 to 150 million tonnes per year, respectively.

Key Findings on CO2 Pipeline Network Requirements

  • It is expected by many of the observers interviewed for this report, that early CCS projects will tend to situated where suitable injection sites can be found near the CO2 source so that relatively short, dedicated pipelines between plants and the nearby storage sites can be built. Some such projects may be undertaken by a regulated utility, and will be under the jurisdiction of the relevant regulatory commission.
  • It is further expected that as more CCS projects are developed incorporating power plants where no suitable storage site is nearby, projects will increasingly connect multiple plants to storage sites over greater distances. The sharing of pipeline capacity among plants can help reduce the network mileage on average (averaged per CO2 source). Early and late projects may have the same average mileage per source.
  • This report presents four cases for required U.S. CO2 pipeline infrastructure, based on the high and low expectations about CCS and the extent to which CO2 is used for EOR.  The estimates are very general and dependent on many unknown variables. 

 Key Findings on CO2 Pipeline Commercial Structures and Regulatory Frameworks

  • There is no definitive federal legal and regulatory framework set up for CO2 pipeline siting and rate regulation. Potential analogues are the oil and natural gas regulatory systems. There is no economic regulation of CO2 pipelines since the Surface Transportation Board (STB) and the Federal Energy Regulatory Commission (FERC), assert they lack jurisdiction.   
  • Many current CO2 pipelines operate as private carriers. In such cases, the pipeline owner owns the CO2 in the pipeline and the CO2 is ultimately sold to a third-party for EOR.
  • In some states certifying that the pipeline is in the public’s interest is a prerequisite to the pipeline company receiving the right of eminent domain. In Texas the pipeline must be a common carrier to obtain eminent domain powers. Many CO2 pipelines like natural gas and oil pipelines are Master Limited Partnerships (MLP). It is questionable whether CCS pipelines will qualify for MLP status and this may affect the industry development. 
  • The two broad regulatory concepts for pipelines are common carriage and private contract carriage. Common carriage presents problems for CO2 producers who cannot tolerate pro rationing of pipeline capacity. Most agree that contract carriage would be accompanied by open access rules.