Carbon Capture and Storage and the Location of

Carbon Capture and Storage and the Location of Industrial Facilities Jeff Bielicki Research Fellow Energy Technology Innovation Project Belfer Center for Science and International Affairs Harvard University Presentation at Research Experience in Carbon Sequestration 2007 Montana State University, August 2, 2007 1

What does CCS do? • Couples industrial organization with geologic organization. – CO 2 transport and storage requirements additional costs. • CO 2 transport and storage costs introduce a spatial ‘tax’. – Costs depend on the distance that CO 2 must be transported. • This presentation addresses how the economies of scale for CO 2 transportation interact with those of shipping coal and transmitting electricity. 2

CO 2 Transport and Storage • Cost model balances CO 2 pressure from storage reservoir back to source. – Includes all fixed and variable costs • Composed of: – Pipeline transportation – Compression/Pressurization – Injection 3

Existing U. S. Pipelines Existing CO 2 Pipelines in the United States Canyon Reef Carriers Cortez L (mi) D (in) Capacity (MMSCFD) ROT (kt/(yr*m 2)) 140 16 240 35, 725 20 300 28, 580 30 1000 42, 341 4000 169, 364 502 Mc. Elmo Creek 40 8 60 35, 725 Bravo 218 20 382 36, 392 Transpetco/Bravo 120 12. 75 175 41, 022 Sheep Mountain 184 20 330 31, 438 224 24 480 31, 755 140 16 600 89, 313 26 1200 67, 645 12. 00 150 39, 694 250 48, 605 100 59, 542 Central Basin Este West Texas 119 127 8 12 Llano Lateral 53 8 12 CO 2 mass flow rate in kt/yr. Diameter in meters. 26, 463 100 59, 542 26, 463 Sources: Map created from data provided by US Office of Pipeline Safety (2003); CO 2 pipeline data collected from Oil & Gas Journal and operator websites. 4

Pipeline CO 2 Transportation • US Pipeline Construction Data – Onshore pipelines – Oil & Gas Journal, 1990 -2005. Regression: $ = 1, 686, 630∙ 1. 0541 YR∙D 0. 9685∙L 0. 7315 • Using CO 2 Pipeline Flowrates $ = 0. 3778∙ 1. 0541 YR∙m 1. 4685∙L 0. 7315 Pipeline Construction Costs: 1990 -2005 Coefficient Cost ($) Year – 1990 (YR) 0. 0526*** (0. 0040) Ln(D) 0. 0969*** (0. 034) Ln(L 0. 732*** (0. 012) Constant 14. 338*** (0. 049) Obs. 1052 Adj. R 2 0. 87 Standard errors in parentheses: ***p<0. 01 Length in km. 5

Transporting CO 2 • Compression and Pressurization: – Compression from gas to liquid. 1 – Pressurization as liquid. • Pressurization at source – Pressure drop = 10 MPa at storage site. – Compression/Pressurization equipment costs. 2 1 Assumes CO 2 is an ideal gas. 2 Based on IEAGHG (2003). 6

Storing CO 2 • Injection: – Estimated costs to drill/equip/rework wells 1 – Flow/number of wells based on parameters from In Salah and SACROC. – Injection Resistance Pressure: • Hydrostatic: Pres = (r. H 2 O-r. CO 2)gh • Dynamic: 1 Sources: JAS (2000), O & G Journal 7

Shipping Coal • Prices paid for 22, 000+ shipments of coal in US, 79 – 01. 1 – Shipped from a number of basins by a variety of means: rail, barge, truck, slurry… – Analysis limited to approximately 4, 000 records for single mode rail transportation in the “middle” states. • 1990 Clean Air Act Amendments made coal from Powder River Basin attractive. 1 EIA Mean Coal Content PDR Not PDR BTU 8, 938 (634. 9) 12, 311 (902. 9) Sulfur 0. 4222 (0. 3062) 1. 352 (0. 8137) Ash 5. 761 (1. 921) 9. 683 (2. 235) Moisture 21. 54 (10. 67) 6. 255 (4. 329) Standard deviation in parentheses. (2005) 8

Note(s) on Shipping via Railroad • 1979 Staggers Act deregulated railroads. – 1980: 22 companies operating rail lines. – 2007: 5 control 95% of lines. • 1990 Clean Air Act Amendments – Congestion out of Powder River Basin. 9

Coal Shipment Costs • Four Interaction Models: 1, 2 – Two functional forms – Two cost structures for distance • Powder River Basin coal significantly cheaper. 1 Powder River Basin dummy variables not shown (odd-numbered coefficients). 2 Distance structures differentiated by whether or not a 13 and b 13 are estimated. 10

Case Study: Coal to Liquids Plant • Coal gasification for synthesis gas: CO 2+H 2 • Fischer-Tropsch: • 2. 5 bbl oil and 1. 7 tonnes CO 2 from 1 tonne coal. 1 • Economies of scale unclear. – Assume size relative to SASOL plant (150, 000 bbl/d) 1 Assuming 75% efficient gasifier (Argrawal et al, 2007). 11

CTL Plant: CO 2 vs. Coal • Example: – Powder River Basin coal, power model, same cost structure, SASOL-sized plant. 1 Bold points indicate costminimized location CCS transport and storage costs relocate CTL plants… but only so much. 1 $70/MWh; 5%, 50 years. 12

Power Plant • ‘Typical’ PC Power Plant 1 – Uses approximately 9. 6 kg/s coal per MW – Produces approximately 4. 7 kg/s CO 2 per MW 1 Full load, 37% efficiency 13

Power Plant: CO 2 or Coal? • Should we transport CO 2 or ship coal? • CCS pulls power plants away from coal mines and towards storage sites. • The tug weakens as the distance between the coal mine and the storage site decreases. • No significant impact for small distances and power plants. 14

Transmitting Electricity • Transmission lines: – Discrete voltage ratings. – Capacity degrades over distance. – Losses depend on distance, diameter, material, impedence… 15

Electricity Transmission Costs • Model chooses minimum required design. 1 Different line designs • E. g. Low load requires smaller diameter/lower capacity (k. V) line. But losses increase. • Hence the different slopes 1 Based on IEAGHG (2003). 16

CO 2 or Electricity? • Should we transport CO 2 or transmit electricity? Storage Site CONCLUSION: Build power plant close to demand transport CO 2… 17

But… Part of the Grid Exists • The ‘tug’ of CCS transportation and storage depends on: – Plant size/output. – Distance between demand storage. – Amount of grid infrastructure to be built. • Transition at about 30± 10% transmission investment. 18

Economies of Scale • This presentation focused on the ‘tug’ that CCS exerts on the location of facilities: – Significant enough to make existing facilities wish they were somewhere else. – Scale of production is important. • How do the economies of scale of CO 2 transportation and interact with the economies of scale of e- and CO 2 co-production and capture? – Distance to storage site important. 19

Next Steps • Spatial Triangulation of Locations… • … including Spatial Optimization for Pipeline Routing: 20