THE GLOBAL STATUS OF CCS HOLGER BIETZ – General Manager – Projects, Financial and Commercial 7th Study Meeting – Tokyo 16 May 2013

THE GLOBAL STATUS OF CCS: 2012

Released October 2012.

Update released January 2013.

Comprehensive coverage on the state of CCS projects and technologies.

Challenges and recommendations for moving forward.

2

KEY MESSAGE CCS IS ALREADY CONTRIBUTING,

BUT PROGRESS MUST BE ACCELERATED

3

9 operating projects:

6 natural gas processing plants 1 fertiliser plant 1 synthetic natural gas plant 1 hydrogen plant

8 projects under construction (Execute):

2 electricity generation plants 2 natural gas processing plants 1 hydrogen plants 1 fertiliser plant 1 ethanol plant 1 oil refining

KEY MESSAGE

Volume of CO2 potentially stored by large-scale integrated projects

CCS IS ALREADY CONTRIBUTING, BUT PROGRESS MUST BE ACCELERATED

4

KEY MESSAGE CCS IS ALREADY CONTRIBUTING,

BUT PROGRESS MUST BE ACCELERATED

5

Volume of CO2 potentially stored by large-scale integrated projects

KEY MESSAGE STEADY PROGRESS BUT

IMPORTANT DEVELOPMENTS

Large-scale integrated projects by asset lifecycle and year

6

KEY MESSAGE

Volume of CO2 potentially stored by primary storage type and region

7 January 2013 Update

STEADY PROGRESS BUT IMPORTANT DEVELOPMENTS

KEY MESSAGE

8

Quest, Canada

TCM, Norway

Plant Barry, US

Boundary Dam, Canada

STEADY PROGRESS BUT IMPORTANT DEVELOPMENTS

KEY MESSAGE ACCELERATION OF CCS DEPENDS ON

COLLABORATION AND KNOWLEDGE SHARING

CCS faces difficult and time-consuming challenges.

Sharing knowledge gained is critical to accelerating the deployment of CCS.

Collaboration and effort is required to increase the intensity and scope of knowledge sharing activities.

9

PROJECT KNOWLEDGE-SHARING AGREEMENTS

INSTITUTE FUNDING STATUS

Active Commencing/under discussion

Completed

2. Trailblazer (Tenaska)

FEED studies

3. Nelson 6 (Tenaska/Entergy) Development studies

1. RCI (Rotterdam CCS Network) Storage and shipping studies 6. Getica

(ISPE) Feasibility Study

10. Callide Oxyfuel (OTPL)

Transport and CO2 injection studies

4. Pioneer (TransAlta)

FEED studies

11. CarbonNet (Victorian Government)

Commercial and Planning studies

5. Mountaineer (American Electric Power)

FEED studies

7. ROAD (Maasvlakte CCS)

FEED studies & execution planning

8 Chiyoda (Chiyoda/Tokyo University)

Shuttle shipping study

9. South West Hub (Western Australian Government)

General reports

13. CSIRO Amine emission

studies

14. CarbonNet MMV (Victorian Government)

MMV scope study

15. Loy Yang (Worley Parsons, MHI) Process validation model

16. Yanchang CCUS (Shaanxi Yanchang Petroleum)

Capture, storage and permit reports

10

PROJECT KNOWLEDGE-SHARING AGREEMENTS Feasibility/FEED Case Studies Status

Project

Cap

ture

Tran

spor

t/ In

frast

ruct

ure

Stor

age

and

MM

V

Fina

nce

and

Com

mer

cial

Polic

y, L

egal

an

d R

egul

atio

n

Publ

ic

Enga

gem

ent

Ris

k an

d En

viro

nmen

t

1 Rotterdam CCS Network Project Complete

2 Trailblazer Energy Center Complete

3 Nelson 6 CCS Project Complete

4 TransAlta Pioneer In progress

5 AEP Mountaineer Complete

6 Romanian CCS Demo Plant Complete

7 ROAD Project In progress

8 Chiyoda Project Complete

9 South West Hub Project In progress

10 Callide Oxy-fuel Project In progress

11 CarbonNet Project In progress

13 CSIRO Complete

14 CarbonNet Project - MMV Complete

15 Loy Yang Complete

16 Yanchang CCUS Project Commencing

PROJECT KNOWLEDGE SHARING – AEP mountaineer project (1)

KEY ASPECTS OF AEP’S MOUNTAINEER PROJECT The project aimed to design, construct, and operate Alstom’s chilled ammonia

process to capture approximately 90% of the CO2 from a 235 MWe slipstream from the existing 1300 MWe Mountaineer power plant.

Around 1.5 million tonnes per annum of CO2 were to be treated, compressed and injected into suitable deep saline formations for permanent storage approximately 2.5 kilometres underground.

REPORTS AND OUTCOMES The knowledge sharing reports delivered to the Institute covered a wide range of topics including: technical studies, business case, engineering and design considerations, integration and storage.

In July 2011, AEP announced the project would be put on-hold beyond the front-end engineering design (FEED) phase, due to the current uncertain status of national climate policy and weak economy.

12

PROJECT KNOWLEDGE SHARING – AEP mountaineer project (2)

CCS Front End Engineering and Design Report The front-end engineering and design package included: a +/- 25% cost estimate (see table below) all information needed Environmental Policy ACT a construction contracting strategy preliminary PFDs and mass and energy balances a deep well drilling program for characterization of subsurface geology at one of

the CO2 storage sites

System (Phases I, II & III) Estimate ($ x million) USD

Capture System $665

Storage System $160

Sub-Total $825

Escalation $71

Sub-Total $896

Risk Based Contingency $103

Total Constructed $999

Phase IV Operations $66

Total Project Cost $1,065

AEP has put the project on hold as a lack of federal climate change legislation adversely impacting AEP’s ability to fund it’s cost share of the commercial scale project.

PROJECT KNOWLEDGE SHARING – ROAD project (Netherlands) (1)

14

PROJECT DETAILS

Location: Rotterdam, Netherlands

Status: Define

Proponent: Maasvlakte CCS Project C.V., a joint venture of E.ON Benelux and Electrabel (a subsidiary of GDF Suez Group)

Technical aspects Construction of a new E.ON Maasvlakte Power Plant 3 (MPP3), a 1070 MW (gross) coal-

and biomass-based power plant.

Retrofit of post-combustion capture is being designed on a 250 Mwe unit of the plant, capturing approx 1.1 million tonnes of CO2 per annum.

The captured CO2 will be transported through a 26 km pipeline to the P-18-A Platform of TAQA in the North Sea and injected into depleted gas reservoirs at a depth of 3500 metres under the sea bed.

The project has obtained all necessary permits and concluded all its costing and technical design work – FID is expected later this year.

PROJECT KNOWLEDGE SHARING – ROAD project (Netherlands) (2)

15

PERMITTING PROCESS REPORT

A large number of permits required for all aspects of the CCS chain

Obtaining a storage permit was most challenging issue for the project

Key issues for the storage permit relate to the: Amount of information requested by the permitting authority

Financial Security (funds needed for post-closure activities)

Transfer of responsibility and liability

PROJECT KNOWLEDGE SHARING – Project Pioneer (Canada) (1)

16

TransAlta announced the cancellation of this project on the 26th of April 2012, on the grounds that "the revenue from carbon sales and the price of emissions reductions [were] insufficient to allow the project to proceed at this time".

KEY ASPECTS OF PROJECT PIONEER The project was built as a retrofit of TransAlta and Capital Power Corporations' Keephills 3

(K3) coal-based power plant

Pioneer would have captured one million tonnes per annum of carbon dioxide (CO2) through post-combustion technology (MHI).

The CO2 was to be transported for enhanced oil recovery (EOR) in nearby oil fields as well as for permanent storage in deep saline formations.

REPORTS AND OUTCOMES Knowledge sharing reports cover a wide range of topics including: regulatory, project risk, socio-economic, public opinion, construction execution, commercial structuring, CCS integration, risk management, and MMV technology issues.

PROJECT KNOWLEDGE SHARING – Project Pioneer (Canada) (2)

17

SYSTEMS INTEGRATION WORKSHOP – SUMMARY REPORT When integrating the capture facility into the host plant the following design features can improve the efficiency and performance:

Integration of utilities Integration of (environmental) monitoring and control systems Optimization of energy/heat recovery and use Waste minimization and use of waste products Optimizing materials and flows/exchanges within the plant Operating flexibility, i.e:

Maximizing operational flexibility for the industrial process generating the CO2 (e.g. power plant 24-7 load following, handling interruptions in availability of any component in the system, etc.)

Optimizing trade-off between cost and operating flexibility Optimization of maintenance, preventative maintenance system and shutdowns

PROJECT KNOWLEDGE SHARING – South West Hub (Australia)

PROJECT DETAILS Location: Western Australia, Australia Status: Evaluate Proponent: Department of Mines and Petroleum, but moving to an industry joint venture

Technical aspects:

CO2 captured from various industrial sources including coal-based urea plant, alumina production and power generation.

A 50-100km onshore pipeline network is proposed to connect large stationary sources of CO2.

The base case project aims to store around 2.5 million tonnes per annum of CO2 in onshore deep saline formations.

Current focus: Negotiating land access for seismic studies on land surrounding possible storage sites. 18

PROJECT KNOWLEDGE SHARING – Project Carbonnet (Australia)

PROJECT DETAILS Location: Victoria, Australia Status: Evaluate Proponent: Department of Primary Industries Technical aspects CarbonNet is a storage led hub project

Storage opportunities exist in the offshore Gippsland basin, in depleting oil fields The nearby Latrobe Valley is home to power stations responsible for generating more

than 90 per cent of the state’s electricity

Aiming to develop the hub concepts allowing multiple CO2 sources to connect to a network of injection sites

The business model is unique as it is not driven by a single CO2 emitter Knowledge sharing activities:

Commercial frameworks for hub projects (2013) Business model for CarbonNet project (2014)

19

PROJECT KNOWLEDGE SHARING – our approach in China (1)

MoU with DCC-NDRC The key areas of cooperation identified under the MOU: the promotion international and domestic cooperation; encouraging further research and development; supporting demonstration projects; and developing industrial and academic networks.

20

PROJECT KNOWLEDGE SHARING - our approach in China (2)

MoU with Shaanxi Yanchang Petroleum (Group) Co., Ltd

The key areas of cooperation identified under the MOU: the promotion of CCUS in China and globally, including;

increase technical and non-technical understanding of the application of CCS in the non-power sector including capture, transport and storage technologies, and regulations and permitting;

Increase understanding of CO2 storage and utilisation and monitoring, measurement and verification within China’s unique geology;

Enhance public awareness and acceptance of CCS technology development in China and globally; and

Share and dissemination disseminate key learnings in order to help advance other projects around the world.

21

PROJECT KNOWLEDGE SHARING - our approach in China (3)

MoU with Shaanxi Yanchang Petroleum (Group) Co., Ltd

Work towards a Knowledge Sharing agreement:

Key reports to be provided under the agreement when finalised:

CO2 capture in the coal to chemical industry;

CO2 storage and EOR in low permeability reservoirs;

Measurements monitoring and verification on CO2 storage in the Jingbian, Wuqi and Dingbian oilfields; and

Regulation and permitting of CCUS projects in China.

22

TARGETED REPORTS - THE FIRST TRANCHE

Community communication on key risks of CCS Projects. (Indigo Research Ltd, UK)

Relative permeability guideline. (Benson Lab; Stanford U, California, USA)

Making the business case for CCS projects: more insights. (2CO Energy, UK)

CO2 networks and hubs: participants, roles & commercial structures. (National Grid, UK)

CO2 transportation – shipping. (Chiyoda, Japan)

Mitigating unexpected CO2 migration. (CO2GeoNet, Italy/France) - with IEAGHG

Balancing key contracts for CCS projects. (Baker McKenzie, Australia)

CCS public funding programs – Lessons Learnt. (Institute will create this report)

Business case for CCS projects. (Summit Power Group, Texas Clean Energy; USA)

CO2 networks and hubs: Shared transport and storage infrastructure. (Deltalinqs, Netherlands)

Cross-border transport of CO2. (Maersk Olie og Gas, Denmark)

ULCOS – public engagement (ArcelorMittal, France)

Overview of NW Sturgeon Refinery (North West Redwater, Canada)

Baltic Sea CCS storage (Bastor) summary reports (Elforsk AB, Sweden)

Storage Atlas - (CCOP, Thailand)

New Targeted Report Scopes are currently being contracted

INSTITUTE FUNDING STATUS

Active Commencing/under discussion

Completed 23

TARGETED REPORTS – CONTRACTED AND PLANNED Report Description

Aquistore Project Aquistore will serve as the storage site for the world’s first commercial post-combustion CO2 capture, transportation, utilization, and storage project from a coal-fired electric generating facility. This report will capture key lessons from the project.

Compostilla: Progressing onshore storage in Europe

Report will cover of aspects of injection into carbonate reservoirs, the geochemical impact on a carbonate reservoir (induced changes in porosity and permeability); and will comment on regulatory requirements and public engagement activities to highlight the European perspective

Creating core message Translating the technical results of the Weyburn Project technical research findings into public communication resources

The CSIRO Key Social Research findings This report will provide a comprehensive overview of the breadth of recent CCS-focused social research; attempting to categorize, contextualize and synthesize the key findings, recommendations and challenges evidenced throughout this substantial body of work.

Funding CCS Demonstration Projects This report will consider structuring of a CCS project to access commercial bank, ECA, public financing institution and green bank funding and the respective roles and requirements of bank, ECA, PFI and green bank support.

Storage Liability 1

Effects of liability for CO2 leakage in an EOR-CO2 project

Storage Liability 2

Identifying the benefits to liability regimes (or development of insurance markets) through regulatory requirements that incorporate both project-level risk as well as system wide risks when setting payment rates for projects

Framework for geological assessment This work will develop a systematic process to more quantitatively measure and categorise the data available for assessment and maturity of the geological assessments performed by countries in their storage capacity assessments

Indonesian Coal Gasification Project: Storage Scoping Study

Identify if there are potential storage sites in Indonesia suitable for long term geologic storage of the intended volumes of CO2 within a reasonable range of the coal gasification project.

Project management structures for integrated CCS projects

Considering the different skills required across the value chain and how this changes throughout the asset lifecycle model from Identify to Execute, Operate and Closure

What international standards on CCS might mean for CCS projects

Momentum towards the development of international standards is growing rapidly, as the ISO Technical Committee is forming its working groups and starting to develop their work programs. The aim of this study would be to examine the implications for standards development at this stage of CCS demonstration.

A study considering the costs associated with the emerging modes of regulation

To assist both project developers in developing their detailed project budgets and business cases, but also policymakers and legislators so that they can have a more accurate view of the costs and burden they are imposing on projects.

Expansion of the current 'CDM-Ready' project The development of legal and regulatory regime ratings and an assessment model for host countries

Technology commercial pathways – learning from the LNG sector

A study of the rapid and successful development of the LNG industry to identify learnings that can be applied to accelerate the development of the CCS industry

Innovation in the CCS Sector While there is good analysis of the state of development of CCS technologies, there is much less readily available analysis of what existing projects are doing to drive innovation and lower the costs of CCS.

24

TARGETED REPORTS – Don Valley Power Project (UK) (1)

25

Project details Location: South Yorkshire, United Kingdom Status: Define Proponent: 2Co Energy Limited Technical aspects 2Co Energy is proposing to build a new, integrated gasification combined cycle (IGCC)

power plant - 920 MW (gross) - and capturing more than 91 per cent of its CO2 emissions.

Approximately 4.9 million tonnes per annum of CO2 would be captured through pre-combustion capture technology.

CO2 is proposed to be transported via a 90km onshore pipeline to the North Sea coast. From there the pipeline will continue approximately 300km offshore to its final storage destination.

Two offshore storage options are being studied: both EOR prospects ann deep saline formations in the southern North Sea.

Front end engineering and design (FEED) studies have been completed and the project is now looking to improve its business case.

TARGETED REPORTS – Don Valley Power Project (UK) (2)

26

MAKING THE BUSINESS CASE FOR CCS REPORT Capital expenditure of approximately £5 billion A mix of potential funding sources required

Grants 26% (UK competition / NER300) Equity 14% (2Co, Samsung, BOC) Debt 60% (ECAs, MFIs and commercial banks)

Three major sources of revenue: the UK wholesale power price; the power price premium (CfD); and the revenue from oil production

Key risks affecting the business case: regulatory and permitting risk; changes to capital costs; delays in commissioning; changes in oil price; and challenges with decommissioning.

TARGETED REPORTS - CCOP storage mapping program (1)

Coordinating Committee for Geoscience Programmes in Asia and South-East Asia (CCOP)

Institute support for a CO2 storage mapping program in the CCOP member countries

Preparation work for a CO2 Storage Atlas that presents the best available estimates of potential CO2 storage capacity

Map of CCOP countries 27

TARGETED REPORTS - CCOP Storage Mapping Program (2)

CCOP Work Program

Phase 2 – April 2016 till March 2017

Application in Member Countries CCOP Storage Atlas

Phase 1 – April 2014 till March 2016 Three country case studies

(onshore and offshore) Case Study estimations

of storage capacities

Facilitation Phase – March 2013 till March 2014

Align goals and objectives Agree methodologies and workflow, training courses and workshops

28

A FINAL WORD: COMMUNICATION IS PARAMOUNT!

“ ...a fundamental conclusion is that communication should not be seen as an add-on to the project. Successful projects integrate communication and outreach as a critical component of the project from the beginning.” International Researcher Team: Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia; Energy Research Centre of the Netherlands (ECN), Netherlands; Illinois State Geological Survey, University of Illinois, USA; Pacific Northwest National Laboratory, operated by Battelle for the US Department of Energy, USA; and AJW Inc., USA.

“Despite our positive stakeholder engagement, public opposition still ranked in the top 5 of our project risks” Longannet Project. - UK

LEFT: Opposition group posters against the Barendrecht Project - Holland

Linlithgow Academy Pupil’s Science Communication Posters - reflecting community support and understanding of CCS.

29