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Maersk Oil– plan to make CCS pay for itself

Monday, February 14, 2011

Maersk Oil believes that it can significantly reduce the costs of carbon capture and storage of carbon dioxide sequestered, by burning gas directly from an oilfield in oxygen, generating electricity, using the resulting CO2 immediately for enhanced oil recovery, and possibly selling the resulting water if it is in a region of water shortage (for example, desert).

The plan “gets us significantly closer to CCS that pays for itself (i.e. without subsidies)”, says Pieter Kapteijn, director Technology and Innovation at Maersk Oil.

It has licensed a special combustion technology from Clean Energy Systems of California which enables the gas to be burned in a combustor directly from the field, with little or no pre conditioning required on the gas.

What is special about the idea is that most of the necessary systems – a combustor, a turbine, a generator, and a condenser, can be installed in a single plant, which is small enough to fit inside 3 x 40 foot box containers.

The only other piece of plant required is an air separation unit, a much larger piece of plant, which needs to be kept a good distance from the combustor for safety reasons.

This means that the overall capital cost of the system can be much cheaper than the “conventional” concept for carbon capture for gas.

With the “conventional” carbon capture and storage concept, the gas is piped from the well to a gas power station (which may be a long way away); the gas is burned in air, to produce a mixture of carbon dioxide, water and nitrogen; and this gas mixture goes through an expensive and high energy separation process to remove the carbon dioxide. An expensive pipeline infrastructure is built to carry the carbon dioxide out to an oilfield.

With the Maersk Oil concept, the gas enters a relatively small plant which can be close to the well (if it is on land) or close to where the gas comes to shore. The outputs from the plant are electricity (which is relatively easy to transport) and carbon dioxide (which can be sent directly back down neighbouring oil or gas well). There might even be a customer for the water (from the reaction of gas with oxygen) if it is in a desert environment.

With only a relatively small plant required on land, it seems likely that there should be less local objections to installing it, compared to (for example) a new gigawatt scale power plant.

The financial benefits of enhanced oil recovery or enhanced gas recovery are hard to quantify at this stage, and depend greatly on the field and its stage of life and the revenues that can be generated from the electricity and water.

In enhanced oil recovery, carbon dioxide (which becomes liquid under high pressure) can mix with oil and reduce its viscosity, making it easier to produce. This is a good way to increase overall recovery from the 35 to 50 per cent possible on conventional operations, up to 60 per cent or more. The theoretical maximum is estimated to be between 70-80%.

In enhanced gas recovery the carbon dioxide can be used to maintain the pressure of the overall field, supporting the productivity of the gas wells.

The idea of burning fossil fuels directly in oxygen is not a new one – the “Integrated Gasification Combined Cycle” (IGCC) technology for coal involves burning gasified coal in oxygen. But IGCC technology has a much higher capital cost and involves a much larger plant.

Maersk Oil plans to spend 2-3 years further developing the technology and is looking for launch projects.


Combustion technology

Maersk Oil has licensed the combustion technology from Clean Energy Systems of Rancho Cordova, California, which provides a way to burn natural gas which is “dirty” (ie containing CO2 and other contaminants), without separating the CO2 and contaminants out first.

The combustor is also much simpler than a conventional gas combustion plant.

The combustion is carefully controlled, with oxygen and natural gas or other fuels fed in exactly the right quantities for maximum efficiency.

The technology for the combustor was derived from the space rocket industry, where the combustion has to be very carefully controlled to ensure that the rocket combustion products are ejected from the combustor in a stable and safe way. The key is to achieve proper mixing of the O2, fuel and water to ensure that the flame is stable and the temperature controlled.

Clean Energy Systems won a USD $30m grant from the US Department of Energy to further develop the technology and demonstrate its integration with a gas turbine and generator.


Air separation unit

The system also requires an air separation unit to separate air into oxygen and nitrogen by cryogenic cooling. This is a mature commercial process.

The air separation unit is much bigger than the other equipment and must be positioned away from the rest of the process for safety reasons.

Maersk is looking at installing the air separation units offshore. “It seems to be feasible without too much development work,” Mr Kapteijn says.


Making it viable

For the system to be feasible, at a minimum you would need a gas well, a customer willing to buy an additional steady supply of electricity at the megawatt scale, and nearby depleted oil or gas wells which could use a steady supply of carbon dioxide for enhanced oil recovery or enhanced gas recovery.

The system could only work if everything could be operated continuously – so there was a continuous supply of gas into the system, electricity was generated continuously, and the carbon dioxide produced would continuously be pumped into a gas or oil field.

This means that there would need to be a customer in need of a continuous supply of electricity (“base load”), or the electricity would need to be stored in some way.

The overall viability would increase if producing gas fields which already contain a large amount of carbon dioxide, because it would not require a process to separate out the carbon dioxide before feeding the gas into a combustor, and the carbon dioxide from the field could be sequestered together with the carbon dioxide from combusting the gas. Today these “stranded” gas fields are difficult to develop economically.

The system could also be more viable if it could earn money from carbon trading schemes. EU emission allowances are currently being traded at around Eur 15 per ton of carbon dioxide equivalent, which means that a system like the one described above could earn Eur 15 for every ton of carbon dioxide sequestered.

Estimates of the overall cost of ‘conventional’ carbon capture and storage vary but are often around the Eur 50 per ton level, which means that if the Maersk concept could reduce the cost by (for example) Eur 10 a ton, it would still cost Eur 35-40, too high to be paid for by carbon trading at current levels.

But if the carbon price rose, and a system like the Maersk one could earn more money than anticipated from the enhanced oil recovery / enhanced gas recovery, then it could start approaching viability.

Maersk Oil also envisages providing the system in partnerships with national oil companies, whereby it would agree to produce gas fields effectively (using enhanced gas recovery) and provide electricity, without adding a single molecule of carbon dioxide to the atmosphere, even if the gas fields themselves are already high in carbon dioxide.

For example several Middle Eastern counties are showing a great deal of enthusiasm for low carbon technologies, and might be keen to invest in a technology which would enable carbon free electricity generation from contaminated gas.

 

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